Roy Smith: Dog days
The month of August is sometimes referred to as the “Dog Days of Summer”. This is because of the normally uncomfortable hot and humid weather before conditions start to get more favorable in September. The grain markets in August have usually discounted the prospects of a good crop in the field and are headed for lower territory. Sometimes there is the possibility of an early frost or late season spell of dry weather which causes a small rally instead of a stagnant market.
My research on seasonal trends in grain markets indicates that February could be called the “Dog Days of Winter”. The sun sets earlier than in the previous month, but there is not enough heat in it to keep away the frequent cold spells and snow storms. The weather is too cold even on nice days to make outside work very productive. This year even the marketing business, which usually keeps my mind occupied in these long dreary days, is going very slowly.
In February I usually watch the markets for a significant low in prices before the grain trade starts becoming concerned about the battle for acres between the different grains or the possibility of delayed planting from wet weather. I am usually occupied with doing a lot of marketing meetings while farmers do not have to spend their days in the field.
February is different this year. Prices have been in a long gradual uptrend since the harvest low in October. Instead of looking for a winter low, I am looking for signs of weakness which has been noticeably absent for many months. With cash corn at $6 and soybeans at $13, the demand for marketing meetings is less than normal. The ones I have had were four or five hours away. This raises the stress level without improving the profit level! The weather is better than last winter, but I still have had to work around snow storms every time I have traveled.
I would like to have something profound to say every time I stand in front of an audience or sit at my computer. Fortunately or unfortunately, depending on your perspective, instead of proposing strategies based on long term historic experience, I am pre occupied with trying to blaze a trail through an economic situation in which grain prices are at historic levels, with production expenses sure to catch up some time.
It is easy to be profitable with today’s grain prices. Making the economics work when the adjustment is over will be much more difficult. February is a good time to try to look ahead and develop strategies for when the price relationships between income and outgo are not so favorable. I am tentatively scheduled in March to participate in a workshop on leasing arrangements at the ARDC in Mead, NE.