Discipline Is the Name of the Game
While this never-ending crop year continues to linger, with harvest dragging on well into year end, basis levels continue to improve throughout the Midwest. With basis improving, that is a sign demand is strong, and the crop is indeed slow to come into the end users. (Or, more likely, the crop is smaller than trade is currently admitting.) Heading into year end, seasonally, corn and soybean futures prices will likely work higher. There will be opportunities to market your grain, and we want to encourage you to think about capturing those marketing rallies. Be disciplined about using those seasonal tendencies to pull the trigger.
Think about it, the market price will likely work higher into year end, in part due to the continued slow harvest, and in part due to the reality that this crop is smaller. Then, there will be some sort of weather scare in South America during a key part of their growing region that gives the grain futures one more boost to the upside. However, in February, the USDA will have its annual “Outlook Forum” where they will likely suggest that the U.S. farmer will plant unending acres of grain in the spring of 2020, and yields will be the largest ever in history. They’ll say the U.S. will again be awash in grain supplies. This event usually coincides with the reality that seasonally, grain prices start to work lower in late winter into early spring. Again, we want to encourage you to be disciplined about pulling the trigger on old-crop and new-crop sales during that midwinter peak.
Discipline is an essential component to farm marketing, especially when it comes to pulling the trigger on those cash sales. When working with farmers and their marketing, we’ve found that no matter how much time and knowledge about markets a person has, everything falls apart if there is no discipline. Discipline is required in two main areas:
- PRIOR PLANNING. Prior planning – what we have referred to in the past as market scenario planning – is very important. First, imagine all the possibilities of what the market might do (why prices could go higher or lower). Then, develop your strategy for each scenario. That way, you’ll be ready for whatever the market (global weather, trade deals, presidential tweets) throws at you!
- IMPLEMENTATION. When your market indicators signal it is time to act, implement your strategies! How many times have you been close to a trigger point on a cash sale, set months in advance, then when that signal is close to getting hit you cancel your order? Or you change the order to sell a smaller quantity? Or you don’t follow through because there is some market news that just sounds too tempting. That’s where lack of discipline hurts. Call your grain elevator in advance and place those target orders for cash sales! Really think about what percentage of your crop you want to be pricing at each target.
When it comes to your marketing, turn your attention inward and make a conscious decision about your strategies and your actions. Keep the end goal and your overall average price per bushel in perspective.
When you feel tempted to abandon your previously planned goals and strategies for whatever excuse or reason, stop and ask yourself if it’s really worth it. Take out your written reminders of your long-term goals and revisit them again. If the goals are still vitally important to you and the strategies still make sense, you should have no trouble choosing the right action.
If you have questions, you can reach Naomi at firstname.lastname@example.org.
The data contained herein is believed to be drawn from reliable sources but cannot be guaranteed. Neither the information presented, nor any opinions expressed constitute a solicitation of the purchase or sale of any commodity. Those individuals acting on this information are responsible for their own actions. Commodity trading may not be suitable for all recipients of this report. Futures trading involves risk of loss and should be carefully considered before investing. © 2019 Total Farm Marketing by Stewart-Peterson. Past performance is not indicative of future results. No representation is being made that scenario planning, strategy, consistency or discipline will guarantee success or profits. Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. No representation is being made that scenario planning, strategy or discipline will guarantee success or profits. Any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to Total Farm Marketing. Total Farm Marketing and TFM refer to Stewart-Peterson Group Inc., Stewart-Peterson Inc., and SP Risk Services LLC. Stewart-Peterson Group Inc. is registered with the Commodity Futures Trading Commission (CFTC) as an introducing broker and is a member of National Futures Association. SP Risk Services, LLC is an insurance agency and an equal opportunity provider. Stewart-Peterson Inc. is a publishing company. A customer may have relationships with all three companies. SP Risk Services LLC and Stewart-Peterson Inc. are wholly owned by Stewart-Peterson Group Inc. Unless otherwise noted, services referenced are services of Stewart-Peterson Group Inc.