Commodity Classic Insight: Picking Farmers’ Minds
While attending Commodity Classic this year, I was able to collaborate with some of the best farmers in the country. I asked their top questions and concerns as we continue into 2019. Here are the top three takeaways from those conversations:
1. Slow Start to Spring Fieldwork
Normally at Commodity Classic (always held in late February/early March), we hear stories about how the farmers in Texas are plugging along with planting already, and how farmers in Alabama and other Southern states will start their spring planting within days. Not this year. There was very little talk of spring planting progress. In fact, with the multiple blizzards in the Midwest this year, on top of a very slow temperature warm-up expected during the month of March, it seems like spring planting will be later than normal this year. Add to it, the soil is already saturated underneath all this snow. It will make drying out hard. And, as we flew from Wisconsin down to Orlando, the rivers were all swollen and full – abnormal for this time of year. Plus, because of the late harvest last fall, due to rainy conditions, the fall fieldwork was not completed. While the crop will eventually get planted farmers are wondering, “How will the stand look, especially if crops are mudded in?”
Will farmers in the South be able to get the corn planted in a timely manner? Or will acres have to get switched to soybeans, or in some places cotton? Will they be able to apply additional inputs to help with the growing quality of the crop itself? Or will the soil stay too wet for too long? With the potential for less inputs, will the crop be able to have optimal yield later this year?
2. Trade Deals
We are still weeks away from a potential trade deal with China, hoped to be concluded in late March. A lot of uncertainty and gossip continues to swirl around potential breakthrough deals for U.S. commodities. Will China buy any additional amount of soybeans? What if they come in and buy corn, ethanol, or DDGS? This, in my opinion, is the biggest potential trade deal to watch. Any new demand that could surface in corn is NOT priced into the market yet, and could add tremendous price support. Some are hoping and watching for more beef or pork to be exported to China, as well.
3. Realistic Price Trading Ranges for Grains
Price outlook – it was by far the biggest conversation. Most producers had a good handle on cost of production and knew the price targets they were interested in for making old- and new-crop sales. Price targets were realistic based on current market information. We talked about trading ranges that corn has been trapped in for the past four years, and what it would take to get corn to trade through those ranges. It was evident farmers had been doing their homework this winter regarding grain market fundamentals and technical charts.
It was also important to have those conversations about scenario planning for the ‘what if’ conversations of less than ideal yields this summer due to weather or the reality that farmers are potentially spending less on inputs. We talked about what it would take for December corn futures to actually penetrate through that $4.50 technical resistance or for November soybean futures to trade above $10.00. Insightful conversations took place about how to best prepare for that possible scenario, that scenario prices really may just be stuck in that same trading range, and how to best pull the trigger or stick to their disciplined strategies.
While there was plenty to say and hear at Commodity Classic, these three thoughts were the most stated by producers. As 2019 planting progresses, it will be interesting to see how things move, or don’t move. No matter what happens, it’s always good to be prepared, have a plan in place, and watch worldwide and local activities.
If you have questions, you can reach Naomi at firstname.lastname@example.org.
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