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2019 Grain Markets: Planning is Imperative

With trade wars still playing out, the new year needs more discipline than ever.
By ADM Grain Marketing
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It was a challenging 2018. The year started with positive news: projections of record soy demand and weather issues in Argentina. But then we had a perfect storm: a trade war, a better-than-expected South American crop, and another huge U.S. harvest. Mid-summer saw a dramatic drop in commodity prices that’s still trying to recover.

When you seem to lack control, it’s hard to get motivated for a new crop year. We get it. So our January podcast, In the Driver’s Seat: Make 2019 Work, provides a market outlook and encouragement to take the first steps.

Our guests are Becca Burns, Product Line Marketing Manager for ADM, who also helps market grain for her own family farm; and Paul Scheetz, Manager of the ADM corn and soybean plants in Iowa. Listen to the podcast below.

 

 

Here are some highlights from Paul and Becca’s comments:

Global markets matter. We’ll still be working through a world soybean surplus environment, and we’re still going to be navigating through trade policy negotiations. Hopefully some of the trade issues get resolved and we build back the soybean demand.

Price volatility is normal. We’re always within six months of another major harvest – and production issues that can suddenly and drastically change our supply and demand numbers. Argentina’s weather proved that last year. In soybeans, there’s been close to a $2 swing every one of the last four years. We don’t see anything special about 2019 that would change that level of volatility.

Simple steps work. Every year, no matter what, there is some sort of unexpected event. Regardless of circumstances, there are very simple and effective ways to go about planning:

  • Look at what acres and crops you’ll be planting;
  • Anticipate your yield based on recent history (don’t under-estimate);
  • Plan insurance coverage to establish protection levels;
  • Using a pie chart, allocate new-crop portions to various marketing strategies;
  • Share your price targets with your ADM representative who can look for opportunities to reach them.

Every year, no matter what, there is some sort of unexpected event. Regardless of circumstances, there are very simple and effective ways to go about planning.

Set “sell by” dates. Decide how much to forward market in certain types of programs, and also put time stamps on your forward marketing: How much do you want to sell by spring planting? How much going into summer? Ahead of harvest, where do you want to be? Be defensive where you need to be, but also be on the offensive early in the year.

Observe seasonal trends. It’s easy each year to find a “black swan”—a reason  why seasonal contracts might not work. But we still believe that consistently marketing a portion of your bushels during historically better pricing windows (spring for corn, summer for beans), will be beneficial more years than it isn’t.

Key contracts close on January 25. Paul and Becca discuss two ADM forward contracts that have a sign-up deadline of January 25:

Get off the emotional roller coaster you rode in 2018. Block off some planning time in January and identify price levels that work for your farm. If you share those goals with your ADM representative, we can help get you closer to what you need, no matter what the markets do.

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ADM is providing this communication for informational purposes, and it is not a solicitation or offer to purchase or sell commodities. The recommendations in this communication do not take into account any particular individual’s or company’s objectives or needs, which should be considered before engaging in any commodity transactions based on these recommendations. The sources for the information and recommendations in this communication are believed to be reliable, but ADM does not warrant or guarantee the accuracy of the information or recommendations. ADM or its affiliates may hold or take positions for their own accounts that are different from the positions recommended in this communication. The information and recommendations in this communication are subject to change without notice.