Farm Progress

How I View 2013 | Thoughts from Richard Brock on Economy, Demand, Weather in 2013How I View 2013 | Thoughts from Richard Brock on Economy, Demand, Weather in 2013

Richard Brock

December 13, 2012

3 Min Read


Forecasting and decision-making in 2012 turned out to be a difficult year for many as the drought changed market direction for many commodities. 2013 will likely see continued volatility and tough decisions. There are three key fundamentals that will likely affect all of our decisions, and these fundamentals are essentially out of our control.

The three that I am talking about include:

1)             The world and U.S. economy. We all know that Europe is on the brink of bankruptcy and that it has had a negative impact on the demand of many products. The recovery in Europe will be long and slow, and it is perpetuating weakness in China and in the U.S. The good news—all of this is well known and thus likely discounted in the world markets. 2013 will likely be an economic recovery year, and I would plan on the news in the U.S. economy being better than expected.

2)             Demand. While all corn and soybean producers are enjoying these high prices, the longer they stay at these lofty levels the more demand is being hurt. High prices are good if they don’t last long—then demand is not hurt. But $7.50 corn for six months is going to result in some bad consequences down the road. There’s an old saying that the cure for high prices is high prices—and we are witnessing that now.

3)             Weather. Obviously this one is out of our control. With record corn acreage being planted this spring, in some ways weather is less critical than it was this past year. By increasing acreage even if near perfect conditions don’t exist, corn supplies are still going to go up. If good growing conditions exist after planting 98 million acres of corn, $7.50 corn is going to become $4.00 corn.


September was the peak

Making decisions in this environment is not going to be easy. Here are some thoughts, however, to throw into your “think tank” for the coming year.

  1. What worked last year in marketing will not likely work this year. The same strategies rarely work two years in a row.

  2. My assumption is that the corn and soybean marketing prices peaked for this marketing year in September. Rallies between now and spring are rallies in a bear market.

  3. Some old sayings—“short crops peak early and have a long tail”; “never store a short crop, always store a record crop.”

  4. Is this a year to be selling two years’ crops? Personally, I am in that camp. For subscribers to The Brock Report, we are already 100% sold on the 2012 crop and 50% priced on the 2013 crop. These prices are extremely profitable. Farming is cyclical. Good times don’t last forever and fortunately bad ones don’t either. The odds favor aggressive marketing in 2013.

One last thought—input prices. Fertilizer prices have likely already discounted high-priced corn, and fertilizer prices follow corn—not the other way around. If my assumption is correct on the downward trend of corn, you will likely see softening fertilizer prices as well.

Land prices will stay strong throughout this year. Agriculture has never been in a stronger financial footing than it is today. Even weaker prices are not going to change that. But also remember that sometimes when people have made too much money we often lose focus on making marketing decisions because it is easy to put off these decisions if we have money in the bank. Good luck in 2013.

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