Despite High Prices, Markets Fall Much Faster Than They Move Up
By Harold Walker
Conventional and organic grain markets have experienced unprecedented volatility in the past few months. In fact, it is near record levels for both conventional and organic producers. Fueled by weather, unprecedented activity by fund traders, expanded trade limits at the CBOT, the war in Ukraine, and delayed plantings; supply and demand is almost an afterthought.
As we navigate these volatile markets, I recall some adages from veteran analysts. Pete Lorenz, a grain marketer for several decades, was fond of saying: Sell something when the market exceeds the cost of production. Don Roose, US Commodities founder, frequently reminds us that “oats knows.”
Oats are one of the most stable commodities traded and are often an indicator of market trends. With today’s social media, it seems that rumors are plentiful and facts are somewhat elusive.
Your National Farmers marketing representatives have access to accurate and verifiable information, which allows profitable marketing advice and decisions for our producers. That’s why you need to use us. Use us to help you make better decisions and more money on your farm.
Today’s grain markets are experiencing historically high prices with profitable margins for producers. But many are reluctant to sell or forward price their production. Producers see the volatility and feel that the market will continue to move higher.
This is not a good strategy because prices traditionally fall to lower levels much faster than they increase. Grain Marketing Plus has long advocated incremental sales throughout the year with a particular focus on the historically best pricing months. This strategy has resulted in producers receiving above-average prices for their production.
The current rumor in the corn market suggests we could see $9.00 to $9.50 per bushel with a possibility of $10.00. This pricing level would be wonderful, however, $6.00 to $7.25/bu is more realistic. $5.00/bu is definitely possible with today’s economic turmoil.
Soybeans have followed with extremely optimistic rumors, but reality dictates differently. A producer should have at least 30 percent of expected production for 2022 already priced. Or call us right now so we can do it for you.
We should also consider pricing a small amount—10 percent of the 2023 crop as futures prices are currently at profitable levels. This is a small amount of protection against economic recession and provides security for future input costs.
NForganics continues to grow and a recurring industry theme has emerged. Buyers of organic production are contacting our representatives seeking to purchase commodities. Also, organic growers are contacting NForganics representatives to sell their production. Our marketing representatives have earned a reputation for seeking fair prices for the grower and providing quality commodities to buyers. We continue to develop new markets, coordinate reliable logistics, and provide competitive pricing and service to our grower members.
Weather concerns, supply and demand, and the traditional market forces seem old-fashioned and not very sensational in today’s world. These basic truths and influences are vital to the marketplace and to the producers of food and fiber. Grain Marketing Plus, NForganics, National Farmers Crop Insurance, and a solid risk management plan will still help to ensure success in this volatile world.
Your Grain Division, like all enterprises, is experiencing added expenses due to inflation, fuel costs, and other factors. The current grain marketing fees have not been increased in several years.
Unfortunately, a modest increase in marketing fees has become necessary and will be implemented in the near future.
Your Grain Division, like all enterprises, is experiencing added expenses due to inflation, fuel costs, and other factors. The current grain marketing fees have not been increased in a number of years.
Unfortunately, a modest increase in marketing fees has become necessary and will be implemented in the near future.
