It’s December (has this year literally flown right by us?), and whether or not it’s cold and whether or not you have snow on the ground, I feel it is safe to say that winter is upon us. For farmers, the fieldwork is completed and now is the time of the year when you spend time in the shop. For cattle producers, it’s insulated coveralls, heavy coats, gloves and winter boots. (Don’t forget a good hat.)
It is also the time of the year when all of us truly think of others and what we can do to help those who maybe just aren’t as fortunate as we are. I don’t feel it is a coincidence that we finish off the calendar year in this mindset. I have spent most of my life working in the agricultural industry – from hauling hay, hoeing tomatoes and beets and then picking those same tomatoes as a youth, to helping producers market the commodities they raise.
I might be just a little biased, but I do feel that ag people are some of the most generous people on the face of the earth. They may not be the ones involved in large national or international service projects, but they are always there to help their neighbors when they are in need without any fanfare or recognition, simply because that is just what you do.
Before we get down to business and visit about what I get paid to visit about, I would like very much to wish each of you a very merry Christmas and ask you to be safe during this holiday season.
Now that we are all in a kinder and gentler mindset, let’s visit about the markets for just a few minutes. Recently, we have discussed the possibility of watching some different indicators in the futures markets that could help us in marketing our commodities. I’m not going to ask for an individual accounting or “show of hands” from those who have looked into the things we have talked about. I do, however, hope some of you have studied for at least a few minutes a technical indicator along with the current supply/demand numbers and have maybe looked up a seasonal trend or two.
When I wrote this article, we could look back and see that Chicago December wheat had been in a continued trend lower since the last week in July. At that time, the relative strength index (RSI) was at 78. Remember we talked about how when the RSI is above 70 there is a very good chance the market will begin to trend lower because there’s a very good chance the market is running out of buyers.
As of the middle of October, the Chicago December wheat contract was trading at some of the lowest levels in the previous 12 months, and even with the unrest in the world, it didn’t look as though we would rebound by any significant amount. We did, however, see the futures rebound slightly, along with the local basis strengthening in some areas. It was refreshing to see some of the producers in those areas who now understand just what basis is (the best indicator of the local supply/demand) take advantage of the strength and contract wheat. The strength only lasted a few days before adjusting and moving back lower.
These producers have adjusted their thinking when it comes to marketing. The first adjustment was that they realized the market is always right, and the second is that the price they contracted may not be as high as they would have liked it to be, but that just may be as much as the market was willing to give them (at least in the near term). Keep this in mind as we continue our discussions in the new year.
This next year, 2024, will be a good time to hit the ground running when it comes to preparing and implementing a great marketing plan. If you would like to visit with me in more detail, simply give me a call.
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