As geopolitical conflicts and crop-impacting weather events create volatile markets, farmers face critical decisions about protecting profitability while positioning for potential upside post-harvest.
“What the producer has to do is focus on ‘what's going to keep me in business for another year’ during these uncertain times particularly with high input costs,” says StoneX’s Arlan Suderman, speaking on this week’s episode of Ag Marketing IQ In Depth. “It's a matter of really pushing the pencil and estimating your farm yields and what you're going to have so you can really put together your own budget.”
The weather outlook shows El Nino proving to be the dominant force despite periods of heat, with analog years like 1997 and 2015 producing above-trend yields. “Those are years when we saw above trend yields for both corn and soybeans where El Nino won out," Suderman says.
The chief commodities economist for StoneX sees uncertainty on the demand side, largely around the question of how much China is going to buy and when. He also sees potential for export sales to the European Union as drought takes a toll on crops there. The answer to either demand question won’t be known for a number of months. And that, Suderman says, created both downside and upside risk.
Here’s how to navigate uncertain markets
For farmers navigating this uncertainty, Suderman recommends a clear strategy: “When you see a price opportunity, talk to your grain buyers, look at basis opportunities, look at where you can assure that you're going to be in business for another year, but also follow some strategies that allow you some upside potential.”
For producers who find marketing frustrating — about three out of four according to studies — Suderman offers straightforward advice: “Get someone to help, whoever it may be. Find someone you have confidence in, who you can communicate with.”
Suderman says that person may be closer than farmers think. It could, he says, be your spouse.
For more of Suderman’s examination of this market and the impact weather may have, watch this week’s episode of Ag Marketing IQ In Depth.