There are a lot of factors that impact grain prices. The fundamental factors -- the supply and demand of grain -- have always been obvious and easy to understand. For example, when the weather turns hot and dry, supplies are threatened and prices move higher. (Just think of last summer and how the drought rallied prices!) Another example is when a USDA report shows a lot more acres than expected. All that extra anticipated supply triggers a drop in prices.
In general, prices will change when demand is much better -- or worse -- than expected.
Before I even started my presentation at a seminar last winter, a young farmer came up to the podium and quietly asked, “How much lower can it go? Will it ever come back?” He was very nervous that day. He was asking these questions just as the grain markets were collapsing.
We talked a little more, and it became clear he didn’t have his 2012 crop sold or any of his 2013 crop forward-sold. We had a few minutes before my presentation started, so I pulled out my long-term charts, and I showed him what I was thinking.
Lower grain prices are very likely by this fall.
In the 30-plus years that I have traded corn and soybean futures, I have never seen such bullish and bearish price potential at the same time. It will take a disciplined approach to make the right grain marketing decisions for your farm. Before you get busy planting this spring, write out your plan. Be sure to consider the bullish and bearish factors that could drive prices up or down.
4 Bullish Factors
Use this three-step risk-management plan.
Five marketing rules can help you do the right thing.
Here are five ways to fine-tune your risk-management plan this year.
There are five critical days to watch in 2013.
With increasing crop revenue, you can be optimistic about farm prices and profits.
Expect volatile markets again in 2013.