You’ve got to have a pretty tough gut to live the life of a farm marketing advisor.
You live the life of telling farmers when to sell their crops, knowing you’re almost never going to pick the top of the market and will occasionally make sell recommendations near the bottoms.Â
Most advisors make no claim to trying to pick the tops, but that doesn’t stop most of their clients from openly or secretly desiring to sell their entire crop at the peak of the market. Most advisors spend their time convincing clients that selling incrementally and attempting to lock in profitable prices through a crop year makes more sense that speculating on tops and bottoms, and most clients wouldn’t remain clients if they weren’t willing to listen to their advisors’ suggestions.
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But still, when advisors made sell recommendations last year at this time on wheat, as its price soared, they felt confident that it was good advice because it was a profitable level and a way of capturing a rising market. However, as prices kept spiraling and hitting levels literally never seen before, many got earfuls of criticism from clients who felt deprived of their best opportunity in years.
And along coffee row lots of farmers who hadn’t priced anything could be gleeful and make fun of the farmers who locked in prices in the fall. So advisors who had made early sell recommendations didn’t get a lot of positive feedback.
But a lot of farmers who happily watched crop prices climb into mid-summer didn’t price out much at all, waiting for predictions of things like “$30 canola” to come true. And then the market fell, and fell, and fell, and has kept falling until recently. A lot of glee washed away, and a lot of grins by those who hadn’t priced early were wiped away by the slump.
Farmers who locked in prices last autumn might have seen lost paper profits as prices went up, and unpriced farmers might have seen paper profits skyrocketing in the rally, but in the end those early-pricing farmers probably didn’t do too badly, and a substantial number of the summer’s paper winners ended up seeing those paper profits flushed down the toilet.
The other day I mentioned to an analyst that his job seemed to me to be like regularly putting his private parts on the anvil and seeing whether reality would hammer down on it. He laughed, then said “That’s about it. It’s a relief when you’re right, but you remember when you were off.”
