How to Ride Out a Rocky Market
Corn and soybean markets have been discouraging lately, to say the least. Trade uncertainty, changing world demand, fund positions, and large crop projections have created a crazy environment around commodity prices.
It’s natural to fear what’s next and wonder what you can do to keep your operation on sound footing. While we don’t pretend to have all the answers at ADM, we do want to reach out and remind you we’re available to help. We’d also like to offer some perspective and guidance on constructive steps you might consider taking over the coming weeks.
1. Review the Facts
It’s only late June, so don’t lose hope. Typically, at this point in the growing season we see volatility and price declines as yield projections and weather take shape. In fact, last year, soybeans saw a low of $9.07 on June 23, then gained back $1.36 by July 11. There’s no guarantee this will repeat—we may be in different times and different markets. But resist the temptation to panic and make emotional decisions. Instead, prepare for a market that may continue to swing on its way to a possible recovery. More often than not, volatility can be a net benefit for producers who have a plan to execute on a moment’s notice.
2. Give Yourself Credit
Take pride in the sales you’ve made and any forward marketing you’ve enrolled in up to this point. There’s good reason to feel positive: Our ASP Corn contract is capturing a solid price, and bushels enrolled in ADM Advantage Expert are performing well above the underlying markets. These are successes to celebrate. Learn from any regrets too, and apply your experience to decisions moving forward. These markets illustrate why it pays to have a proactive grain marketing plan.
3. Reset Your Plan
If there ever was a time to get in the driver’s seat of your farm’s risk related to grain marketing, it’s now. Sit down and rework your costs, yield projections, breakeven, and potential indemnity payments. With those fresh calculations, it’s a good idea to:
- Evaluate Risk and Impact: Decide whether to focus on old crop or new crop. Which one represents your biggest risk—or your biggest opportunity to make an impact? Time is your friend right now on 2018 bushels—or even on next year’s crop. Make sure you’re looking far enough ahead.
- Protect Your Risk: Depending on your situation, there’s nearly always a way to alleviate some worry. You can count on your local ADM rep to provide anything from a listening ear, to help mapping out a plan of action. If we know your targets and preferences, we’re confident we can help you navigate chaos.
- Think Ahead: With harvest around the corner, think beyond today. Maybe you could use another perspective. It’s our top priority to understand your specific situation and help you get where you want to go. You won’t feel pressure to do things that don’t fit. You’ll simply get suggestions for a path forward.
In markets like this, it’s tempting to either react and make wrong moves, or become immobilized. The middle ground is constructive action. To stay in the driver’s seat of your operation, pause and reflect. Review and learn from your decisions so far. Then move forward with a plan of action on the factors you can control.
We would love the opportunity to earn your trust and respect for the collaborative way we approach grain marketing at ADM. If you want to talk through any of these thoughts, don’t hesitate to reach out to your local ADM representative. We have many ways to help you understand your grain marketing picture—and we’re ready when you are. You can find us at ADMfarmview.com or check out our variety of possible solutions at ADMadvantage.com.
Past performance is not indicative of future results.
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.