With higher prices lingering in grain markets as the world watches the war in Iran and waits for word that the Strait of Hormuz, this period may offer the best pricing opportunity, says Matthew Kruse, president of Comstock Investments and a farmer with operations in both Iowa and Brazil.
Or at least one of the better opportunities.
And that puts Kruse in the mood to sell.
"If you have any old crop left, now is a good time to clean the bins and sell," Kruse advises on this week’s Ag Marketing IQ In Depth. Citing seasonal trends that often peak in April or May, Kruse is focused on managing downside risk, especially given the current market dynamics.
Though the ongoing war in Iran has driven up crude oil prices and influenced corn prices, commodity markets are beginning to stabilize as "cooler heads prevail." He also points to favorable weather forecasts across much of the U.S. Corn Belt, which could lead to strong yields and increased supply.
Pay attention to Brazil
Brazil's dominance in soybean exports is another critical factor. "China is being flooded with cheap beans from Brazil," Kruse says. With Brazil's record soybean crops and favorable weather forecasts, the global supply is robust, reducing the likelihood of a major price spike.
That makes it unlikely that U.S. bean farmers will see significant demand increases, although President Trump’s planned meeting with China’s President Xi creates optimism in some circles.
Kruse, however, advises farmers to focus on profitability rather than waiting for a potential rally created by a weather event or new deal with China.
"Your downside risk feels a little greater than your upside opportunity," he warns, encouraging producers to sell a portion of their crops now to mitigate risks.
“No one's saying you got to sell everything,” Kruse says. “But you take some risk off the table, and you sell 20% or 40%. Just get started.”
To hear more from Kruse on the current corn and soybean markets, watch this week’s Ag Marketing IQ In Depth.