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Top of Mind: Boring as Molasses

November 27, 2013
By: Jeanne Bernick, Top Producer Editor
 
 
JeanneBernick Spring

Most producers are trying to put the grain market’s year-end lows behind them. So what can we look forward to next year?

According to most analysts, the spring market will be stagnant. A rally of substance will require unanticipated demand, says Greg Wagner, president of GWX Ag Advisors. Global demographics, the number of people climbing the food chain and production capacity suggest there is prospect for higher prices, but not $8 corn.

"It’s going to be boring as hell—like molasses," says Bob Utterback, president of Utterback Marketing and Farm Journal economist. He predicts that through May, corn might only have a 50¢ to $2 trading range, depending on the weather.

How does the global market factor into prices? There’s been a surge in corn production, especially in Ukraine and South America. China is a wild card with its extraordinary social dynamic, urbanization and rising incomes. This makes it difficult for analysts to predict whether China will boost production or import more grain. However, there could an even bigger wild card. Reports from South America say farmers there will plant more soybeans and less corn, but nobody’s talking about any big supply curtailment.

Additionally, the value of the dollar has dropped. A weakened dollar isn’t all bad—it makes exports more marketable, but only if buyers have confidence in the currency. "There is a point where a value drop becomes bearish," Utterback says. "Once you start losing confidence, you have a quick transition."

Learn All You Can. Transitions and quick decisions are key to success. By the time this
column gets printed, the corn market could have turned on its head. That’s why you need to stay on top of things with as much business, management and marketing education as you can find.

I encourage you to come to our Top Producer Seminar Jan. 29-31 in Chicago. You’ll get the freshest market information, risk-management advice, human resource and business tips. Our team works hard to find new speakers every year who can provide a different perspective for your farm.

This year, one of our keynotes is Clyde Fessler, former Harley-Davidson vice president, who worked at the company during a time of great upheaval and turnaround. He helped change the brand and bring the company back from the brink of bankruptcy. There must be lessons we can all glean from his story. Learn more at www.topproducerseminar.com.

I hope to see you in Chicago! 

Jeanne BernickEditor of Top Producer
jbernick@farmjournal.com

 

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