Prepare for More Volatility Ahead: Analyst

Agricultural market volatility has increased over the past few years, and it seems a safe bet for farmers to prepare for more of it ahead, according to a grain analyst. 

In fact, rather than betting on bullish or bearish trends, Ben Buckner of AgResource Company told a crowd attending the Ontario Agricultural Conference last month that it makes more sense for farmers to simply be ready for any possible market outcome. 

The reason, he said, is there are simply too many factors in the mix to draw any firm conclusions. The first land war on European soil in over 70 years is continuing unabated, conflict appears to be spreading in the Middle East, Houti rebel attacks in the Red Sea are impacting grain logistics, and climate change continues to have large influence on global production potentials. 

“So, the market at any point could just wake up and be very, very different from what it was just 24 hours ago,” he said. “We have not seen the list of ingredients to produce volatility this high. I just don’t think committing to a bullish or bearish outlook in 2024 makes a lot of sense.” 

According to Buckner there has been unprecedented volatility in the markets over the past three years, with corn trading as much as $3/bu higher or lower and soybeans as much as $4 or $5. It’s a sharp contrast from the period between 2014 and 2020, when both markets were relatively calm and chopped mainly sideways. He attributed that period of volatility to pandemic-induced fear of food shortages that drove prices sharply higher, which was then followed by rising – and now falling – inflation. 

The bottom line for farmers, Buckner said, is to expect continued volatility in the market, and to have a marketing plan in place for the inevitable highs and lows. 

“You come to these meetings to know if you should be bullish, or bearish, or neutral,” Buckner told the audience. “But we don’t really think it pays to commit to anything in 2024. We think 2024 will be defined by the lack of trends.”