Below is an excerpt from a weekly column called “A Scientific View” written by Hedge Plus owner Patrick Hayes. In this column dated November 19, 2018 Patrick talks about adapting to a changing world with global fundamentals overtaking U.S. fundamentals.
Things change and we need to be ready or we will suffer consequences.
The world and our markets are much more complex and integrated.
Today, our markets have two growing seasons, and global fundamentals are becoming more important than US fundamentals.
We can no longer count on price highs for corn and soybeans being put in during summer. We must adapt or be left behind.
It seems like every year there is something new to pay attention to. Thirty years ago, I could forecast a summer price high in the corn market and that forecast would be really close to the marketing year high, as long as a drought didn’t hit. Today, who can tell me with any accuracy what is a good price to sell crop at?
Exactly one year ago, soybean prices were pretty good and corn prices stunk. This year, corn prices are pretty good and soybean prices stink; who would have guessed this price relationship a year ago? What is real is that farm marketing is now a 12-month job with seasonal price highs that could occur regularly in any month.
Back in the old days, I would expect a post-harvest Santa Claus rally and those of you who have been with me since the turn of the century would expect my “Yes, Virginia, there is a Santa Claus” slogan that Santa would rally prices. Heck, last year March corn futures never closed the gap left when December corn futures went off the board and rallied to an early season high. Last year, beans put in a yearly high in March and prices never moved higher!
I hope Santa brings us prices that put a smile on your face. If he doesn’t, we will continue to use all our tools to help you find the best price we can. We need to stay alert, as that good price can happen any time!