Jon Scheve with weekly market commentary made on August 2, 2024
Everyone is asking, “are the lows in yet?”
With what is known today, that probably is unlikely for the following reasons:
The low for the year rarely happens in early August.
Too many farmers have unpriced old crop corn still in storage.
Very little new crop corn is priced.
Every rally seems to be met by farmers selling.
It probably will be difficult for the market to rally until after the 2024 crop is harvested and locked away in storage.
Be Careful of Echo Chambers
Wikipedia defines an echo chamber as “an environment or ecosystem in which participants encounter beliefs that amplify or reinforce their pre-existing beliefs by communication and repetition inside a closed system and insulated from rebuttal.”
One of the worst things farmers can do when marketing their grain is to get caught up in an echo chamber. Only listening to information that aligns with a farmer’s beliefs increases their farm operation’s risk because they usually don’t plan for any other outcome.
I frequently see echo chambers in marketing meetings and online discussions. Last year, one particular group was saying how corn couldn’t go lower than $5.00. A few months ago, the same group was saying it can’t go below $4.50 and now they say $4.00 is the downside limit. Each time, members of this particular group had reasons why it just had to go higher. However, those reasons were based on social media posts others in the same group had posted over the weeks prior. They were basically just repeating each other over and over again, rather than acknowledging the possibility of other outcomes.
I have caught myself doing this too. Recently, I had a conversation about the market with someone who quoted another person I follow closely. I asked if they followed this person, and when they said yes, we both realized we were in an echo chamber. We were following and repeating the same information and not challenging the beliefs we both held.
That’s why I listen to those who disagree with my beliefs in market direction. I’ll use their arguments to poke holes in my viewpoints to see how strongly I believe in my position. Sometimes I may not think their viewpoints are valid and decide to stay the course with my marketing strategies. Other times I will adjust my risk management plan to take into consideration their ideas in case I am wrong. This strategy doesn’t guarantee I will hit the top but maybe it can prevent me from being at the bottom.
The biggest mistake any of us can make is believing things that may not be true. It is important to always ask yourself “What happens if what you believe will happen is wrong? How bad will that hurt you and are you protected if you are wrong?”
Jon Scheve
Superior Feed Ingredients, LLC
9358 Oak Ave
Waconia, MN 55387
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