D24—Lancaster Farming, Saturday, May 26,1984
NEWARK, DEL. - After last
year’s drought, many farmers are
very reluctant to forward price
grain again this year. But ac
cording to University of Delaware
extension marketing specialist
Carl German, indications are that
a profitable marketing plan for
their 1964 crops must take ad
vantage of any preharvest pricing
opportunities that occur.
“Marketing years following a
short crop generally make a major
downward price adjustment prior
to the next harvest,” the specialist
says.
Although futures markets aren’t
an exact forecast of prices to
Grange
Domestic Content Bill
WASHINGTON, D.C. -
“Damaging to American farmers,
exporters and broad national in
terests,” is what Edward An
dersen, Master of the National
Grange, has charged in testimony
on Capitol Hill opposing the
domestic content bill (5.707).
Anderson also warned that
passage of the legislation could
trigger massive trade conflicts
which could result in a world
depression. He also pointed out
that the bill is in violation of
America’s international com
mitments and obligations under
the General Agreement on Tariffs
and Trade and invite retaliatory
actions from the European
Community and Japan.
“U.S. farmers and the entire
agricultural community, among
the hardest hit of all sectors during
our economic downturn, can ill-
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Time to think of grain marketing
come, he says they do indicate
what may happen and should be
used as a barometer m making
sales decisions. Futures markets
generally anticipate a lower
harvest market far ahead of time.
Nearby com and soybean futures
(old-crop) are trading around 40 to
80 cents per bushel higher than
new-crop December and'
November futures.
According to German, a com
parison of new-crop futures prices
during October (fall harvest) with
new-crop futures the preceding
April shows that after short crop
years, October com bids average
only 85.5 percent of the April level.
During normal years, October
opposes
afford risking further decline in
our vital $35 billion export
market,” said Andersen. “Far
mers are not just exporters,”
Andersen said, “but consumers as
well and are concerned about the
obvious increase in automobile
costs that would result if the
domestic content bill become
law.”
Citing figures that a domestic
content law would add $l,OOO to the
price of an imported car, Andersen
also observed that the bill would
result in a net “job-loss” and be
detrimental to the long-term in
terests of the automotive industry
workers whom it aims to help. “It
reduces incentives for the auto
industry to become more com
petitive and does not deal with the
central problems underlying
unemployment in the auto in
dustry,” he said.
prices were down only about 2
percent from April.
Similarly, October soybean
prices have averaged only 80.8
percent of the April level in years
following short crops. In other
years, prices have inclined by an
average of only 3.5 percent over
the same period.
Based on these precedents, the
economist says substantial
downside price risks exists this
year. This means that November
soybean futures could dip below $6
and December com could drop
down to the $2.65 level this fall.
“Since the market discounts a
large crop well in advance, it will
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The sanitary way to get rid
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Sat.
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TOBACCO GROWERS
Attention!
Is there a special grade of
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YES
Corn grades can reduce quality
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Also - call us for complete
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be impossible for growers to lock
in the current higher prices for
1984 production unless they act
soon,” German says. “Strong old
crop markets generally lend
support to new-crop bids this early
in the season. So there’s a good
opportunity right now to forward
price a portion of your 1984 corn
and soybean crops.”
For now, he says, cash con
tracting will be the best choice in
most cases for forward pricing a
part of this year’s crop. “This is
because of the favorable basis
difference between the cash
contract bid and the appropriate
futures-being bid into prices this
i
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PHONE: 717-656-4151
spring. Advancing sales to around
the 20 percent level at this early
stage in the marketing year will
help give your marketing plan
needed flexibility and should
prevent the temptation to become
overcontracted before harvest.”
Hedging is the other main
pricing option open to growers. A
hedge provides some pricing
flexibility beyond that offered by a
cash contract, German says.
However, farmers who hedge must
fully understand the process.
Either a forward cash contract
or a hedge will permit producers to
accomplish the same goal-to start
a marketing program now.
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