The Market Is Changing. Your Plan Should Too.

The Biggest Risk May Be Marketing This Year Like the Last Two

Markets have a way of teaching lessons.

The problem is that sometimes those lessons stick around longer than they should.

The last couple of years rewarded producers who were aggressive about moving grain. Big crops, comfortable supplies, weak basis in many areas, and rallies that struggled to hold created a fairly clear message: waiting for something better could get expensive.

It would be easy to carry that lesson straight into this crop year.

But the setup is changing.

There is still plenty we don’t know about the size of this crop, and that uncertainty matters. At the same time, global conflict, energy markets, export demand, and changing conditions in wheat are adding variables that weren’t nearly as important the last couple of years.

That doesn’t automatically make this a bull market but, it is much more bullish than the last two years.

A Wider Range of Outcomes Requires a Different Plan

One of the biggest challenges right now is the sheer range of possible outcomes.

There are areas dealing with legitimate dryness and crop concerns while other areas look much better. Meanwhile, the market is still waiting for enough data to determine what national production actually looks like.

That uncertainty has created two very different camps.

One side sees crop problems and expects a major rally. The other looks at the last couple of years and assumes any strength should immediately be sold.

Neither approach leaves much room for what happens in between.

A better strategy is to recognize the uncertainty and build a marketing plan that can survive more than one outcome.

For producers with storage, that could mean being more patient with physical grain rather than automatically assuming holding bushels will end the same way it did recently.

For producers who have already sold grain or won’t have room to store everything, the conversation may shift toward whether there is an intelligent way to re-own some upside.

Takeaway: Don’t build a plan around one prediction. Build one that gives you options as the market gives us more information.

Re-Ownership Could Matter More This Year

Selling grain doesn’t necessarily have to mean being finished with the market.

That distinction could become important.

If you have profitable sales already made, there is nothing wrong with having those bushels protected. The question is what happens if the market environment becomes substantially more supportive later.

That is where re-ownership strategies can enter the conversation.

There are several ways to approach it, and each carries different costs and risks. The right structure depends on how much grain is already sold, storage availability, cash flow, risk tolerance, and how much downside exposure an operation can realistically handle.

The important part isn’t choosing a specific strategy today.

It’s recognizing that selling cash grain and participating in future upside can be two separate decisions.

That creates flexibility.

And in a year with a wider range of possible outcomes, flexibility has value.

Stop Arguing With the Market and Start Reading It

Every USDA report brings the same debate.

The yield is too high. The acreage is wrong. The carryout doesn’t make sense.

Maybe.

But being angry about a number doesn’t tell you what to do next.

There are other signals available that can help determine whether the physical market agrees with the headline numbers.

Basis and spreads matter.

If grain is genuinely difficult to source, eventually the commercial market has to compete for it. That pressure tends to show up in basis and spreads.

If supplies are comfortable, those signals usually tell that story too.

That doesn’t mean they predict exactly when futures will move. Markets can stay disconnected longer than expected. But they provide another layer of information beyond trying to guess a national yield from social media pictures and local crop conditions.

The goal isn’t to prove somebody wrong.

The goal is to recognize when the structure of the market starts changing.

Takeaway: Watch what commercial grain buyers are doing, not just what everyone is saying.

Wheat Finally Has Something Worth Watching

Wheat has disappointed plenty of people over the years.

Every promising story seems capable of disappearing just as quickly as it appeared.

But the environment deserves attention this year.

The Russia-Ukraine conflict has again put production and export movement from the Black Sea region into focus. If disruptions continue, the implications extend beyond headlines because that region is an important part of global grain movement.

At the same time, domestic wheat supplies and spreads are creating opportunities worth monitoring.

None of that guarantees a major move.

It simply means wheat has more potential catalysts than it has had recently, and producers holding wheat may want to think carefully before assuming the best decision is automatically to move everything immediately.

This is another place where the broader lesson applies:

Recognize the year you’re in.

Cattle May Be Sending a Different Signal Too

For several years, betting against cattle has been a painful exercise.

A shrinking herd, strong demand, and slow expansion created an unusually durable bull market. Producers who kept hearing that cattle were “too expensive” watched the market continue higher anyway.

That history matters.

But it can also create complacency.

One of the important changes now is the relationship between what is happening at the sale barn and what is happening further down the chain.

Cattle are still commanding aggressive bids, but boxed beef has not shown the same strength.

That deserves attention.

Add rising energy costs, expensive feed risk, imports, and pressure on consumers, and the cattle market is beginning to face more headwinds than it did earlier in this run.

That doesn’t mean cattle suddenly collapse.

The supply side remains important, and this bull market has earned plenty of respect.

But after a run this long, the strategy may need to change from assuming every pullback is an opportunity to recognizing that rallies can also become opportunities to manage risk.

Planning Beats Predicting

There is still too much information missing to know exactly how this crop year plays out.

That’s okay.

You don’t need to know the final yield today.

You don’t need to predict exactly where corn, wheat, or cattle will trade months from now.

You need a plan for what you’ll do as the information changes.

What happens if production estimates continue falling?

What happens if additional acreage keeps supplies comfortable?

What happens if global disruptions push energy and grain markets higher?

What happens if you make a profitable cash sale and the market later gives you a reason to want some upside back?

Those are useful questions because they lead to decisions.

Trying to predict one number months in advance usually doesn’t.

Final Thoughts: Don’t Fight the Last War

The lessons from the last two years shouldn’t be forgotten.

They just shouldn’t become automatic rules.

Holding grain too long because you’re convinced a rally has to come can be expensive. But dumping grain simply because holding it didn’t work recently can create a different

problem.

Markets change.

Good marketing plans change with them.

Right now, the job isn’t to decide that everything is bullish or everything is bearish. It’s to recognize that the range of outcomes has widened and start building a plan that can adapt as the picture becomes clearer.

Because the best strategy for this year probably isn’t the one that would have worked last year.

🎙️ This week on Hedge Heads: The Market Is Changing. Your Plan Should Too.

Listen to the full conversation at thehedgeheads.com/podcast

The risk of loss in trading commodity interests can be substantial. These are opinions only and not trading advice.