Store and ignore isn’t a plan

Markets remain impossible to predict with any consistency. This is a crucial concept to accept and own as you embrace the uncertainty that could lie ahead. Position and prepare for future volatility as you make the marketing decisions you need to execute over the coming months. There has undoubtedly been a lot of bearish news built into the markets lately; sentiment has officially swung, and you can feel it talking to farmers.

The most disappointing change has been the funds' ability to cover nearly 1/3rd of their net short position in corn over the past month while the market slid 20-30 cents lower during this process.

Given the number of farmer bushels still needing to come to town and how that could offset funds unwinding short positions, nobody should be surprised by this move. The question now is: Are we set up for a similar pattern going forward? Possibly.

It appears we have a significant U.S. crop about to hit the supply chain, and bushels will need to be converted to cash. This could put tremendous pressure on the market – if demand doesn’t outpace supply. Right now, it certainly feels like the most bullish thing going for grains is how bearish the sentiment has become.

But things can change. We simply need a few production dominoes to fall elsewhere to encourage global buyers to come in strong for U.S. grains. 

How low is the seasonal low?

Let’s switch gears a bit. I want to talk about “seasonal lows.” It’s that time of year when you hear this term thrown around a lot, and this year is no exception.

In my opinion, seasonal averages can be somewhat of a trap, as they can be heavily weighted on big bull market moves and overly discount the “grind lower” years. It's crucial to stay informed and aware of these trends. Just look at the last five years for March Corn Futures versus today. It’s easy to see the two years that skew this average up, making today appear to be a seasonal low on average. That said, in three out of the last five years, March corn futures came off the books lower than the board price in late August.

Consider hidden storage costs

This is important to anyone who thinks that ‘store and ignore’ will be their marketing plan this fall. We can all hope a bullish catalyst provides an opportunity to market at higher prices. But if that doesn’t come, we may find ourselves in a much worse spot six months from now.

The final thing I want to leave you with could be the most significant risk to fall marketing decisions. It is simply the hidden costs of ownership.

What do I mean? I’m talking about: