Friday, November 16, 2012

Wow's and What's News letter article

Wow!  What????

Our grain markets seem to have plenty of “Wow’s!” and “What’s”.  Are you prepared for the next one?  Where you comfortable for the last few surprises our markets had?  It is never easy to know what the next curve ball producers will face in marketing their grain.  Look at some of the curve balls we had this past year.

First last spring we had USDA reports that forecasted nearly a 2 billion bushel corn carryout on yields over 160 bushels per acre.   It had some predicting sub $4.00 corn. 

 We followed that up via perhaps the worst drought since the 30’s.   When corn got to 8.00-8.50 on the board some thought we could have 10.00-12.00 corn; at the same time when beans hit nearly $18 talk was of $20 or $30 beans.

 Now we are in the process of balancing out demand with our somewhat known supply.  But even that supply is still debated and will be into the January crop report.  A report that has seen some limit type move in one grain or another every year since 2008. 

Presently as I write this we have our government dealing with a fiscal cliff; one that hopefully will be resolved by the time anyone reads this.  But a more then scary situation and possible huge implications on the funds and their investment attitudes.  Some days they are risk on buying everything and other days they are risk off selling everything.    They tend to help our markets over due things and make the extremes tough to swallow at times.  Presently we also have huge demand for soybeans leaving some still thinking we have 20.00 beans in the future; while some other analysts are out there thinking 9.00 corn will still happen.  For wheat there are many comparing the world wheat situation to 2008.  But on the flip side others are talking about huge South America bean crop; thinking that we will plant fence row to fence row next year and with normal yields we will be swimming in grain.  Many are already predicting sub $4.00 dollar corn next year and sub $10.00 beans.  The possible extremes depending on weather and what the headline catches the funds attention are more than extreme.

Bottom line is our industry will always have lots of unknowns that lead to a lot of “what’s” and “wow’s”.  The only thing we can do in marketing is be prepared; be comfortable not knowing for sure what direction the next big event will be.  I think our markets are at very profitable levels but my personal bias remains slightly to the upside; yet I think that everyone knows that the right thing to do when it comes to marketing is to take risk off the table at good profit levels; making sales that make $ense; yet NEVER getting oversold.

Many have done a good job getting them self comfortable via making smart good business decisions or profitable sales over the past several months.   If you want help the MWC Grain Team is willing to help you.  We can sit down and do up a marketing plan for you; come up with a strategy that helps get you comfortable for the unknown future.  We can’t pick tops nor are we ever going to try to; but we can take a fundamental and technical look at the market and tie that into what makes good business sense for you and your operation.    We can come to your farm and write up a grain marketing plan or you can schedule an appointment at our office.  Just give us a call if you would like some assistance writing up a grain marketing plan.

Along those risk management lines we want to make sure everyone is getting our mid day update; which is a voice update around noon everyday on what the markets are doing plus a little reason why.

We also will be sponsoring a couple of Grain Marketing workshops.  First on December 19th in Philip and December 20th in Pierre. Both Kevin Van Trump from farm and Tregg Cronin from CHS Hedging will be speaking in Pierre; while Tregg will be speaking in Philip.  Make sure to join us to get a little more market insight.

Lastly I want to thank all of you for your patronage this past year; we are hoping you enjoy some decent patronage paybacks early next year and most importantly wish you and your family the best this Holiday Season.

Happy Holidays!

Jeremey Frost

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