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Central Missouri | Farmers have a hard time thinking as a buyer thinks because we are always selling. Buyers have to forecast demand figure out logistics and then buy as cheaply as possible. It has been known for months that china was going to need to buy corn from us it was just a matter of when and how much. Why did china wait?til last week.? They really didnt. They were buying through cofco USA and those purchases dont hit the exports until they transfer the sales to cofco china. Theit purchases for supply and logistical needs show up in the export sales report. As far as price goes on those purchases we dont know because they can do the pricing part in the futures market any time. Those sales may have been futures priced 6 months ago or they may still be futures unpriced with only the basis locked in. Dont get stuck in the paradigm that their pricing occured when the sale was announced. Pricing could have been done 6 months ahead or 1 as late as 1 day ahead of the boat unloading in china. Think hta contracts or basis contracts they can do the same thing on the buy side.
There are 3 things that move grain markets, fundamentals, technicals, and money flow. The charts reflect an equilibrium of these 3 at the end of each day. At different times in the price cycle any one of these can be dominant thus we see times when things seem out of whack though they arent in the long run because the market will always correct itself, thus the charts move up and down reflecting where equilibrium is headed. Fundamentals in corn beans and wheat indicate fairly tight carryover so why are or have they been moving down? One has to consider money flow and technicals. For technicals i would encourage people to sign up for keaton heller and mike jinks substack. Those 2 are darn good at what they do. For money flow i look at commitment of traders. I have posted that info at times previously. For the bit of fundamental info i use i get from strategic farm marketing from their world conference call notes each week. They give leading info on what is going on in china.
Just remember our current risk as producers is lower prices which would be very painful for those unsold if they come about. Our forward sales are as high as they were in 2014 insuring a great year even if we go to new highs. Look at a monthly chart going back to 1970 and look at how long prices stay high and where and how fast they go down once they decide to.
Set your farm business up to thrive in a high price environment and to be insulated and grow in a low price environment.
Edited by ehoff 3/19/2023 08:21
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Black sea agreement
