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.
Richard Brock, Brock & Associates
China has purchased more corn this year than ever in history. Much of that corn is to feed poultry and their recovering pork industry. The key question is: How long will this purchasing continue?
At this stage we can assume their purchases are a game changer and the bull market will likely continue. It is rare for a bull market to peak in the first quarter of the calendar year.
The second factor to watch is U.S. acres. With the large price premium on soybeans, soybean acres will be up substantially this year while corn will struggle to maintain 2020’s planted acreage.
There will likely be many changes on the political and trade front with the new administration. Will Biden and Vilsack be as pro export on agricultural commodities as Trump was? I doubt it. This administration needs to keep these trade policies in place.
For most farmers, prices are above break-even levels. I would market the first 30% based upon the profitability of my farm. Then I would look at the expected average price of the year and the technical trend. In bear markets it pays to be an early seller, in bull markets it does not.
In major bull markets corn and soybeans are almost always sold too early. It’s hard to imagine how high a market might go, so we sell too early.
The marketing tools to use have little to do with the year or commodity. What emotionally best fits you? Marketing should not be the most stressful part of your job. Use the tools that help you make it “more fun.” With that said, to maximize profits we like to spread our marketing out over various tools.
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