Good Goal: Lose A Little Money Next Year

January 6, 2014 09:00 AM
Good Goal: Lose A Little Money Next Year

For many people, the start of a new year represents opportunity and hope. But many producers entering 2014 might not share those sentiments, experts tell the U.S. Farm Report Market Roundtable.

"(If) you buy the best crop insurance and you’re happy with your insurance guy, you’re happy with your futures guy, you still might be looking at a loss," says Tommy Grisafi, Trade the Farm. "If a producer thinks, ‘I’m working with the best guy in the whole world, I’m going to make money next year,’ if your inputs are higher than the cost of production, you’re working with negative numbers. So maybe just losing a little next year is a good goal."

Another challenge facing producers is the wealth of information thrown at them daily, including in magazines, radio, TV, the Internet and social media, says Jim Bower, Bower Trading.

"We’re going to narrow it down so we have fewer and fewer opinions in order to make that decision correctly," Bower says. "In other words, let’s get the data down to the point where we can make a trade, we can make a sale, we can make the correct decision. I just feel that there’s been so many people shove so much information at these producers, I think they’re confused. And they miss opportunities that should have been there, and I’m including myself there in too much information overload."

As for the Jan. 10 reports from USDA, producers and market types alike are probably ready to look past them.

"I just dread the thing (the January crop report)," Bower explains. "It approaches demand factors, it approaches production factors, it approaches acreage factors. It all has to blend together in one, and what the trade perceives as opposed to what the USDA perceives. Of course that’s historically, the last two years, been a situation where we have high volatility, a lot of uncertainty going into it. Hopefully this year it will be much calmer, and we can go into the New Year with a standard set of data that we can use to make good decisions throughout the rest of the year."

While Grisafi says he has the benefit of going into the report flat, the same scenario isn’t true for producers.

"I think if you’re long corn, you might be long a little bit from ’13, you’re long a bunch from ’14, and most guys have nothing sold for ’15," he notes. "So no matter what the producer thinks, they’re going into the report long unless they have cows or pigs, maybe they’re short on grain and they can buy corn down 25 cents. That would make them happy. But the majority of the crowd is rooting for a higher push in the prices on these reports, and that may not be the way, but that’s what people are hoping for."

Click the play button below to watch the complete U.S. Farm Report Market Roundtable:

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