Market News & Headlines >> Brock Consultant Katie Hancock's Blog: A Problem to Watch Marketing Stored Grain
Insights from Brock Associates Consultant Katie Hancock
In Western Kentucky, a strengthening river basis and a trend of neutral to friendly crop reports have increased seller optimism. How can I tell? Farmers in this area don’t pile corn unless they’re optimistic. They especially don’t make piles as large as the one I saw this morning! Most are filling bins or paying elevator storage, but some are more aggressive with alternative storage strategies like outdoor corn piles.
I’ve also noticed buyers are not only increasing the basis, but are pushing producers to make sales. That tells me they’re worried about the availability of corn. This isn’t an issue directly related to the futures movement, but more so to the willingness of farmers to let go of grain in storage.
I am worried about the next couple months of futures prices—not because of where the price will move, but rather how sellers will react to changes. If prices rise, will your neighbor become bullish? If prices fall, will he become bullish? See the trend? Let’s call it what it is: greed.
Greed is an emotion that can damage the decision-making process. Human nature tells sellers to sell everything at the top price of the year and buyers to buy everything at the lowest price. When I use the word “greed,” it’s not that you’re wrong to want the most. At the end of the day, businesses need to maximize profits.
Unrealistic goals and emotions are the two main reasons many people are not successful marketers. Optimism is one of the great traits of farmers. Risk is part of it, but don’t mistake optimism for greed or you’ll miss decent opportunities in the next few months.
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Past results are not necessarily indicative of future results. There is a risk of loss as well as profits when trading futures and options.
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