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This little thing called apathy
When talking with producers about selling their crops over recent weeks, there is an overwhelming sense of apathy on the part of many. In my conversations with producers, I hear things like,
"Well, the fundamentals are still bullish, so it's not like we'll see $2.00 corn ever again."
"No one thinks the price will go down."
And my personal favorite, "I'm waiting for one more push higher…then I'll pull the trigger."
Apathy, or showing a lack of interest in marketing grain or livestock, can be dangerous. With this approach, a producer is subject to "reacting" to market prices and selling on a whim, rather than strategically and with discipline.
Perhaps that's why many producers get frustrated with marketing. When it is not done consistently, it can be frustrating, emotional and ultimately unsuccessful. You find yourself listening to or reading the news, looking for that last piece of information that will satisfy you before you act. You are basing your decisions on information you've collected, not on strategic goals you've set for yourself.
While it is true that the fundamentals are currently friendly for grains from the supply perspective, keep an eye on demand. What if the U.S. dollar rallies substantially higher and exports slow? What if Congress tweaks blenders' credits and demand for ethanol slows? This market only needs to hear any small piece of negative news which will create a perspective or notion that ending stocks are growing, thus creating the conditions that allow prices to fall.
When that happens, when the signs begin to appear that it is time to be sold, will you be ready, or will you be reeling? Are you prepared with your strategies? Use this time to be calculating your average price per bushel when sales are made or various tools are used to protect a certain price. This is the "market scenario planning" I have written about before.
Do it now, for this reason: High prices cure high prices, and many commodity prices now are currently at or near historical high values. Now is the time to think about your average price per bushel as it stands, and investigate pricing opportunities at your local cash marketplace. History has shown us that high prices don't stick around for too long.
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