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Feedstuffs is the news source for animal agriculture
August 28, 2020
These days there is an election being held every day on the trading floor, says senior market analyst David Bauer of Provimi. In this weekâ€™s episode of Feedstuffs Precision Pork, Bauer uses the recent post office situation as the perfect example of what he means by this. Many have been sowing the seeds that the U.S. postal service slowdowns were actual actions taken that have created dire problems. Others have said it was constructed election year propaganda aimed at selling a message in hopes of gaining emotional support for an agenda.
It is the same thing going on each day in our ag futures markets, says Bauer. In the grains industry, depending on whether you're a livestock feeder or a grain farmer and depending on the radio station or TV show that you listen to, the messages being sent by media outlets can easily play on the emotions of the audience. Knowing this, media looks to create the message that plays on that emotion. This is nothing new. But in times like these, Bauer cautions that such messages can easily get in the way of reality. The point to be made, he says is to is understand where information is coming from in these times of making risk management decisions. Realize that an election can be considered risk management.
When making production sales decisions and input purchase decisions, make sure you step back from the emotion, look at the entire picture and not get caught up in the contrived emotion of weather scares and crop conditions. Take the emotion out of it. It is late August and crops biologically die at this time of year. Has weather impacted crop condition, crop progress and yields? Absolutely. Are massive sales to China good? Absolutely. But remember it is China and we've been through these emotional runs before and they don't always end well, notes Bauer.
Situations like COVID, the hurricanes and others disaster in the past couple of weeks are doubling down the political pressures of bailouts and fingerpointing. Bauer says he has heard it said that geopolitical risks can be more damaging than wars and embargoes. So, when making risk management decisions always step back and understand why you're making the decision in the first place and always ask yourself if your decision is based on emotion or is it in the best interest of your business? Are you being reactive or are you working to be proactive? Or put another way, are you being margin focused or market focused?
These are uncertain times and it will pay dividends to be well-prepared. If you have questions on this weekâ€™s recap or want to discuss something not covered, feel free to ASK DAVE at [email protected]. Plan today for tomorrowâ€™s success.
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