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Corn+Soybean Digest

Keep Your Chin Up

The lower prices go this spring, the higher they'll be by late summer or early fall. Look for opportunities on the buying side early, and selling opportunities late.

On the seminar trail the last few weeks, I noticed that attitudes among many producers were starting to slip. With increasing input costs and declining commodity prices, it's easy to let that happen.

But before you get too depressed about the business situation in farming, keep some of these points in mind.

It's net income that counts, not the selling price of corn and soybeans. Remember, with the loan deficiency payment (LDP) program, it's just as important to pick bottoms in the market as it is to pick tops. The lower a market goes, in many instances, the more profitable the marketing opportunities become. In this environment, the selling price of corn and soybeans is not the biggest issue — it's what you do when prices turn.

The news will always be the most negative at bottoms. By the time you read this, the news of a record South American soybean crop should be an overwhelming negative factor. The potential of increased soybean acres and only a modest decline in corn acres could also be a very bearish fundamental. It's news like this that helps make bottoms.

Coffee shop attitudes will always be the most negative at bottoms. By now, all coffee shop regulars should know that there's no way this market can ever go up again. Everyone who was a “super bull” in the summer of 1996 is now on the opposite side.

Low corn and soybean prices in late winter and early spring discourage increases in planted acreage. This is the best time of the year to keep prices down. History would seem to indicate that the lower prices are now, the better the opportunities will exist for sharp price rallies in late summer.

Weather rallies will happen. Weather predictions are like weather itself — subject to change. Especially in corn, with declining supplies worldwide, any type of perceived weather problem this summer will result in some significant upward price moves. Opportunities will come when least expected.

There are two sides to marketing. Remember, prior to the mid-1990s, about the only thing important in successful marketing was to know when to sell — near market tops. That's no longer the case. It's equally important to know when to pick market bottoms. Locking in high LDP payments is just as important to your bottom line as selling at the top prices of the year.

With that in mind, some may assume that there's nothing you can do if prices bottom before harvest. That's not necessarily so. For those of you who are fairly astute at using various marketing tools, consider using futures or option strategies to lock in the bottom of this market to assure a good LDP payment before harvest even occurs. The opportunity to use this strategy may come very soon.

Parting Thoughts: Marketing opportunities don't always come wrapped in packages marked “Opportunity of the Year.” Most farmers, unfortunately, think of opportunities only at high prices, not low prices. Keep an open mind. As long as prices are moving, opportunities are there.

Richard A. Brock is president of Brock Associates, a farm market advisory firm, and publisher of The Brock Report. For a trial subscription and information on Brock services, call 800-558-3431 or visit

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