Grain Exchange – 4-27-2021
Planters are starting to roll in much of the state. Pulling the farmers focus away from the market and into the involvement of getting seed into the ground to start a new growing season. Do not let the markets slip out of daily agenda items. Over the last week, we have experienced a strong rally in corn, soybeans, and wheat for old crop and new crop grain. Understanding when to sell grain in a rally is always a tough decision because everyone always wants to hit the top.
That leads me into the discussion of opportunity management. Many times we talk about risk management and how to minimize risk. That is a good topic when it comes to safety practices, but not grain marketing. If one is trying to limit risk, it is too late in their marketing practices. They are playing catch up as the market is starting to move lower.
That moves me into another area which is understanding when one should sell. Many talk about breakeven targets and what numbers an operation needs to keep running. That is a great tool when it comes to understanding bottom lines and where the absolute minimum one can sell is. Here are some questions to think about when deciding it is time to sell. What do you really want to make this year? What are those goals for your business that you want to meet? Is selling something now proactive? Would selling a percentage at current price ranges meet my target goals? When figuring out what one truly wants to make per bushel can determine how you need to market. If that is selling cash on rally days, setting basis, or placing offers to meet market highs. At the end of the day, humble yourself and do not lose focus that current sales are at profitable levels.
Over the last week and to current, the market continues to present great prices to producers. Do not let this rally slip out of your hands. Take the OPPORTUNITY to make a sale at profitable levels that will improve your business. Many people have granted this rally to several different reasons. Some influencers are the dry weather in the US and South America, a belief that South America’s crop will be smaller, and that China is still buying large volumes. These are all strong reasonings behind a rally in the grains. One item to not lose focus on is the large number of outside investors putting funds into the commodity market. This is something that has influenced the strength of this market. Also, continue to watch the US dollar strength. Understanding what the US dollar is doing compared to the Chinese’s currency is a standout aspect in the commodity market. To understand the market and where it is moving, do some digging. Market information is all over the internet but look at multiple sources and see all points that are being presented. Continuing to learn is another tool in your marketing toolbox.
Next week on May 2nd new trade limits will be in placed for market open on May 3rd. The new limits will be as follows:
Corn: 40¢ per bu. (currently at 25¢ per bu.)
Soybeans: $1 per bu. (70¢ per bu.)
SRW and HRW wheat futures: 45¢ per bu. (40¢ per bu.)