As the last few days of December 2013 fly by, it's a great time to reflect on the past 12 months. Farmers had an interesting year, one that provided some key learning opportunities.
Before we put this year to bed, let’s think about what lessons 2013 provided that will be useful in the coming years. To do so, we polled four market analysts. Here is what they learned.
Lesson #1: In 2013, the best time to sell your grain was yesterday.
Kevin Van Trump, president of Farm Direction, says 2013 was the year of "Could of, Should of, Would of…"
"This will go down as one of those years when the markets have caused many producers to kick themselves," he says. "We were lucky enough to make some fantastic early sales up above $6 but in hindsight should've done more and would've done more. But we were a little uncertain about our overall production when we had the opportunity."
Lesson #2: Crops can take a lot more stress than we think.
Late planting plagued much of the Corn Belt, especially in Iowa. Back in July, only 12% of the state’s corn crop was ranked excellent. Yet, many were shocked with the markets didn’t react to the poor crop seen in Iowa.
But as the season progressed, the crops made a big turnaround. "The 2013 growing season will be remembered for how well crops did despite cool temperatures in July and a hot and dry August," says Ted Seifried, vice president of Zaner Ag Hedge. "Genetics have really come a long way."
Rich Nelson, chief strategist at Allendale, agrees. "The corn and soybean crops fared much better than expected," he says. As always, it never pays to count your chickens before they are hatched.
Lesson #3: Don’t underestimate the hungry dragon.
China continues to be a major player in global grain consumption, says Tim Hannagan, grain analyst at Walsh Trading.
"Their massive needs for high-protein crops challenged the world’s record bean production to keep pace with their demand," he says. "2014 will be the same challenge."
Lesson #4: Markets can change fast.
"The most interesting feature for us was how quickly the market was able to price ration corn demand at record highs in a down economy and how slowly demand has been to come back at lower corn prices," Seifried says.
"2013 has been a lesson in how the strength or weakness of the world economy affects the elasticity of grain demand," he says.
Lesson #5: Easy money in grain production may be over.
For the past few years, farmers who forward contracted their grain missed the major price rallies. It was literally better to do nothing when it came to marketing. But Nelson doesn’t think that will be the case in the future.
"Unless you are in the middle of a 30-year drought," he says, "you must market your crops and take advantage of high prices while they last. 2013 will also be remembered as the transition period back to normal prices from the 2010 – 2012 production years."
What will the 2014 markets hold? Read AgWeb's 2014 Market Outlooks.