November is generally a very good month. The fall work is completed or at least winding down. (There usually is plenty of work to do, and it’s the snow that tells us we are done.) Thanksgiving is upon us, which gives us all time to reflect on those things that are the most important to us – things like our families, our homes and the comforts of our homes, the communities where we live and this great country. We aren’t without our challenges, but when it comes right down to it we are truly blessed.
Having said this, it is time to get back to work. Over the past few months, we have visited about how the markets trend and a few things we can do to analyze the market. When I say analyze, what I am in reality saying is based on the news in the market today. That can be technical news, political news, government reports and, last but not least, the fundamentals in the market. But no matter what we read or see, that is all today’s news because tomorrow it may change and move the market in a different direction.
Over the past year, we have seen the market move in a direction that hasn’t really benefited producers and the prices we receive for the commodities produced. The war between Russia and Ukraine has gone on for so long now that at the time I wrote this article, it is almost a non-issue. The bullish news that we do receive from the war has recently been very short-lived and has been more of a knee-jerk reaction rather than anything long-term.
When we look at the domestic side of demand, we are usually nearing the end of the peak demand season. By Thanksgiving, we have usually seen the peak in the domestic demand for flour, and we may not see any additional demand until we move closer to barbecue season in the spring.
If there is one thing we have learned these past few months, it is that when the market moves quickly to the upside, it will move just that quickly back down. Knowing this, we all now know that we need to be prepared to contract our commodities on these quick moves. I can’t count all of the times when the market has found some quick strength and I have had a producer say, “Well, it looks like it is finally moving in the right direction,” only to then have the market reverse itself.
Now, I know better than most that hindsight is very good, so when I say we missed an opportunity to contract our wheat at that higher price, I am saying that with hindsight. Or am I? See, after years of working in this industry, I have the philosophy that if the market is willing to give you 40, 50 or 60 cents per bushel more today than yesterday, we should take advantage of the strength in the market and at least contract a few bushels or tons. (Yes, I did throw in tons just for those of you who produce hay.)
I want you to know I agree with you when you say that our commodities need to be higher. We really aren’t selling into a market where we have all that much control over the prices we can sell at, but we do have to a large extent control over when we can sell. Many of the commodities we produce can be stored for an extended period of time. We usually have time to study the markets and then make our decision. We may not be able to say our wheat, for instance, is worth $10 per bushel when the market is trading at $7, but we can say that we think $7 just may be all the market is willing to give us this year. You make your marketing decision based on what you know, not on what you wish.
After all we have visited about, the most important thing to remember is this, “The market is always right.” Let’s continue to simply do the best we can within the parameters the market gives us each year.
Until we visit again, have a happy Thanksgiving and be safe.
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