Posted on November, 15, 2024 at 04:01 pm
The November USDA WASDE report had supportive underlying tones to it, due to lower-than-expected corn and soybean yields.
The report provided enough for a short-term price rally, which has unfortunately already dissolved.
“Now what?” A client recently asked me. The question posed sarcasm, philosophical tones and genuine curiosity regarding how grain prices might trade into year end and early 2025.
“I’m not totally sure,” I responded. “We need to be ready for anything.”
As we head into year end, be mindful and ready to manage your grain marketing constantly in the coming weeks and early months of 2025.
U.S. grain ending stocks are viewed as adequate. Because of this, grain futures prices may struggle to find reason to rally triumphantly in the months ahead – barring some black swan supply or demand event.
Plenty of newsworthy items could offer market movement – either higher or lower. Traders will constantly be monitoring South American weather, global economic jitters, a new U.S. administration, inflation talk, the potentially slowing Chinese economy, and potential competition for planted acres in the Unites States this spring.
Which way will the pieces of news ultimately fall and tip the price scale?
Will prices rise higher due to unexpected lower supplies?
Will the U.S. crop get smaller on upcoming USDA reports due to the very low moisture content at harvest?
Or, what if there is adverse weather in South America?
Might we see an export demand uptick ahead of the new presidential administration?
Or will a snafu in global economics or global geo-politics spook prices lower?
My advice: Make a strategy that allows your farm to be prepared for either scenario. Don’t wait and see. Be ready to act on opportunity.
Start looking at technical charts for corn, soybean, and wheat markets now.
Know where support and resistance levels are on those charts, as they can create pricing opportunities for your cash sales.
Decide now where and when you want to pull the trigger on those cash sales.
Get those orders working with your grain elevator now.
Good marketers also have contingency plans in place, so they can act when they see an opportunity or protect themselves against tumbling prices. It takes a well-balanced blend of fundamental analysis, knowing your local cash market, weighing both U.S. and global economic news, watching geo-political drama, understanding technical charts and having discipline.
Scenario planning is the process of creating possible future outcomes: sharply higher markets, markets that stay low for two years at a time, or markets that stay consistent. Scenario planning is forward thinking. It’s preparing your farm for the unthinkable.
I believe that markets will continue to be volatile in the coming years, and often times, better pricing opportunities arise when markets are uncertain, rather than when they are certain. That means you have to manage through uncertainty.
You have to be ready with contingencies: sell, hedge, store, or whatever the appropriate action might be. Know your cost of production. Know where you’ll place target price orders to sell and review your marketing plan weekly. Be ready for anything; there is plenty of uncertainty ahead.
Source: Farm Progress