Crop producers should take advantage of lull in markets

by | Jan 17, 2019 | 5 Ag Stories, News

The partial government shutdown and little to no activity on the United States/China trade front have created a lull in the grain markets. Market analysts are encouraging crop producers to take advantage of this moment.

The grain markets have reached a “little bit of a standstill,? says Jim McCormick, senior adviser for Allendale Inc. Producers may not view this as positive news. However, McCormick sees this as the perfect opportunity to focus on crop marketing plans.

?Now that it’s slow, we want to encourage producers come up with a game plan. Decide what you?re going to do for this year?s crop, as well as what you?re thinking marketing wise for next year?s crop,? McCormick said. ?Come up with some ideas. Where is profitability? Where can you market grain? Think about that.?

Brian Grossman, market strategist with Zaner Ag Hedge, says “The importance of having a marketing plan is removal of emotion.” By removing emotion, producers have a clear vision of cost-effective prices and profit taking opportunities.

?Right now, guys have more time to watch markets and make a little more of a planned out decision,” Grossman said. “Often, we see seasonal highs hit during the middle of planting season when you don?t have time to watch the markets. You might not even to have time to answer your phone. Even if you do answer your phone, there could be a hundred things going wrong. You don?t have time to put concentration into what you are going to sell this grain for.?

Grossman rarely recommends banking on rallies, and here’s why.

?I would not be counting on the big rallies,? Grossman said. ?Over the last five years, we?ve become accustomed to corn trading over $4, soybeans trading over $10. We have to realize there?s a lot more grain out there. Corn has a strong fundamental story. But, if South America cranks out a massive corn crop, the fundamentals – even on the global front – can quickly change. You have to have a plan because something, somewhere is going to change and something, somewhere is going to go wrong. The market is going to react and we have to prepare for that.?

NOTE: Jim McCormick, senior adviser with Allendale, is featured in our Opening Market program on Wednesdays. Brian Grossman, market strategist with Zaner Ag Hedge, is featured in our Opening Market program on Fridays.