As I write this many of you are wondering what just happened. Did the market pull a classic Chicken Little or is the sky really falling?
First of all I don’t think these markets are gonzers, however, we all need to evaluate our current market position. What we are seeing right now is a market that is in a state of limbo. The market is desperate for some meaningful news and direction. Unfortunately, these global economic forces are causing unprecedented volatility.
Why This Matters
This magnification of global uncertainty has a direct correlation to magnitude of market volatility. Which basically means these markets are crazy wild.
As farmers this means that price forecasting and understanding fundamentals is incredibly important, because that wisdom gives you a pricing target zone. Understanding your pricing target zone prevents you from making rash decisions that end up costing a lot of money. The decisions are either selling too low or waiting for too high – which is very tempting in these types of markets because the volatility can easily create a Vegas style dopamine fix. Everyone knows the House always wins.
Armed with this knowledge HOW do you pick a target zone?
Here is the formula:
Technical Analysis + Fundamental Analysis + Political Analysis + Macro Economic Analysis + 10,000 hours of market dedication + Gut Feel + Risk profile + Speculation. Yet, all of this is useless if there is not a grain pricing target in place.
The easiest way is to call Greg @ Insight Ag Marketing – 403-782-5488
Bulls and Bears
Bullish: Smaller than expected crop in Canada Stats Can: 18.17 MMT 2022 vs 19.5 MMT 2020 (13.7 for 2021 but it was drought)
Bearish: Soy oil market is not as strong as projected
Bullish: feels like barley has peaked. Maybe a weak $CAD will help Stats Can: 9.9 MMT 2022 vs 10.7 MMT 2020 (6.9 for 2021 but it was drought)
Bearish: Lots of corn in US and it is below $7. Good barley crop and elevators do not have a strong export program on barley.
Bullish: Lots of agronomic issues in the world. Global ending stocks shrinking.
Stats Can: 33.8 MMT 2022 vs 35.4 MMT 2020 (22.3 for 2021 but it was drought)
Bearish: Strong global production 779 MMT in 2022. Global economic weakening
There is some serious support around 800, 850 and 900.
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