An unwritten motto of a former employer, market adviser Professional Farmers of America, was that it’s easier to turn journalists into economists than economists into journalists.
While I did not become an economist at Professional Farmers – and some might say I didn’t make the grade as a journalist either – I, like everyone there, quickly became a 24/7 commodity market watcher, analyst and seer.
The job. That was the job: Learn every fundamental and technical tic and trick in the market so you could intelligently advise farmer-readers how to make money. And I got pretty good at it.
Good enough, anyway, that one summer day six months into the job, a boss told me to monitor Treasury Bond futures and call him when I thought the market was going to turn so he could short $1 million in Treasury Bonds futures.
I, of course, did what any scared 25-year-old with a young family would do – I said “Yes, sir,” and began an immediate job search that, a couple of months later, delivered me to Successful Farming magazine as an assistant machinery editor.
The move into journalism, however, never stopped my market watching.
Monitoring futures. Twenty-seven years after my boss’s knee-knocking command, I continue to monitor most commodity futures markets as closely as most farmers monitor crops. And I do so with the dispassionate eye the pros at Professional Farmer instilled in all their eager journalists-cum-economists.
That process, too, had a motto: Bulls make money, bears make money and pigs get killed. Indeed, the bulls-bears-pigs axiom is the first caution I offer family, friends and neighbors when asked for market views.
The second is, “Hey, it’s free, so never forget what it cost you.”
This fall and winter, though, I’ve kept my cards – and my mother-in-law’s modest corn and soybean inventories – closer to my vest and my advice closer to the wind because no one can reasonably predict where today’s wild, 2007 and 2008 record-setting corn, soybeans and wheat futures markets are headed.
Variables. There are simply too many compounding variables to stumble over. For proof, look no further than the Chicago reaction to the U.S. Department of Agriculture’s raft of Jan. 11 market reports.
The explosively higher corn, soybeans and wheat prices that hit the Board of Trade seconds after it opened that day telegraphed two messages.
The first was that no market seer yet has a firm handle on 2007 grain usage; and, second, until they do know, today’s prices – even at these nose bleedingly high marks – are still too cheap.
Moreover, the first peek at winter wheat seedings caught everyone unaware.
At these once-in-a-lifetime price levels, they wondered by bidding wheat higher, how can wheat growers plant less, not more, hard red winter wheat?
I don’t know, but if I had some wheat I would have rewarded their bewilderment by trickling it into the cash market. Ditto for 2007 corn and soybeans.
Prices. Indeed, I already have. The family’s first corn sale knocked down $4.05 per bushel on about one-tenth of the stored crop; the first soybean sale pulled in $11.18 on a little over half of the crop.
Did I sell too many beans too early? Yes; cash today is about $1 higher. Am I sorry I sold ’em? No, and I’d do it again in an instant because $11.18 – or $9.18 or $8.18 – is a profitably attractive price for beans.
My only task now is to sell the remaining inventory, and some of 2008’s yet-to-be-planted crops, at prices higher than the initial sales.
When and for how much? I haven’t a clue. The only thing I absolutely do know, however, is that bulls make money, bears make money and pigs get killed.
(Alan Guebert’s Farm and Food File is published weekly in more than 75 newspapers in North America. He can be contacted at agcomm@sbcglobal.net.)
