If you want to market your grain effectively in 2016, you might want to take a quick look back to 2015.
“There’s always twists and turns in the markets, and (when looking at last year), the biggest thing that comes to my mind is preparedness” and taking advantage of the marketing opportunities that arise, Brian Basting of Advance Trading said, speaking on U.S. Farm Report. “In the corn and soybean market, the entire calendar year came down to about a three-week window in that late June, early July time period when the market rallied."
The big event? USDA’s June Acreage and Grain Stocks reports, which showed lower than anticipated corn acreage and smaller than expected soybean stocks. Corn went limit up, hitting $4.22 for July futures and soybeans gained more than 50 cents to close at $10.56 for July futures.
“That was it,” Basting said. “You never know historically when the market is going to move, but being prepared and being willing to execute is essential to successful marketing ... Once the market gave that opportunity, it slipped away very quickly.”
Watch the U.S. Farm Report segment here:
On the first day of trading in 2016, March corn futures are trading at $3.52; January soybean futures are $8.65.
It’s a tough place to be for farmers, who are understandably worried about the bottom line impact.
As low as prices are right now, though, analysts do see the potential for upward price movements in the months to come.
“I think the most important thing is not to box yourself into a corner …” said Basting. “If you’re looking to do some forward pricing, give yourself some flexibility to be able to participate in rallies should they come. I’m not predicting rallies, but there are certainly a lot of variables out there that could give the market a boost, whether it’s South America, demand trends (or) U.S. weather trends, but be really careful in terms of marketing.”
It’s a situation that reminds him of 2009-2010, in terms of grain prices, market factors, and marketing psychology. “It’s like you go into survival mode, and the market’s trying to get you to price your grain at low prices,” Andy Shissler of S&W Trading said. “I think it’s going to be tricky … but I also don’t think there’s a ton of downside price risk and our upside is limited at this point.”
His advice to farmers? “Protect price with flexible marketing strategies, but leave the upside open.”
Watch U.S. Farm Report's "Markets Now" segment here: