While there’s money to be made in a market boom, crops still need to be priced into a falling or fallen market. Deciding on when to make those sales can be much more stressful in a deflationary period, but there are factors to watch in the coming months that may present pricing opportunities into small rallies.
Ben Buckner, chief grains analyst for AgResource Co., says that commodity markets had a lot going for them for some time — high demand, production risks, supply chain issues, and ethanol and renewable diesel mandates kept prices firm.
This current deflationary price period with adequate to abundant supplies and a tougher demand picture means that farmers need to be watching for changes in weather risk, demand shifts, and currency risk, too. A strong U.S. dollar really bites into the purchasing power of several buyers, he says.
Buckner says you’ve got to “acknowledge the cycle,” but there will be opportunities to price into rallies. Farmers grappling with the question of planting corn or beans need to be ready to forward price corn, if that’s the route they take, he cautions. Right now, it does pencil out better than beans, but managing price risk will be key.
There are opportunities for some commodities, looking ahead. Food markets and still strong and the livestock sectors, especially cattle, are in for a better year than most.
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