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Stick to your marketing plan and be on the lookout
As we head into September, the weather, economy, and harvest make for marketing opportunities and risk.
Traders will now be looking ahead to harvest and buyers may wait for a setback to add to their needs, creating the potential for markets to sell off until we see what combines tell us about yields.
Basis has held up well lately due to tight old crop supplies, thus giving producers a chance to add sales ahead of harvest.
Corn remains supportive should demand hold. There looks to be potentially a large domestic bean crop and very little incentive to store beans with no carry in the market and faced with a potential record- breaking crop in South America next year. Producers should consider selling beans now or off the combine and re-own on paper in March or May in case South America would have weather issues.
With the potential tight supply for corn, most are expecting a post-harvest rally. There is little to no carry in the market for corn as well, and a potential for a 40-cent drop into harvest. Producers should consider adding to sales now—even if you plan to deliver in January—to take advantage of basis and price. Paying for storage make little sense with little carry to help offset the cost. Consider making sales, re-owning on paper and transfer your risk.
Marketing continues to be a challenge as headlines change nearly every day. Uncertainty remains on what will be exported out of Russia and Ukraine. China and world economies continue to struggle creating concern about demand for commodities, and global weather remains less than ideal for the upcoming South American crop season.
What you can control is when and how much you sell. Stick with your plan of incremental sales and keep in mind your overall price average. Be sure to look out to next year’s crop as well. Should South American plant more and manage to avoid dry weather, November 23 beans could be a good value. Also, December 23 corn over $6 is a good place to start forward selling.
The next big market mover will be the September USDA Supply and Demand Report, which was released today. Then, markets will focus on harvest and final yields.
About the Author: Cathy Ekstrand is a senior market advisor with Total Farm Marketing by Stewart-Peterson. During her 17-year tenure, Ekstrand has offered the type of farm marketing service and advice that are essential to a long-term advisor/client relationship. She combines that advice with a warm, personal, and firm touch to help her clients pull the trigger on decisions that matter to their success. If you have questions, you can reach Ekstrand at cekstrand@s-pelmwood.com.
Disclaimer: 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. 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.
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