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In a panic over trade war? Not me

Even when the sky appears to be falling, be prepared to hedge risk and act on opportunities.

Hearing all the talking heads on the farm shows today, you maybe wonder where they got their vast knowledge on trade policy. You can hear them crying and hollering, “the market is down, the market is down,” and they say unless we can stop this trade war the farmers will all go broke.

Well, I may not be able to drive a straight line through the field like my dad can, but I did study ag economics in undergrad and graduate school, thrown in with some industry experience, and my gut tells me that if China doesn’t buy one bean from us we will all be fine.

Stop and think about it: the market has a fixed amount of demands and a limited amount of supply. It’s like a balloon, you push one place and it pops out another. So, if China buys all its soybeans from Brazil, so what? Then we will sell Brazil’s previous customers our soybeans. Brazil production cannot supply the world any more than we could.

Our prices are, and will be, determined by the world-wide laws of supply and demand. Personally, I am not surprised prices are down. Our crops look great, and it’s not just in Illinois but in other parts of the Corn Belt. More acres went into beans because of the poor corn prices last spring. The rules of the market haven’t changed. The people with the fancy suits up at the board of trade know this is a phony story, and so should you.

When it comes to our farming business, this daily volatility is causing a mix of worry and relief. What I believe is that even if the sky appears to be falling, I must be prepared to hedge my risk but act when I see opportunities.

The opinions of the author are not necessarily those of Farm Futures or Farm Progress.

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