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Farmers holding onto grain, hoping for a break in the market

Grain in silo_rgbBy JACK WEATHERLY 

Mississippi farmers are holding large amounts of grain, primarily corn and soybeans, on their property, waiting for the best time to sell it.

But they are holding out for hope in a market oversupplied and underpriced.

Plus, if too many dump it at the same time, that would drive prices down further, said John Michael Riley, agricultural economist at Mississippi State University.

There hasn’t been any sign of gradual release of the grain by the farmers, Riley said.

“If it all happens at once, it’s very dramatic,” Riley said. By July, sale plans should be in place because harvest time for the two grains starts in August, he added.

Riley said many farmers are hoping to break even on the crops.

The caution was  brought on by the downturn in row crop prices in 2014. Revenue from that source in Mississippi fell more than $600 million from 2013. (The drop increased to $972 million when the U.S. Bureau of Economic Analysis included in its farm income report a federal government settlement with black farmers in 2013 totaling $340 million.)

Corn prices in 2014 in Mississippi were down nearly 24 percent, soybeans fell 26 percent and wheat were down 29 percent.

Thus far in 2015, things are not looking any better, in the United States or in global markets.

Global markets are the X factor.

“The world is awash in grain, prompting the most bearish outlook ever by speculators,” Bloomberg reported on Sunday.

“U.S. corn stockpiles at the start of last month were the biggest in 28 years, adding to signs of a glut that’s driven global food costs to the lowest since 2010. Hedge funds have been net-short on agriculture from cotton to wheat for three weeks, the longest since the government data started in 2006.”

That means that hedge funds are short-selling, betting that the commodities will decrease in value.

Paul Christopher of the Wells Fargo Investment Institute, which oversees $1.6 trillion, was quoted by Bloomberg as saying: “The only real hope is for some global cuts in production. I wouldn’t be buying corn [or other grains] here.”

Faced with a gloomy futures market, farmers in  Mississippi and elsewhere in the country are prone to contract with buyers on a cash basis.

The Grain Stocks Report from the USDA’s National Agricultural Statistics Service was overshadowed when it was released on March 31, the same day that the highly anticipated report on how much acreage farmers are expecting to devote to each crop was released.

Corn stored on farms as of March 1 in the United States was 4.38 billion bushels, up 13 percent from 2014, according to the statistics service. Total corn stocks stood at 7.74 billion bushels, up 11 percent from a year earlier.

On-farm soybean stockpiles across the country stood at 609 million bushels, up 60 percent from a year ago. All soybeans on hand as of March 1 was  1.33 billion bushels, up 34 percent from 2014.

Farm-stored wheat (all varieties) stool at 279 million bushels, up 17 percent from 2014. Total wheat supplies stood at 1.12 billion bushels, up 6 percent.

The statistics service did not release figures, which are aggregated, on Mississippi corn, soybean and wheat “to avoid disclosing data for individual operations.”

That’s something that “baffles” Riley. “There’s never been an on-farm report in Mississippi. My colleagues and I would love to have it.”

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