After spending this week on the phone the only image that comes to mind is one of a farmer circling his combine like a caged lion. Just itching to fill the quonset with that sweet aroma of spent diesel. The hour is near.
My intel (which is you guys) is suggesting a low average crop. Again, it seems that this year was a year of extremes and weirdness. It was either way too wet or too dry. However, almost everyone is having a better time than last.
Why This Matters
As we roll into a new season of marketing we need to examine a different picture. The growing season market is now behind us. Typically, this means that the extreme volatility will dissipate. However, I don’t think that will be the case. There is simply too much uncertainty in the global marketplace and political spheres for markets to remain calm. This is going to play an important part in your marketing strategy this year.
We need to ask whether or not we are in a bull market or bear market. Most of you are saying we are in a *#*&^@$#%^ market. Yes, you are probably correct but we still need to deal with reality and the cards dealt.
In my opinion, I believe this is not going to be a simple marketing year where you can bin it and forget it. I don’t believe this is the setup. Yes, prices could be higher in the spring, but I think the volatility will give some excellent opportunities before spring.
Another thing to consider is the balance between risk management and speculation. These prices are at all time highs. The drought premium is gone. The war in Ukraine is status quo. Also, look what happened to lumber and oil futures. What I’m saying is that we are not immune to market whims and global economic pressures. Consider, perhaps now is the time to look at the profit margin and decide if these profits are solid; then take some money off the table. Maybe even use that money to buy fertilizer.
Bulls and Bears
Sentiment: Neutral. Expect harvest pressure
Bullish: Average crop with extreme low ending stock. Vegoil demand is strong
Bearish: Soy crop is solid. Weak global economy
Sentiment: Neutral to slightly bearish.
Bullish: Limited import of corn. Average crop size. Solid demand.
Bearish: Less aggressive export program. Domestic demand could suffer.
Sentiment: Neutral as global harvest pressure
Bullish: Globally the wheat crop will not meet trendline yields of production.
Bearish: Harvest pressure. Will China buy from North America?
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