Volatilty Rules This Week’s Ag Markets, Analyst Says
Recent activity in the agriculture sector of commodities has certainly picked up in recent weeks, as impactful USDA reports and news events have pushed prices in strong directions.
The most recent is a surprise reduction in both corn and soybean acres on the March 29 acreage estimate. This was followed by tariff news last week regarding a limited number of commodities, which included pork, and then China’s list this week of over 100 commodities to incur tariffs, with soybeans at the top of the list.
Weather has been impactful, as well. Bottom line: volatility is picking up, and with increased volatility comes increased risk and opportunity.
The bean market has been very volatile in recent weeks. As of this writing, this week has experienced a high in November soybean futures at $10.60 and a low of $9.97¾, a range of over 60¢.
Corn futures have been volatile, as well, with December corn futures trading as high as $4.16 and as low as $3.96 within a three-day window.
Livestock prices have been on a steep downturn, as concerns of high supply and tariffs against pork sent prices reeling. Yet, on April 4, futures posted large bullish key reversals. May feeder cattle experienced a daily trading range of near $7.00.
Weather is becoming more of a factor for 2018 crops, as a drawdown in Argentina’s corn and soybean crops suggest tightening world inventory.
The investment community noticed soybeans, with managed money going from near-record short to near-record large in just a matter of weeks. Politics are now looming large as trade war rhetoric increases.
With volatility, the opportunity to sell rallies and buy price breaks increases. Both buyers and sellers will likely have opportunities. They need to pay attention and take advantage when opportunity comes knocking.
Now is the time to sharpen your pencil and reexamine your marketing strategies for the year ahead, before you get into the field. Make sure you have a well balanced approach. Use a combination of marketing tools such as forward contracting, hedge to arrive, futures, and options. Learn which tools are best suited for you and learn how to implement these with confidence.
If you have questions or comments, or want help developing your own marketing toolbox, contact Top Farmer at 1-800-TOPFARM, ext. 129. Ask for Bryan Doherty.
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