The rare occurrence of a downtrend in supply and an uptrend in demand put the grain markets on an upward trend to close out 2020. For 2021, be prepared for a good old-fashioned acreage battle. In response, create a disciplined marketing game plan. We asked eight analysts to provide their best estimates on price direction and market strategies you can employ in 2021. Here is one of eight.
Mark Gold, Top Third Ag Marketing
Grain markets try to force producers out at cheap prices. Cheap prices cure cheap prices.
When everyone is bearish, look for buying opportunities. When everyone is bullish, sell it.
The factors I’m watching for grain prices are:
- Chinese demand.
- South American weather (in January and February).
- U.S. weather in the spring and summer.
We will have to see if President Joe Biden wants to expand Chinese demand. Additionally, we must watch the COVID-19 situation. Will the vaccines be enough to help worldwide demand bounce back to pre-COVID-19 levels?
I know many farmers look at break-even levels to know when to market some of their grain. It is imperative to know your breakevens as a measure of your efficiency compared to your neighbors, but not as a tool to determine when to make cash sales.
Soybean prices are at four-to-five-year highs. Your old-crop should be sold and you can reown with call options. New-crop soybeans should be protected with September put options.
Old-crop corn should be sold and reowned with call options. Sell 10% to 20% of new-crop corn, using put options to protect unsold bushels.
Read More
Bill Biedermann: Grain Demand Curves Have Shifted
Brian Basting: Lock in A Floor, Maintain Flexibility
Richard Brock: Use the Right Tools to Make Grain Marketing Fun
Alan Brugler: Compute 12-Month Price Targets
Naomi Blohm: Watch Global Energy Policies
Gain more grain marketing insights at the 2021 Top Producer Summit. Register now!
Disclaimer: This material has been prepared by a sales or trading employee or agent of these analysts and is, or is in the nature of, a solicitation. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions and agree that you are not, and will not, rely solely on this communication in making trading decisions. The risk of loss in trading futures and/or options is substantial and each investor and/or trader must consider whether this is a suitable investment. Past performance, whether actual or indicated by simulated historical tests of strategies, is not indicative of future results. Trading advice is based on information taken from trades and statistical services and other sources that these analysts believe are reliable. Such information is not guaranteed to be accurate or complete, and it should not be relied upon as such. Trading advice reflects good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice provided will result in profitable trades.
