It’s no secret that farmers are facing some difficult issues regarding the production of grain but also in the market for grain. With that in mind, Don Roose has one bit of basic advice: Don’t lose sight of the fact that you are in a marketing window right now.
“That would be my main message to farmers,” says Roose, president of U.S. Commodities in West Des Moines.
While grain prices are not good, this may be a window when farmers can use market tools and make some sales. Considering the uncertainty facing them today, that might not be a bad thing.
And there is uncertainty. After a wet fall, a snowy winter and a very wet spring, this should be a strong weather market right now.
“We’re in a record year,” Roose says.
Planting progress is far behind normal and there is concern that many acres may not get planted at all. The prevented-planting date has come and gone for corn. Normally, those conditions would mean a strong market. But there were large worldwide grain carryovers coming into this cycle, and farmers in other parts of the world have had strong production. South American farmers, for example, have produced a very large crop.
What’s more, there is considerable political influence on the market. Just last week President Donald Trump surprised almost everyone when he announced new tariffs on Mexico. That is a big problem for the grain market, Roose says. The United States-Mexico-Canada Agreement (USMCA) has yet to be approved by Congress or by the assembly in Mexico. This complicates the approval.
In addition, Trump has been pushing a trade war with China.
The various trade wars will lead overseas buyers of U.S. corn and soybeans to look to other markets, Roose says. And even if those trade differences are eventually ironed out, there is concern that the uncertainty will lead to the United States’ permanent loss of parts of those markets.
Again, that means farmers need to look at immediate market opportunities and to use market tools to reduce risk and maximize any potential profit to be had.