An expert advises grain growers to look long term.
Lead economist for grains and oilseeds with CoBank, Tanner Ehmke said a bullish marketing opportunity may present itself to producers – if they look at deferred contracts on the futures board.
“Obviously, the weather in the other export hubs like South America and the Black Sea region are key. That’s going to be a huge driver going forward… If those droughts continue into October, November, then the market is absolutely going to be building back in some risk premium into the market, and so that might provide some marketing opportunities,” he said. He said those who don’t want to gamble on the weather can look at deferred prices. “You have to look at this those December contracts or the March contracts. What is the market paying you to store?”
Looking long term into the next five to ten years, Ehmke said supply issues will likely play a larger role in market direction compared to demand issues.
“Just because we’re seeing some slowdown in major economies like China and their demographical issues, the aging population, they’ve got…a huge amount of toxic real estate debt” he said. He pointed out that China is the world’s second-biggest economy. “With .. the second biggest economy having trouble economically, I’m concerned there. I’m wondering what the opportunities are with India. Can we shift focus over to the to India as the next export opportunity? What’s going to happen with Brazil? They still have a fair amount of acreage there they can tap into if they want to. “ However, he pointed out that unexpected weather issues around the world could always change things.
Sabrina Halvorson
National Correspondent / AgNet Media, Inc.
Sabrina Halvorson is an award-winning journalist, broadcaster, and public speaker who specializes in agriculture. She primarily reports on legislative issues and hosts The AgNet News Hour and The AgNet Weekly podcast. Sabrina is a native of California’s agriculture-rich Central Valley.