Is 2023 when the shoe drops? Or will it provide some of the same profitable grain marketing opportunities as 2021 and 2022? Questionable corn demand and expected production highs in South America bring major questions to the corn and soybean outlooks. Yet positive factors are evident. Top Producer asked eight analysts to provide their best estimates on price direction and market strategies you can employ this year. Here is one of the eight.
Brian Basting, Advance Trading
High prices will cure high prices. It is already occurring with acreage increases in South America and demand destruction in various regions. With their new trade agreement with Brazil, China is likely to import less corn from the U.S. in 2023. Ongoing uncertainty surrounding COVID-19 lockdown rules could hamper growth in Chinese protein demand. Finally, with domestic and worldwide supplies still tight, reaching trend yields in the U.S. will be important.
In addition, the war between Ukraine and Russia will directly impact exports of wheat and corn from the Black Sea.
Maintaining marketing flexibility goes hand-in-hand with locking in a floor for projected 2023 production. In a marketing environment of volatility, it is important to defend your balance sheet and acknowledge prices do not always follow seasonal trends. All too often we see producers willing to take a small profit, yet they take large losses. This is not a sustainable strategy.
The outlook for 2023 is filled with uncertainty. Options are a marketing tool that help turn uncertainty into opportunity. They establish a floor for anticipated (or realized) production, but also provide the opportunity to participate in rallies. A key advantage of buying a put option is that if a crop problem surfaces (e.g. 2012 drought), bushels are not committed to be delivered.
It is also prudent to add cash sales to your portfolio in addition to the long option purchases.
Read More
Mark Gold: Protect Profitable Prices with Put Options
Alan Brugler: Consider Grain Holding Costs and Set Price Floors
Matthew Kruse: Avoid Market Noise and Stay Focused on Price Targets
Naomi Blohm: Use Seasonal Grain Tendencies to Your Advantage This Winter
Bill Biedermann: The World Needs Both North and South American Bin Busters
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.
