top of page
If You Haven't, Try Our Daily Grain Market Reports FREE for 30 Days!

Tidbits, Seasonal Marketing, Rain Days Update 11/19/23

Highlights


Last Thursday, JPMorgan’s head of energy strategy, Christyan Malek, warned that the $16 decline in crude oil prices the past 4 weeks was driven by Commodity Trading Advisors (CTAs) shorting crude oil. Malek said the oil market discounted the chances of deeper production cuts during OPEC+’s Nov 26 meeting, which he thought are needed to get ahead of demand weakness in early 2024. The market must have listened to him as December crude futures were up $2.99 Friday.

 

Yesterday, the Financial Times (FT) reported OPEC+ is weighing further reductions in response to falling prices and rising anger over the Israel-Hamas war.

 

There is decidedly less rain in the forecast for the dry areas of Brazil this morning than there was Friday afternoon. It will rain this week, but the total predicted rainfall is about 35% less than 36 hours ago. Rondonópolis, in the heart of Brazil’s corn and soybean country, has not had any measurable rain since a trace on November 9th.


 

Seasonal Marketing


Roger has very painfully developed, over the decades, progressively more respect for seasonal price trends. Almost every year, one can say, “I know the seasonal trend turns down this week, but this year is different!” Yes, every year is different, but 9 out 10 years, the price action is the same.  

 

Several months ago, Eugene recommended we change our seasonal price charts from 30 and 50 year history to a shorter price history because the markets have changed so much since 2000.

 

Twenty years ago, China was the major competitor for US corn exports, Brazil was a net corn importer, Ukraine and Russia had just become minor net exporters of wheat after the Soviet Union collapsed in 1991. The Soviet Union was a huge importer of wheat and corn.       

 

Now, China, Mexico and the EU rotate from year to year as the world's leading corn importer. Brazil and the USA compete to be the world's leading corn exporter. Russia is the world's leading wheat exporter, with Ukraine the #5 wheat exporter and #4 corn exporter.

 

Now, to the bigger “making money” picture. You have the marketing tools to lock-in the futures price on a very high percentage of your corn, wheat, and bean production any time you want to do so.

 

We plan to tell you to do just that when the seasonal trend shows that it should be done if the price is profitable. If the price is not profitable, do not price anything at a loss. Why?

 

It is an established fact that, in a supply and demand market, the average cost of production equals the average price received in the long run.

 

That means the price will not stay below the cost of production nor will the price stay above the cost of production. We will not be selling below the cost of production unless government policy makes it clear prices will be below the cost of production for several years, like it did in 1986.     

 

You also have put options available to capture the added profit if the prices go higher after you sell a percentage of your crop.

 

To know when we will be recommending you should price your old and new crop production in the coming year, go to:

 

On the left, you can see the words:

  • “How It Works”

  • “Seasonality”

  • “Select a Commodity” in the black background

  • “Futures”

  • “S&P500E Mini” in the green background

 

In that box with “S&P500E Mini,” click on the down arrow in the same window to the right.

 

Select "Grains," then to the right, "Soybeans".

 

Move your cursor horizontally to the far-right box with "Calculate" and click on it.

 

At the bottom of the new page, click on each of the four boxes:

  • Year to date

  • 5 Year Average

  • 10 Year Average

  • 15 Year Average

 

One by one, click on each of the same 4 links to put the 4 price action lines back on the chart.

 

You can see how the soybean market has changed in the past 15 years.

 

Move your cursor onto the graph and it will show you the % price change for each seasonal trend line for any given date through the calendar year.

 

Select all the commodities you grow and get familiar with the indicated pricing periods.

 

For you folks who are looking to trade futures for profit, these charts are worth more to you for trading futures than for pricing your crop production and they are very valuable for pricing your annual production.

 

Roger has been doing this marketing stuff longer than most of you have been alive. This is your great opportunity to financially benefit from his 44 years of experience which would have been much more profitable for all if Roger never said, “Yes, I know the seasonal trend turned down, but this year is different.”

 

Now, make sure you are mentally and emotionally prepared to not make that mistake. Look at the charts and mark your calendar.


 

Audio Version


 

Rain Days Update


The 6 to 10 day forecast updated every day at: https://www.cpc.ncep.noaa.gov/products/predictions/610day/

Explanation of Rain Days


Comments


bottom of page