So the Report Was Bearish for Corn... What Will You DO About It?

Published on: 10:45AM Jul 02, 2009
The corn market is bearish as prices factored in a very surprising USDA acreage report. Pre-report estimates suggested corn acreage at 84.158 mil, and instead the reported figure of 87.035 was well above even the range of estimates. With this spring’s wet planting conditions, many are somewhat surprised by the report.
Did you guess right? Or were you one of the surprised? Remember, in the big picture, it matters more what you do than what you think.  While reports sometimes change a trend temporarily, this report only accelerated a trend that was already in place. With such a downtrend, being heavily priced before the report, through the report and in the weeks that follow is the wise strategy. You see, the report caused a lot of short-term volatility, but it didn’t do much to change the long-term trend, and it shouldn’t change your wise strategy in response to that trend. In a few days, the volatility will settle down and all the hoopla and news surrounding the report will be behind us--nothing more than a distraction.
So don’t be distracted. Spend your valuable time thinking through your strategies so that if there is a trend change, you are ready to act. And if the trend continues down, you react by having adequate coverage in place.
Be sure to have the discipline in place to act. Discipline is key in marketing. You need to have the discipline to develop your strategy, track the indicators you are using, and implement your strategies when the signals are hit. It is far too easy to let an important market signal be hit and slip past you without acting on it.
Take for instance this planting season: You may have had a trigger point you decided on many months before and reaffirmed many times over, but when that signal was hit, you didn’t follow through because there was some market news that just sounded too tempting, like bullishness due to wet planting conditions. Then you were surprised by the bearish USDA report, and you regret your decision to wait. Now the price is too low, so you wait and hope it bounces back.
We have a saying in our office that “hope is not a strategy.” Hoping that prices go a little higher is not disciplined marketing. Rather, it is the strategic, disciplined marketer who has the most hope for taking advantage of opportunity in the market in the long run.
Scott Stewart is president and CEO of Stewart-Peterson, a commodity marketing education and advisory firm based in West Bend, Wis. You may reach Scott at 800-334-9779 or email him at [email protected]