Could 2022 offer the same profitable opportunities as 2021? The outlook for corn and soybeans is optimistic thanks to strong demand and potential production shortfalls in South America. Yet headwinds are present. We asked eight analysts to provide their best estimates on price direction and market strategies you can put to use in 2022.
Brian Basting, Advance Trading
I am keeping an eye on China’s soybean crushing pace. It might be slowing, which could lead to weaker soybean imports and weaker prices.
The mix of corn and soybean acreage in the U.S. will be key. If expensive input costs persist and corn acreage falls, reaching trend yields will be very important.
Tensions around the globe (China, Ukraine and North Korea) could lead to price volatility. A key difference will be the world’s ability to cope with COVID-19.
Maintaining marketing flexibility goes hand in hand with locking in a floor for projected 2022 production. 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 sustainable.
Options are a grain marketing tool to help turn uncertainty into opportunity. They establish a floor for anticipated (or realized) production, but also provide the opportunity to participate in rallies. An advantage of buying a put option is if a crop problem surfaces (ex: 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.
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.
