Price the bounce and don’t miss the free throw: Grain market lessons from the basketball court

(Lara de Moissac/RealAgriculture)

Farmers waiting for a market rally and continued uptick in crop prices could be waiting a very long time. Instead, Brian Voth, founder of IntelliFarm, draws parallels between the current NBA playoffs and grain markets: grab the bounce and don’t miss the free throw, because that’s about as good as it’s going to get.

In other words, this latest — albeit modest — bump in crop prices is a technical rally, not a fundamental one and Voth warns that technical rallies have a tendency to drop off sharply.

Whether it’s a clean out of ’23 crop or trying to secure a profit margin on ’24, Voth says that farmers should keep their expectations realistic on where prices are headed.

“Seasonally, mid-May signals the end of spring rallies,” Voth says, and some fundamental factors support his bearish outlook.

Balance sheets globally are not tight and demand is getting covered, Voth says, and so far, China hasn’t been in a buying mood for new-crop American soybeans. This could translate to more 10-year average canola prices, versus the three year average, for example.

Vying to “hit the highs” in grain marketing is rarely, if ever, successful, Voth says, and knowing cost of production is a powerful metric in being comfortable with pricing into lower margin price trends.

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