It seems like just yesterday, or even a long time ago, but this year marks the 10th anniversary of the 2014 harvest year. This year is one of those years in my career where free rent will forever stick in my head.
It’s hard to remember the exact state of the market that year, but I’ll always remember 2014 because it was the year we didn’t see a summer rally. You know, the best thing about giving advice for living as a person who is highly critical of yourself is that you will forever remember the years when you truly felt like a failure. 2014 was one of those years for me.
2014 began with a lower price structure than 2024, with the December contract trading at around $4.50 in January. Of course, we were coming off his post-2013 rebuilding year. This year saw a sharp decline in prices towards the end of the calendar year, dropping from over $5.50 the previous summer to his low $4.00 level at harvest.
I vividly remember some of the conversations I had with producers about price targets and what to do with bushels. Just like this year, many were shocked by the year’s drastic price declines, especially with costs still rising, and unsure of what to do next.
I, like many others in my position that year, noted the historical trend of corn rising into the summer.Summertime rallies happen more often than not, which we will discuss in more detail in this article articleI wrote about this topic almost a year ago.
Corn prices almost always increase in the summer. I took a relaxed approach to pricing and ordering for the year, letting growers know this while we waited to see where prices would go once the bad weather hit and the market started moving.
However, 2014 proved to be an exception. This spring’s price crash, fueled by a combination of concerns about declining old ending stocks and planting delays, allowed prices to hit a high of about $5.15 on May 9, the Friday before Mother’s Day. However, it reversed and closed that day. The stock fell 13 cents on the dry forecast. The drier forecast provided ample opportunity to get most of the crop in the ground without issue. Moisture returned just in time to give the United States a new record yield for the year, exceeding that year’s trendline yield by more than 6 bushels per acre. This dispelled concerns about long-term supply shortages, and corn prices in December fell to a harvest low of $3.21, but recovered slightly in November.
I don’t bring this up to be gloomy or to say there won’t be a summer rally this year. Because honestly, I have no clue. But I bring this up because I learned a valuable marketing lesson in a year like this. For producers, rather than looking at dates on the calendar or what the market says they “must” do, it’s better to focus on price, sell at a level they know will be profitable, and do what they need. It’s much better to protect it optionally.
As I said, we don’t believe there will be a repeat of 2014, but we want our producers to have a marketing plan in place, including entering orders with pricing certainty at the level we know they need. You better believe I work hard every day. To achieve. For those who don’t have a marketing plan in place yet, this will probably help establish a solid foundation for your marketing plan.
what else are you looking at
- The situation in Ukraine has worsened, with reports of attacks on export infrastructure and cargo routes. Experts have been warning for weeks that underfunded air defense capabilities would lead to Russia attacking more critical infrastructure targets, and we are now beginning to see the results. Over the weekend, the U.S. House of Representatives passed a funding bill that could improve the air defense landscape, but some experts say it may be too late to make a big difference.
- weather. Brazil is becoming drier to finish the safrinha harvest. Much of the crop is relatively made, but you could see the top end stripped away with a dry finish and that would be something to watch. Here in the United States, above-normal precipitation looks like it will last for 16 to 30 days. Although still in its early stages, the situation remains noteworthy, particularly in parts of the eastern Corn Belt and delta regions. Summer heat is also common in the long-term forecast, and we need a little break before the growing season.
- Chinese demand. We continue to wait for signs of China returning to the cash grain market. Rumors that the country was considering suspending purchases of corn from Ukraine weighed heavily on the market heading into April, but the suspensions appear to have been kept to a minimum.
- Fund positioning/flow of funds. Speculators continued to sell agricultural products aggressively last week, making it one of the busiest weeks of the year. When will we see short covering? With farmers in the fields in the northern hemisphere and growers discouraged, there could be limited potential to start an interesting market move if the fund decides to pull back. be.
As always, if you have any questions, please feel free to contact us. Have a nice week.
On the date of publication, Angie Setzer did not have any positions (directly or indirectly) in any securities mentioned in this article. All information and data in this article is for informational purposes only. For more information, please see the Barchart Disclosure Policy here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
