Market Analyst Offers Encouragement and Strategy for Weathering Tight Margins 

What Happened

Low prices for row crop farmers and higher input costs have had a material impact on farmers’ bottom lines as well as mental health. According to the most recent USDA Economic Research Service report, net farm income is forecast at $140.7 billion for 2024, down 4.1% (or $6 billion) from the previous year. When adjusted for inflation, net farm income is projected to decline $9.5 billion.

Why This Is Important

First, it is important for farmers to understand that they are not alone in their economic struggles. Second, it is also important for those who associate with farmers to understand the financial challenges that producers, particularly row crop farmers, are currently facing. This is where the mental aspect comes in. Be patient when listening to farmers and let them talk about their challenges. They know and understand they are in a business that doesn’t provide guarantees. It is important to be patient and empathetic when listening to them. It is also important for farmers to recognize when opportunities are there to secure market prices, those same opportunities can disappear quickly.

For example, in June 2023, corn prices were trading near $5 per bushel on futures and quickly rallied to over $6. The market then abruptly pivoted, and within two weeks was trading back under $5. Opportunity came and went quickly. Looking for those opportunities and having target points for orders to hit is important.

Agriculture production is becoming more reliable. Large production drawdowns due to weather or poor farming practices are less common as technology and hard-working, knowledgeable farmers find ways to produce great products. The marketplace knows this and will quickly go defensive (sell) if it looks like weather conditions or other events warrant it. The key is to defend price rallies. Preparedness matters.

What Can You Do?

Remind yourself that tough times don’t last forever. Stay resilient and funnel your energies into doing the best that you can. Shave expenses, if possible, but not to the point of putting yourself in a position to reduce your production capability. Remind yourself that prices go up and prices go down. Pay attention, and when opportunities are there, be ready. Be willing to be more aggressive to shore up your bottom line.

Farming is not easy. Recognize you wear many hats and that you are challenged to do a lot of things well. You also need to give yourself a break along the way because you can’t always control events. Control what you can, and what will be helpful in the long run. This means being ready to act as necessary, knowing which marketing tools are best suited for you and how to implement them.

Find What Works for You

Work with a professional to find the strategy or strategies that are best suited for your operation. Communication is important. Ask critical questions and garner a full comprehension of consequences and potential rewards before executing. The idea is to make good decisions for the operation rather than emotionally charged responses to market moves, which are always dynamic.

Editor’s Note: If you have any questions on this Perspective, feel free to contact Bryan Doherty at Total Farm Marketing: 800-334-9779.

Disclaimer: The data contained herein is believed to be drawn from reliable sources but cannot be guaranteed. Individuals acting on this information are responsible for their own actions. Commodity trading may not be suitable for all recipients of this report. Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. Examples of seasonal price moves or extreme market conditions are not meant to imply that such moves or conditions are common occurrences or likely to occur. Futures prices have already factored in the seasonal aspects of supply and demand. No representation is being made that scenario planning, strategy, or discipline will guarantee success or profits. Any decisions you may make to buy, sell, or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to Total Farm Marketing. Total Farm Marketing and TFM refer to Stewart-Peterson Group Inc., Stewart-Peterson Inc., and SP Risk Services LLC. Stewart-Peterson Group Inc. is registered with the Commodity Futures Trading Commission (CFTC) as an introducing broker and is a member of the National Futures Association. SP Risk Services, LLC is an insurance agency and an equal opportunity provider. Stewart-Peterson Inc. is a publishing company. A customer may have relationships with all three companies. SP Risk Services LLC and Stewart-Peterson Inc. are wholly owned by Stewart-Peterson Group Inc. unless otherwise noted, services referenced are services of Stewart-Peterson Group Inc. Presented for solicitation.

About the Author: With the wisdom of 30 years at Total Farm Marketing and a following across the Grain Belt, Bryan Doherty is deeply passionate about his clients, their success, and long-term, fruitful relationships. As a senior market advisor and vice president of brokerage solutions, Doherty lives and breathes farm marketing. He has an in-depth understanding of the tools and markets, listens, and communicates with intent and clarity to ensure clients are comfortable with the decisions.