some changes in the cotton balance sheet , raising yields 14 lbs / acre and raising U . S . production to 17.23 mln bales , while also raising export 500K bales . Carryout was lowered 300K bales to 4.5 mln .
As planting in southern Texas winds down , producers in the major corn belt states are finalizing plans . Although no one is excited about values both in futures and cash today , no one knows what will happen between now and new crop harvest . My dad always told me that the only two things in life that are certain are death and taxes . Had he been in agriculture , he would have added a third — price uncertainty .
Recently , I led a breakfast meeting with some producer clients reviewing market fundamentals and new crop marketing plans and ideas . One of the participants insisted that , historically , the highs in the market always occurred in summer for row crops and cotton , so a good strategy would be in just selling those crops during summer months — effectively predicting the highest prices of the year always happen in the summer months . After the meeting I looked at past years , establishing the highs of the market for December corn , November beans , and December cotton going all the way back to 1998 — almost 20 years of data . As you can see by the chart below , not only are each of those commodities rarely on their highs within a similar time frame of the other , but there are plenty of years when the highs had been achieved either in spring or even the fall months .
Price is unpredictable , and relying on historical and past years ’ markets for this or future years ’ marketing decisions is a mistake . Lower prices are the biggest risk producers face today and almost everything we noted earlier in terms of fundamentals are bearish . The market has plenty of tools available today that allow you to set a floor on your anticipated production and still leave you open to participate in upward moving more advantageous pricing in the future . Alternative ideas and strategies being offered in some cases today sound interesting on the front end because of the possibility of a lower to no cost , but they add additional risk as certain triggers set by price movement will either limit the amount of protection or double the initial amount of grain the producer is committing to sell because of a market rally . Though the cost of these products might be quoted as zero cost , there are significant fees imbedded in these products . Many market participants today forget the problems caused by some of these same alternative strategies in the past — they caused significant issues for producers and even large commercial entities almost 10 years ago in 2008 during the last unexpected rally in markets . Bottom line , make sure you understand each of the strategies you are considering — especially the risk associated . Your United Ag staff can help evaluate what you are considering and assist in developing and implementing marketing strategies that are transparent not only in their cost but also in the risk associated . Working for and with United Ag , we can also assist in recommending and implementing prudent alternatives as well .
Wishing all of you a safe and blessed growing season .
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