Special Market Update
Grain Market Commentary
Monday, June 11, 2018
By Greg Johnson, Executive Account Representative, The Andersons
Marketing This Summer – More Twists Than A Soap Opera
It is now mid-June, and we have officially entered the “weather market” phase for corn and soybeans. As the world turns, each day it seems like we are treated to conflicting weather forecasts. Some of the bold and beautiful forecasters are predicting that a high pressure ridge could set up over the Midwest this summer, which would lead to warmer-and-drier than normal conditions. Other forecasters see plenty of cold fronts developing this summer, leading to the secret storm and many dark shadows. Everyone is looking for the guiding light, that one weather forecaster who can accurately predict the weather 30 to 60 days in the future. Unfortunately, the search for tomorrow’s weather is never a sure thing.
In addition to the weather uncertainties, we have to worry about trade tensions with China, Mexico, Canada, and the European Union. Sometimes it seems like our politicians act like all my children, tweeting one thing this week, and then something completely different next week. It certainly keeps traders and producers alike on the edge of night, unsure how these negotiations will turn out.
This week the USDA will release its monthly supply and demand report on June 12th. Some advisors are urging producers to get more beans sold ahead of this report, as they fear that USDA could lower their export estimate for soybeans, leading to a higher carryout. For corn, there is some hope that U.S. exports could be increased because of weather problems in another world (Brazil). Later this month (June 29th) USDA releases the all-important planting intentions report and quarterly stocks report. Ryan’s hope (as well as the hope of many producers) is that USDA will not surprise us with more acres than what they released in their March report.
What should you do? Some of the young and the restless producers want to get a large percentage of their crop sold, and then hope for a bumper crop. Others know that just as they only have one life to live, they only have one crop to market, and will be reluctant to price much until they are sure of what they have. Our advice is to lock in floors at profitable levels while giving yourself upside price potential. This can be done with min/max/averaging contracts, options, and enrolling in professionally managed pricing programs. This should keep you from getting so nervous that you would need to check into a general hospital. As the days of our lives progress throughout the summer, we will all be able to look back and see how this soap opera turned out.
Extra Credit: How many soap operas did you find in the article?