It is time to start thinking a defensive mindset to protect prices from this recent rally. These strategies can help.
The next few months may provide the grain-pricing opportunities you have been waiting for.
Gas is currently the deal of the decade.
Early talk from many of the industry's analysts and advisers seems to focus more on the bleak price outlook in grains for the 2016 marketing year. This is due to gluttonous supplies of grains not only here in the U.S., but around the world. I heard one analyst suggest $6 beans and a different analyst suggest $2 corn in the coming year. Before you're scared out of farming due to low, unprofitable prices, let's look at what outside market factors might actually allow for price rallies in the coming months.
Sure, this coming El Niño is supposed to be one of the strongest on record, but do you know what happens after that passes? It's time to start thinking about extreme drying in the form of La Niña.
Harvest progressed quickly this year. The rains held off for most, allowing for an aggressive harvest pace. According to the most recent USDA weekly crop progress report, soybean harvest is now 77%t complete, and corn harvest is now 59% complete. At this pace, producers may be completely wrapped up with harvest, have their machinery cleaned and put away, and be waiting, relaxed, for the football game on Thanksgiving Day!
The market is aware that interest rates are historically low, and eventually they'll need to rise.
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A loss of 2.3 million acres is a big, big, big deal.
Coming off a bull market is always hard for producers. Add to this, the opportunities to price grain at still profitable points yet clearly significantly less than prior years, can be tough on the ego. And, it gets worse when those profits slip into breakeven or pass and nothing has been done. The thought of truly pricing in a loss stares you in the face; the desire to do nothing grows stronger. Hindsight is killer.