FEEDSTUFFS PRECISION PORK Market Report – August 28

These days there is an election being held every day on the
trading floor, says senior market analyst David Bauer of Provimi.
In this week’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 finger pointing. 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 week’s recap or want
to discuss something not covered, feel free to ASK DAVE
at David_Bauer@cargill.com. Plan today for
tomorrow’s success.


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