Low grain supplies have buyers scrambling to make sure
they’ll have enough for their
needs. A marketing expert said farmers should be scrambling,
too, to lock in prices driven
up by the shortage.

"Grain stocks in the United States and globally are at
very low levels," said
George Shumaker, an economist with the University of Georgia
Extension Service.

"You’d have to go back to the end of World War II to
find a time when global grain
stocks were as low as they are right now," Shumaker
said.

Many experts like to see a buffer of about 75 days’ worth of
use. But stocks have
dropped to about 30 days’ worldwide use.

Because of the shortage, markets have placed a premium on all
grain prices.

"This premium should encourage growers to plant more
acres to meet the growing
need for food and feed grains," Shumaker said.

The high-price grains include corn, wheat and soybeans used
for human food or to feed
livestock for later human consumption.

Current prices for wheat and corn, the feed grains, are
higher than for soybeans, an
oilseed. That’s because corn and wheat are in scarcer supply
than oilseeds.

Higher prices in all of these grains have caused an
"auction for acreage,"
Shumaker said. Buyers try to make sure they will be able to buy
enough grain by getting
farmers to plant more of the grain with the shortest supply.

"Bidding prices higher encourages farmers to plant more
of that commodity,"
he said.

Georgia grain growers can take advantage of that. Shumaker
said using cash contracts,
hedging futures markets and buying options are all good ways to
manage marketing risk.

"We’re going to have some excellent forward-pricing
opportunities in early
1996," he said.

As high as prices are, the market is more volatile, too.
Weather forecasts play a key
part in setting market prices.

The low supply makes the present crop more precious than it
would be otherwise. Buyers
keep a close eye on current crop conditions and adjust prices up
or down depending on how
weather could affect the crop.

Farmers can’t affect these price fluctuations, but they can
take advantage of them as
they happen. Shumaker said this is an excellent time to learn
about managing market risk
— while prices are high.

"The ‘Freedom to Farm’ bill will force farmers to learn
more about risk
management," he said. "We’re fortunate that prices are
so high now when farmers
are learning."

The new farm bill will also affect acreage. Shumaker expects
an increase in corn and
soybean acreage over 1995. This is partly due to farmers’
planting fewer peanuts, but also
because of higher grain prices.

Grain buyers and others look to the U.S. Department of
Agriculture’s Prospective
Plantings Report on March 31 to find out what farmers intend to
plant this year.

"These intentions could affect current prices for all
grains," Shumaker said.
"So producers need to act quickly when they see a
profitable opportunity."