Low grain ending stocks amplify potential volatility

An ag economist says grain markets have the potential to swing wildly heading into harvest because of low ending stocks and adverse weather.

Ohio State’s Carl Zulauf said the ‘very low’ ending stocks open the door to steep drops in corn and soybeans.

“You don’t have a lot of what I would call, and a lot of people call, shock absorbability in the market,” he said. “And that makes it more vulnerable to production declines.”

He said low ending stocks have amplified the weather market. Zulauf said farmers need to keep an eye on the extended forecast’s production implications when marketing grain.

“This would include production in South America, production in the Ukraine, Russia and Kazakhstan areas which have become major exporters of wheat in particular but also corn and increasingly soybeans,” he said.

Zulauf said farmers should participate in risk management if their risk exposure to lower prices is too high.

Carl Zulauf interview

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