2022 Outlook

[Hamloc]

The weather in South America will certainly have a large influence in the near term and at present is dryer than normal. I think Canadian farmers will be very hesitant about locking in sales for next fall with how dry it was going into winter and how many lost sizeable amounts of money last year. I don’t see inflation easing in the near term and it is hard to predict how record prices for fertilizer will affect its use and resulting crop yields. In the end it all comes down to weather and no one can predict that. I certainly appreciate your outlook Mitch. I do agree there is still some upside in the grain markets.

[foragefarmer]

If the majority of the growing areas of the world have improved conditions than the past season commodity prices will go down.

If the majority of the growing areas of the world have the same conditions as the past season commodity prices will go up.

That's my very simple analysis, everything else is just a personal prediction(guess) of commodity prices for next year.

I know there are those that make a living on predicting price forecasts for the future on commodities and sell this information, all the power to you as it can't be easy work.

[wheatking16]

That’s the problem with high prices, high volatility and high stakes, stress and anxiety make it even harder to decide what is right (during one of the most critical times of our careers).

I believe removing emotion as much as possible should be the primary goal.

The first step is acknowledging that marketing is likely one of your most difficult tasks because you are always going to be wrong. If prices rise, you sold too much. If prices fall, you didn’t sell enough. But also recognize you can do a good job and have excellent results while being wrong. It’s all about the final average outcome.

To reduce the pressure about your price outlook, you should always have three plans in place. A marketing plan based on your assumptions being correct and your targets being hit. An abort plan on how you will alter your strategy if the outlook changes drastically and finally a plan for the possibility that you were just wrong with your expectations for the market.

In addition, I believe the plan should include breaking down sales into small increments so no one single transaction is overwhelming. Again, recognizing that the future is highly unpredictable - it leaves you methodical enough to pull the trigger.

For example, based on my outlook, I would be conservative in my marketing – splitting up sales and having the patience to sell incrementally into a rising market. I would only have as many DDC’s in place as I needed for movement off the combine and was as certain as I could be that I wouldn’t be short. I would then want to have low priced put options in place on the remainder (in case I was just wrong). As time passes, if it looked like the outlook changed and I had to abort my initial plan, I would become more aggressive selling with lowered targets. At the same time, I would increase the protection offered by the put options by spending more on the price insurance to get higher strike prices.

In your case, if you feel the outlook is balanced and uncertain, I would suggest your plan might be similar to my abort strategy. Being more aggressive making sales, spending a little extra on price insurance to get better minimum values, that sort of thing.

Everyone has different risk tolerances and comfort levels but I believe we all benefit from trying to reduce emotions by coming up with plans that are right for ourselves. Then just execute.

See, too long winded, sorry.

TechAnalyst,

This is an excellent thread with great advice.

The expectation that one will be wrong is difficult to understand but so critical to marketing.

I interpret your advice as having a marketing plan that considers both bullish and bearish scenarios so one is prepared for a trend change in price.

The abort strategy resonates with me as I have fallen in love with positions when the trend changes relying on Hopium that the price will recover while not knowing IF or When that will happen.

It is emotionally draining and destroys capital.

Again, great thread!

[riders2010]

Yaaa this is exactly what we need people calling
These high prices what would you call the expense
Side just normal activity?

When the people that don’t farm talk this way
It’s dangerous for us actual farmers because that’s
Who the people that call the shots listen to.

The drought has not ended!!! Not here and not
In many of the other major producing areas.
Factor in covid factor in input prices factor in
Inflation who in their right mind would suggest
Prices are too high? At least at this point anyway.

[TechAnalyst]

Thanks, I hope it helps.

Actually the philosophy is more important than the outlook I think. The latter may change but the former stands the test of time.

Besides, what good is taking knowledge (which comes from experience, which comes from mistakes) to the grave. May as well share if it can benefit anyone.

[checking]

Dont get me wrong. Im interested!

If I can find a voice that can convincingly narrow my window, I'm all ears... Lets just say, that for the full period of my brief existence here, I've never seen such uncertainty. And not only uncertainty, but I can see a logical path to ALL outcomes. Maybe it's my stage in life, or maybe its the market cycle I find myself blessed/cursed to navigate, but I've never seen so many options on the table.

I find this a period of the great table chip shuffle of options. There are only two at my age on the table. I buy the farm, or I really buy the farm.

My ty goes out to macdon. He foresaw this price runup to the point I thought he was bonkers. I was way wrong, since I didn't anticipate shortages that became real quick through supply chain issues, something I though nature and man would never get together on at the same time.

[AlbertaFarmer5]

I find this a period of the great table chip shuffle of options. There are only two at my age on the table. I buy the farm, or I really buy the farm.

My ty goes out to macdon. He foresaw this price runup to the point I thought he was bonkers. I was way wrong, since I didn't anticipate shortages that became real quick through supply chain issues, something I though nature and man would never get together on at the same time.

And his more recent projection sounded even more bonkers than the previous. If events unfold such that they too are achieved, not sure what that portends for humanity, but it can't be good. Thinking we will start seeing the starving hordes pillaging the countryside shortly after.

[wheatking16]

I gotta get me some Hopium seed. 😉

No, you don't. lol

[helmsdale]

And his more recent projection sounded even more bonkers than the previous. If events unfold such that they too are achieved, not sure what that portends for humanity, but it can't be good. Thinking we will start seeing the starving hordes pillaging the countryside shortly after.

I'd hate to put words in his mouth, but I believe he was long pitchforks and ammo...