Looking back over the past few months is a must for all farmers and producers. The agricultural markets have been one big soap opera, bring every possible emotion to not only farmers and producers, but speculators as well. There has been laughing, crying, fear, greed and every other possible emotion any person can feel.
Just a year ago cattle futures were on their way to the moon and cattlemen and those speculating the prices would never go down got caught up the emotion of greed, neglecting hedging or profit taking. There I was in the media warning that this time was not different and high prices would cure high prices. Of course greed is dangerous, most ignored warnings and here we are one year later fearful that the end is near and cattle will never go up again.
In that same year the grain producers were puking their brains out losing money on every bushel wondering how they were going to survive because they were sure the end of the world was here and grains would never go up again. Twelve months later here we are and the grain traders and producers are now filled with greed as they count their money. Most will forget the misery they felt and let greed take over. When these markets fail -- and they will -- they will regret not protecting the profits, looking back with regrets and asking themselves how they could make the same mistake again!
All markets -- commodity, financial, fixed income -- run through the same cycles and are all driven by the same underlying emotions of fear and greed. Understanding probability and market action is more important than any other single item. Remember news, weather and other outside factors are only temporary but all markets run on probabilities.
As humans we often forget about the math and reality as our emotions of joy or despair take over our common sense putting us in the worst probability position instead of the best. One thing every farmer, producer, speculator and trader should be prepared for is that history always repeats. You are doing what you do to make a profit and profits must be protected. Your takeaway is simple, this time is not different and it's always about the money.
Keep those stops tight!
The views, opinions and positions expressed by the author are theirs alone and do not necessarily reflect the views, opinions or positions of Pro Farmer.