Watch Charts During Volatile Markets

Make decisions based on your bottom line — not headlines.

- By Al Kluis

This spring, the news was strongly bearish when the administration announced tariffs on most of the world, including most of our major ag export markets. The U.S. stock market, energy prices, and the grain markets were collapsing sharply. One late afternoon, a worried farmer called me. “Should I sell it all now?” he asked. “I am watching TV all day and — wow — are they bearish!” He told me everything he was reading on the internet was so negative. “I can’t stand it,” he said.

His call, and his reactions, reminded me of the Carter grain embargo in January 1980. The president embargoed wheat sales to the then Soviet Union as punishment for invading Afghanistan.

Over the last 40 years, I have learned that when a farmer calls and is emotional and ready to panic, I need to listen. I ask a few questions and try to get the specifics on his farm. I then keep listening. How many acres does he farm? Does he have crop insurance, and if so, at what policy level? Is he holding a lot of cash grain? What percent of his new crop has he sold ahead?

This farmer was close to being sold out of his cash grain and had a small part of his new crop sold ahead. I told him he was in better shape than most farmers. Also, because he had his Revenue Protection (RP) crop insurance policy, his new-crop production was at limited risk.

He was still very frustrated and wanted to do something.

I told him that long-term selling ahead below his cost of production is never a good idea. He mentioned that this reminded him of the grain embargo, during which ag prices and profits went lower for the next six years. I pointed out that even after the embargo was announced, we still had higher grain prices and more profitable selling opportunities six months later.