I learned a grain marketing lesson from Old Man Winter. I have a steel roof on my house. It is made to look like tile, to go with the rest of the style. We were going for something between Mediterranean and Provence, and we got steel roofs. (Real tile I have not seen outside of the Southwest, and I am sure they would not be a good idea here. I have this vision of pieces falling off as they freeze and thaw.)
What we have learned about steel roofs after 11 years is that they are prone to avalanches. The first winter on the little original house, before expansion, the first good avalanche took the gutters off. We learned some people put those little ugly tabs on them to hold the snow. We just used gutter helmets so the snow slides off.
Behind my office, two roofs come together in an ell, and snow gathers there for the big avalanche. This is the one that shakes the house. This is the one that buried my Buick a few years ago, and I had not thought about how the new addition now gave the snow a 30-foot drop. When we uncovered the Buick, the roof was caved in.
So, why did I park my old car under this overhang again? Maybe because it was October and snow was a long time away. Maybe because it was just to get it off the lawn while it was getting mowed. Maybe it was because I don’t really learn things the first time.
Lessons to relearn
Grain marketing is like that. Something happens that is bad, and you think, wait a minute! I knew better than that! I already made that mistake once!
I tell farmers that my value to them is that I have already made all the mistakes, most of them several times. They laugh, but it is not funny. The truth is painful.
Human nature says that grain will be worth more tomorrow, especially if it was worth more today. It cannot mean that the gain today represents the high.
Human nature says that if the market drops, it will give me another chance. I will give the elevator a target to work on that is a nickel higher than the recent high, and surely we will get back there, and a little more. And, if it gets close, I can always pull the target and put in a higher target. After all, if it rallies back to the high, it will go a little higher.
Except that sometimes it doesn’t work that way. The temptation is strong to bet that history will repeat itself. Sadly, the history that sometimes repeats is the history of bad marketing decisions.
Looking at the January soybean contract is a reminder that the farmer who expects the market to repeat itself can be right. In fact, we talk about the fact that grain markets usually repeat their highs. This is especially true in corn markets.
The trick is to know it is a high, not a pause. Sadly, this is impossible.
The farmer is forced to sell with discipline on the way up. That January bean contract put in a high of 10.65 on the 28th of November. On Dec. 6, it got back to 10.61 3/4. The fact that we did not get back to the 10.65 now seems significant.
This Tuesday morning we are trading 10.12 3/4, 49 cents off that second high. So, we did, more or less, get a second chance, but I bet very little soybean movement was seen at that high.
It is December, the grain is in the bin, prices will surely get higher, something will change, the weather is too bad to fool with getting the auger moved around, the drive needs plowed closer to the bin — you know all the reasons for not selling grain.
What is hard to find is a good reason to sell grain. It can’t be, especially in the case of corn, that we have a high price. We need another reason, and a double top may be part of it.
Sometime today my roof will warm up enough for the ton of snow and ice that is caught in the vee of the roof outside my office to let go, shake the office, and crash to the ground where the car sat until yesterday. This time it will not crush my Buick or my clay pigeon thrower or my bicycle. I lost all three before I learned.
You can teach an old dog new tricks. The jury is still out on old farmers.