"We Didn't Start the Fire"
Aug 01, 2023
Greg Artz
Field Marketing Specialist, Licensed Crop Insurance Agent
The 1980s Billy Joel song stated: “We didn’t start the fire.”
Grain marketing - a fire storm, a dumpster fire? Most days, it seems to be fire, one way or the other.
Putting a plan together during wild market swings, will get bushels sold.
Two different USDA Crop reports, June 30th & July 12th, gave us wild swings in data - moving the market leaps and bounds in both directions. While fielding questions this July, I can report most farmers' sentiment on recent USDA reports are the words by George Carlin: “I have certain rules I live by. My first rule: I don’t believe anything the government tells me.” But these are the numbers we are expected to make decisions on.
How did the USDA come up with the June 30 acreage numbers? FSA certification was not complete yet. Farmer surveys? Satellites? My guess is, there must be some metric to base these numbers on.
June 30, 2023 acreage. Source: StoneX®
That is a big shift and in the weeks ahead, we saw the market run up…and run down. I read a quote from Matt Campbell, risk management consultant at StoneX: “Elevator up, elevator down.” That’s it.
The plan worked! The offers that were in place, hit for the most part and for a brief moment in time, we had $6 cash new crop corn. The Board orders filled and got us out of our July Basis and Extended price contract in what seemed like the ninth inning.
Source: Advance Trading
Fast forward to July 12th, and the corn yield dropped four bushels per acre. The market was down hard. Initial wisdom was the June 30th report that gave us more acres to offset. Bean yields stay the same. The next day, its back up.
What’s the point? There isn’t one. The market is on fire! Up, then down. The bulls tried to run it down on drought news. The bears are in the fight with lack of demand.
Lets go to the box scores:
Put all of that in the Ron Popeil juicer and you get an irrational market. Throw in a couple of “ya buts" - The Big Show, Market to Market, a couple of ag magazines…and you have the perfect storm.
I haven't even mentioned an inverted market this whole time. Old crop is slowly sliding into new crop prices, which is concerning. Old crop basis has recently improved to keep bushels headed to the processors. New crop basis is strong historically, which is up for debate if it will continue to improve or weaken at the height of harvest. We do have December ‘23 to July ‘24 carry, which is a positive sign, however, it doesn’t cover interest.
Bulls and Bears! Who’s going to win? Get your plan in motion with orders and offers.
Field Marketing Specialist, Licensed Crop Insurance Agent
The 1980s Billy Joel song stated: “We didn’t start the fire.”
Grain marketing - a fire storm, a dumpster fire? Most days, it seems to be fire, one way or the other.
Putting a plan together during wild market swings, will get bushels sold.
Two different USDA Crop reports, June 30th & July 12th, gave us wild swings in data - moving the market leaps and bounds in both directions. While fielding questions this July, I can report most farmers' sentiment on recent USDA reports are the words by George Carlin: “I have certain rules I live by. My first rule: I don’t believe anything the government tells me.” But these are the numbers we are expected to make decisions on.
How did the USDA come up with the June 30 acreage numbers? FSA certification was not complete yet. Farmer surveys? Satellites? My guess is, there must be some metric to base these numbers on.
June 30, 2023 acreage. Source: StoneX®
That is a big shift and in the weeks ahead, we saw the market run up…and run down. I read a quote from Matt Campbell, risk management consultant at StoneX: “Elevator up, elevator down.” That’s it.
The plan worked! The offers that were in place, hit for the most part and for a brief moment in time, we had $6 cash new crop corn. The Board orders filled and got us out of our July Basis and Extended price contract in what seemed like the ninth inning.
Source: Advance Trading
Fast forward to July 12th, and the corn yield dropped four bushels per acre. The market was down hard. Initial wisdom was the June 30th report that gave us more acres to offset. Bean yields stay the same. The next day, its back up.
What’s the point? There isn’t one. The market is on fire! Up, then down. The bulls tried to run it down on drought news. The bears are in the fight with lack of demand.
Lets go to the box scores:
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Bears: Lack of demand, overpriced on the world market, lack of exports, more corn acres.
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Bulls: Drought. Everyone has a friend or cousin in Illinois who says it’s bad - less bean acres, less corn yield, inaccurate surveys - and let’s not forget the Black Sea situation.
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Put all of that in the Ron Popeil juicer and you get an irrational market. Throw in a couple of “ya buts" - The Big Show, Market to Market, a couple of ag magazines…and you have the perfect storm.
I haven't even mentioned an inverted market this whole time. Old crop is slowly sliding into new crop prices, which is concerning. Old crop basis has recently improved to keep bushels headed to the processors. New crop basis is strong historically, which is up for debate if it will continue to improve or weaken at the height of harvest. We do have December ‘23 to July ‘24 carry, which is a positive sign, however, it doesn’t cover interest.
Bulls and Bears! Who’s going to win? Get your plan in motion with orders and offers.