Carl German, Extension Crops Marketing Specialist; clgerman@udel.edu
Hurricane Watch
As we head into the Labor Day weekend there are conflicting signals impacting commodity markets. First, hurricane Gustav is forecast to head into the Gulf Coast sometime over the weekend/first of next week. With something like 135 oil rigs off the U.S. Gulf coastline the crude oil market has traded higher this week with the nearby contract now trading close to $120.00 per barrel. The oil price rally has had a positive effect upon corn and soybean prices for a part of this week’s trading; with prices now backing off due to needed rainfall coming into Iowa and other parts of the parched Corn Belt. It won’t be until sometime next week before the extent of any damage that might occur is known. The hurricane watch is likely to hold trader interest for some time because another possible hurricane is forming in the Atlantic that may or may not make it to the U.S. mainland. Two things could happen as a result of a Category 3 or better hurricane hitting the mainland at this point in the growing season. First, some of the U.S. crop in the outlying regions of the row crop producing area could receive too much rain, thereby resulting in crop damage. Second, wind damage to standing crops could become a problem, causing some field loss due to downed corn stalks. As a reminder, this year’s crop is likely to be more susceptible to potential wind damage due to the shallow root system of much of the U.S. corn crop.
Marketing Strategy
Needed rains occurring in parts of the Corn Belt are said to be responsible for the lower overnight trade in the corn, soybean, and wheat pits. The markets are likely to trade sideways to lower as we go into the weekend. Once Gustav makes its way through, crop damage will be assessed and the markets will trade accordingly. Simultaneously, the status the oil rigs off the Gulf Coast will be assessed and reported. The U.S. dollar index, trading stronger earlier in the week, has also backed off slightly. The weakening dollar is likely attributed to the higher crude oil price and the rate at which the Fed is printing money to stave off a credit crisis and inflation. Considering the unknowns, typically referred to as uncertainty, row crop prices are likely to remain extremely volatile. Only catch up sales should be considered at this time. Harvest pressure is expected to take corn and soybean prices lower from their current levels. World production for all wheat is expected to increase and thereby increase beginning stocks for the next marketing year. Currently, Dec ’08 corn futures are trading at $5.85; Nov ’08 soybean futures are trading at $13.26; and Dec ’08 wheat futures are trading at $8.07 per bushel.
Fall Crop Insurance Required for Disaster Eligibility in 2008
No coverage on wheat and barley now means no disaster aid next year.
OVERLAND PARK, KS – Any producer who wants to be eligible for disaster assistance on 2009 summer crops must have crop insurance coverage on all insurable fall planted crops before the sales closing deadline (September 30, 2008 for winter wheat, barley, and forage production.) The new Farm Bill requires crop insurance, on all acres of any insurable crop, or Noninsured Assistance Program (NAP) coverage on all acres of uninsurable crops, in order to be eligible for the Supplemental Revenue Assistance Program (SURE). If you fail to sign up for crop insurance on your fall planted crops you will not be protected under SURE for your corn and soybeans next summer, even if you buy crop insurance for those crops. The more crop insurance coverage you have, the more your SURE guarantee will be. Authorized in the Farm Bill, SURE is effective for the 2008 crop year and runs through the 2011 crop year. SURE will be based on whole farm revenue. It will be triggered by a USDA Secretarial disaster declaration for a county. Contiguous counties are automatically eligible. It will also be available to any farm where, during the calendar year, the total loss of production on the farm, because of weather, is greater than 50 percent of the normal production on the farm. For insured crops, the SURE guarantee is 115 percent times the crop insurance price election times the crop insurance coverage level times the adjusted crop insurance yield. Crop insurance coverage levels will determine the size of the guarantee.
Some of the more common fall planted crops with the September 30 deadline include: winter wheat, oats, barley, rye, and forage production.
Assure Your Eligibility
If you want to maintain your eligibility for disaster aid in 2009 you must sign up for crop insurance coverage on every acre of every insurable fall planted crop before the September 30, 2008 deadline.
If you have any questions, contact a crop insurance agent well before the deadline. For more information contact Jan Eliassen at (410) 778-0120 or Laurie Langstraat at (913) 685-2767.
For technical assistance on making grain marketing decisions contact Carl L. German, Extension Crops Marketing Specialist.