By John Berry
Most of the time, people don’t want to talk about grain prices. This is especially true in a down market. When markets do not meet our expectations by going sideways or worse yet going down – it can be difficult to stay focused on effective marketing. Typically, we may be feeling that we missed a good price and are concerned a recovery is not likely.
When someone does want to talk about grain markets, I try to remember two significant concepts. One is the strength of your local basis and the other is seasonality. As our local cash price is a blend of futures and basis, a strong local basis is one clear sell signal that depends more on our conditions than those of a producer in the Midwest or Plains States.
The way seasonality makes sense to me is that 80 percent of the time the most favorable grain commodity futures price is found in March, April, and May. As prices evolve over season after season, we see this price tendency that repeats itself on average at least the past 38 years for corn, soybeans and wheat.
Did you ever read the research report that monkeys throwing darts are better than commodity brokers at spotting a pricing opportunity? (This monkey is out of darts). I am remembering a quote from a casual mentor at the University of Nebraska - “the trend is your friend”. For any remaining 2019 preharvest pricing I am watching the moving average like a hawk. When the uptrend takes a break, it may be time to consider additional pricing.
I don’t know about you, but it still stings when I think about not believing that a lengthy global trade skirmish was possible, or the economic turmoil it could precipitate. There were way too many soybeans left exposed.
Given some areas are wet, some are planting, and some areas are harvesting; I expect most acres will be planted in a more-or-less appropriate time frame under favorable weather conditions. Should this assumption come true; what will May 2019/2020 prices do?