Opportunities for profit in 2017

first_imgShare Facebook Twitter Google + LinkedIn Pinterest Trade, currency and geopolitical issues are putting much uncertainty in an already wavering commodity market, but one analyst says he still believes there will be opportunities for farmers to use the black pen this year when looking at their bottom line. Finalizing crop insurance will be a major factor in getting to that positive outcome.“Farmers need to utilize these products to protect themselves and get to a profitable level,” said Mike Zuzolo from Global Commodity Analytics. “The last thing a farmer wants this year is to have more uncertainty and worry after they plant, versus before they plant.”That is why Zuzolo is advising his clients to make hedging a priority. He says that seed technology, fertilizer and weed control are all very important to the farm plan, but marketing needs to be right at the top of the list.“The U.S. dollar is going to be even more important this year, in terms of what commodity upside we could have,” Zuzolo said. “A year ago, the soybeans were in the midst of a sharp rally because the dollar was going down, crude oil was sharply higher, we had South American weather and China was rebuilding their hog herd after severe flooding. We have some of those elements again this winter, but not all of them.”Early talks about the 2017 planting decision are pointing to corn needing to buy back acres, or more currently about soybeans selling some. Zuzolo believes the majority of the corn acres never left in the first place.“West of the Mississippi River I am seeing a massive discount on basis, up to 75 to 85 cents negative in the western Corn Belt,” Zuzolo said. “There is just no way that cash flows, so corn is still holding on to acres, especially given the recent soybean slide.”Looking well past 2017, China’s new Silk Road Initiative is also on Zuzolo’s mind. This move will look to strengthen Chinese trade, investment and infrastructure with more than 60 countries across Asia, Europe and East Africa.“I think this will become a very powerful, potentially strong demand-consumption initiative that is going to span the next 30 years,” Zuzolo said. “The Chinese are looking to spend $8 trillion in trying to develop those neighboring markets with commodity-intensive infrastructure projects and it’s certainly something that I will be keeping an eye on.”Zuzolo spoke in northwest Ohio at crop insurance meetings hosting by Williamson Insurance in early February.AUDIO: The Ohio Ag Net’s Ty Higgins visits with Mike Zuzolo about if he believes there are profit opportunities for 2017.Zeus Articlelast_img

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