Marketing is More Important Now than Ever  

What’s Happened…

Row crop prices (including corn, soybeans, and wheat) have dropped significantly over the past year and are now arguably accelerating downward in recent weeks. Chances of weather adversely affecting the crops grow slimmer by the day, as record production estimates for both corn and soybeans are on the rise by private estimates. The USDA could increase yield potential in the August 12 WASDE report, however, it is more likely that adjustments could come in September when field surveys are conducted. The market is likely focusing on what private sources are suggesting currently – record yield.

Why this is Important…

Highly rated crops later in the growing season generally exert pressure on prices. End user buying remains active, though only as-needed. Speculative selling continues by managed money and remains active this past week, as a good weather forecast for maturing crops suggests good conditions to remain into mid-August or later. Support levels on both December corn and November soybeans were breached this week, with corn closing under $4.00 and November soybeans under $10.00. Technically, the corn market looks weak with a downside objective at last year’s low of $3.85 on the December 2024 contract. November soybeans could pierce $9.50. Keep in mind that last year’s dry weather throughout August limited farmer selling and created offensive buying by both end users and speculators. The contract low price for both corn and soybeans in 2024 was in late August. This year could be different, as world supplies are now expected to be on the rise, or at least to the point where there’s little urgency for end users to step up and buy aggressively.

What can you do about it?

Maintain a defensive posture. Deciding to do nothing is a strategy and may pay dividends. It could also be the strategy with the most risk, as current prices are gaining downward momentum. Explore different avenues of protecting carrying charges (selling futures, buying puts, selling calls, fences) as well as shopping for basis. Hedging futures versus forward selling is attractive, as futures can be quickly liquidated and forward contracts lock you into a price. If prices look as though they are trying to bottom (likely in the weeks ahead), utilize tools to manage potential insurance indemnity payments. Marketing is always important. When prices are falling and big crops are looming overhead, it may be more important to be active sooner rather than later. Shifting risk is paramount.

Find out what works for you…

Work with a professional to find the strategy or strategies that are best suited for your operation. Communication is important. Ask critical questions and garner a full comprehension of consequences and potential rewards before executing. The idea is to make good decisions for the operation and less emotionally-charged responses to market moves, which are always dynamic.

About the Author: With the wisdom of 30 years at Total Farm Marketing and a following across the Grain Belt, Bryan Doherty is deeply passionate about his clients, their success, and long-term, fruitful relationships. As a senior market advisor and vice president of brokerage solutions, Doherty lives and breathes farm marketing. He has an in-depth understanding of the tools and markets, listens, and communicates with intent and clarity to ensure clients are comfortable with the decisions. 

The data contained herein is believed to be drawn from reliable sources but cannot be guaranteed. Individuals acting on this information are responsible for their own actions. Commodity trading may not be suitable for all recipients of this report. Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. Examples of seasonal price moves or extreme market conditions are not meant to imply that such moves or conditions are common occurrences or likely to occur. Futures prices have already factored in the seasonal aspects of supply and demand. No representation is being made that scenario planning, strategy or discipline will guarantee success or profits. Any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to Total Farm Marketing. Total Farm Marketing and TFM refer to Stewart-Peterson Group Inc., Stewart-Peterson Inc., and SP Risk Services LLC. Stewart-Peterson Group Inc. is registered with the Commodity Futures Trading Commission (CFTC) as an introducing broker and is a member of National Futures Association. SP Risk Services, LLC is an insurance agency and an equal opportunity provider. Stewart-Peterson Inc. is a publishing company. A customer may have relationships with all three companies. SP Risk Services LLC and Stewart-Peterson Inc. are wholly owned by Stewart-Peterson Group Inc. unless otherwise noted, services referenced are services of Stewart-Peterson Group Inc. Presented for solicitation. 

Author

Bryan Doherty