3 Takeaways from Our April 16 Webinar on COVID-19 & Commodity Markets
On April 16, we hosted a live roundtable discussion between four FBN Crop Marketing analysts—Kevin McNew, Chief Economist; Rejeana Gvillo, Senior Commodity Analyst; Ryan Denis, Head of Crop Marketing - Canada; and Cy Monley, Head of Brokerage—to help farmers like you gain a better sense of the current state of commodity markets as the coronavirus pandemic continues to impact most areas of the world.
Here’s a quick look at three key topics our panel discussed
Even if you weren’t able to participate in the live event, you can still watch an archived recording of the webinar available on YouTube. We’ve also identified some key takeaways from their conversation below and included timestamps so you can navigate to specific moments in the webinar for more detailed commentary.
1. What are some ways the coronavirus is impacting the ag industry, in particular demand for commodities?
The demand side of the balance sheet for corn (1:30) has softened since stay-at-home orders began to take hold, driving price action downward as ethanol production slowed significantly over the past several weeks. We’ve actually been tracking U.S. mobility trends during the COVID-19 pandemic to gain a clearer picture of how ethanol demand might be impacted moving forward.
In Canada, demand for malt barley (13:43) has declined as bars and restaurants have closed their doors and beer consumption rates lowered. Price action for old-crop malt barley has all but disappeared, and new-crop malt barley now turns to the country’s export program for supportive price action.
Wheat in both the U.S. (5:49) and Canada (15:31) actually saw some positive price action as consumers scrambled to stock up on flour and other wheat/durum products (e.g., pasta), but we believe this trend is likely to be relatively short-term (21:59; 22:34).
Meanwhile the livestock industry (6:46) has experienced disruption over the past month with plant closures and decreased demand from the restaurant industry.
2. How can a systematic, disciplined approach to crop marketing play a role in your decision-making during this pandemic?
Cy Monley (9:46) emphasized the importance of establishing both 1) your process for grain marketing; and 2) your success metrics so you can assess your grain marketing decisions at the end of the year.
He also discussed the importance of looking at data to guide your grain marketing. To drive this point home, he polled webinar attendees (12:09) to see what they viewed as the odds corn will be selling at or above $4.00/bu at harvest and later used the results of that informal poll (17:14) to discuss market probabilities and how they can be used to inform decision-making.
At Farmers Business Network℠, we’ve long advocated for a systematic approach to grain marketing. And particularly when there’s a fair amount of volatility in the market, this sort of disciplined, data-driven methodology can help you take some of the emotion out of your marketing decisions.
3. Based on current market conditions, which posture should farmers adopt—survive or thrive?
Kevin McNew posed this question (30:07) to his colleagues and fellow panelists halfway through the webinar. All four panelists agreed that the current market outlook suggests farmers are quite likely to find themselves in survival mode in 2020.
That’s not to say, however, that there weren’t a few windows of opportunity they identified. For one, while farmers are generally facing deflation in the market today (32:26), they might be able to take advantage of inflation a year or two down the road.
There was also consensus that, particularly in the current environment, focusing on return on investment (32:57) by paying attention to each and every line item on your operation is of utmost importance.
Want access to more insights like this?
This live webinar featured insights that are delivered regularly to members of FBN Market Advisory. With FBN Market Advisory, you'll receive truly personalized tools and reports to support your grain marketing efforts. Get access to market news, straightforward marketing recommendations, basis trend insights and weather reports—all relevant to your operation and geographic location.
FBN Market Advisory services are offered by FBN BR LLC, dba FBN Brokerage, FBN Market Advisory and FBN Advisory NFA ID: 0508695.
Disclaimer: The risk of trading futures and options can be substantial and may not be suitable for all investors. All information, publications, and reports, including this specific material, used and distributed by FBN Market Advisory shall be construed as a solicitation. FBN Market Advisory does not distribute research reports, employ research analysts, or maintain a research department as defined in CFTC Regulation 1.71. Past performance is not necessarily indicative of future results. Trading should only be done with true risk capital. We do not guarantee customers will receive specific benefits or value from participating in FBN Market Advisory; results will vary.
FBN Crop Marketing is offered by FBN CM LLC and is only available where FBN CM LLC is licensed. We do not guarantee customers will receive specific benefits or value from participating in FBN Crop Marketing; results will vary. FBN Crop Marketing offerings involve risks, including the risk that market conditions deteriorate, resulting in contract participants receiving a lower price for their grain than had they not participated.