MT. VERNON, Ill. — One never knows when a tsunami will hit Japan, as it did nearly a year ago. Equally difficult to predict is when drought-like conditions will strike burgeoning grain markets in South America, as they have this season.

“When the tsunami hit Japan, grain prices moved 45 cents overnight,” said Jody Lawrence, president of Franklin, Tenn.-based Strategic Trading Advisors. “South America lost 25 to 30 percent of its corn crop, and we all know South America produces about 30 percent of the global crop.”

Lawrence was one of the keynote speakers during the Illinois Wheat Assoc. annual winter wheat forum, and he used the two timely examples as evidence that commodities markets likely will continue a roller-coaster ride in 2012.

“There are just so many moving parts these days that can have an impact on prices, and you usually can’t control any of them,” Lawrence said. “We could see a cool, wet spring, and it would shoot prices way up. Be prepared, because we could see $1 weekly shifts in the price of corn.”

He told nearly 200 farmers attending the forum that for about the past decade, wheat prices basically have mirrored what has happened with corn prices. “We all know the 800-pound gorilla is corn, so when we talk even about wheat, we have to factor in the bottom line, and that’s corn,” Lawrence said.

“Think of corn and wheat interchangeably now. 

Prices will move in the same directions.”

He told the group current prices – corn at $5.68 a bushel, soybeans at $12.39 and wheat at $6.68 – are fairly attractive numbers and that farmers should not be hesitant to lock in some of their future product at similar prices.

“My recommendation is, don’t be overly greedy right now. Consider selling some crop now, perhaps 25 percent of your new crop, before you get into the fields,” Lawrence said.

The value of the U.S. dollar, if it continues to remain low as it is now, is a big plus to American producers, he explained. “A weaker dollar is bullish for commodities, and it’s a huge benefit for you because the world can buy more of our product,” Lawrence said.

 He noted China’s growing demand for grain will keep on. “With 350 babies born every minute in China, you can see why their demand is going up. And remember this: Just because you hear about record production over there, keep in mind that there is also record demand.”

The country’s demand in 2012 for corn is expected to rise 3 percent, leaving a production gap of about 10 million metric tons.

“The bottom line is that as we enter 2012, historically you are in the best position price-wise to start a season than you ever have (been),” Lawrence said. “The volatility’s here to stay, but those rallies give you opportunities.”

Under certain circumstances, corn prices by December could range anywhere from $4-$8 a bushel, but more than likely will finish the year in the $5-$6 range.