Special Market Update
Grain Market Commentary
Monday, June 22, 2020
By The Andersons Risk Management Team
Like any year much of the day to day focus is on weather. Forecasts seem to be improving after some dryer days took hold of the belt. Some saw the heat as beneficial for the crop to make up some GDDs, others fear it was too hot and dry. In the end rain this past weekend was more widespread than expected, and the market reacted. Weather is difficult to trade, and the result on the crop sometimes is not fully apparent until much later in the cycle.
There was more speculation Sunday evening about China looking for US offers on beans, and maybe wheat and corn. This seems as hard to track and trade as weather. Overall, we think there will be larger purchases in our commodity space from China, but the timing is hard to pin down. News about day to day tiffs between trade delegates makes it worse.
Next week we will see the USDA June 1st Stocks, and Acreage reports. The trade is expecting lower corn acres. These reports historically can bring a lot of volatility into the market, since there is always a prospect of two surprises.
Everything described above illustrates the importance of a marketing plan. It is impossible to predict what will happen, even though you try. You have no control over weather, trade relations, or aggregate USDA reports. You are in control of your farm, and its marketing plan. That is why it is crucial to know what your reaction will be to a rally, drop, or sideways trade. The decision is the hardest part, but once it is made it can often feel like a burden has been lifted. Dividing your production into small percentages and setting dates for a decision to be made is a great starting point. Ultimately you know your business better than anyone, so the plan starts with you. However, your Andersons rep has the tools and market knowledge to build that custom marketing plan with you.
Before it’s too late in the year or all the chips fall take time to come up with a plan going forward. Last year showed us that these market disruptions can arrive rapidly, and the opportunity is momentary.