Implications of the war in Europe, labor shortages, and supply chain issues in an inverted market.

Robert Braden, General Manager, Uvalde County Farmers Co-op, Knippa, TX

"Between the exponential rise of crop input costs and global political unrest, many factors will collectively determine market direction and grain marketing strategies throughout our supply chain for the upcoming crop year.

"One of the more glaring issues that merchandisers and grain handling facilities will face this year will be ongoing market volatility and an overbought, high-priced commodities market. With higher commodity prices comes higher counterparty risk, as well as a need for increased capital to cover inventory positions. Good communication and extra diligence should be exercised when managing open contract equity.

"All merchandisers are certain to face increased supply chain issues due to daily skyrocketing fuel prices along with carrier shortages and other increases in transportation costs. At times, traders work on very thin margins to stay relevant in their competitive markets. All efforts will need to be used to mitigate the risk of freight increases when buying or selling into the deferred months.

"Finally, something that is always a paramount consideration facing our industry is weather. Today we are seeing a droughty trend across Texas and Oklahoma that is creeping north. Dry weather and poor growing conditions certainly will create more volatility in the marketplace and add additional supply issues for end users looking to book the critical mass needed to operate their mills or feed lots."

Henry Aufdenkamp, Commodity Merchandiser, Cooperative Producers Inc., Hastings, NE

"Two of the three top issues we face stem from a COVID hangover. First is the labor shortage. It's very hard to find employees, and it's a major issue as we try to keep up the volumes we've done in the past. We've had to sacrifice opportunities due to the labor issue.

"Rising costs in general is another issue. Wages, insurance, and the cost of adding and maintaining space in our elevators are all increasing. Margin calls are expensive, too. We're seeing rising costs across the board.

"The third issue is the inverse we're walking into for corn, wheat, and soybeans. The corn inverse has really made us stay on top of risk management. We're looking at ground piles differently because keeping quality is the name of the game with the inverse. We're getting ground piles up faster so we can move crops before the crop year end.

"Regarding new merchandising or marketing strategies, there's nothing noteworthy at the moment. Itís important to use labor efficiently and be more cognizant of labor because itís hard to come by. We have major issues with shipping freight, both trucks and rail, so we have to keep executing on what we do to stay ahead."

Michael Kaeb, General Manager, Goodwine Co-op, Goodwine, IL

"One of the biggest issues is extreme volatility. It's an emotional environment, and it's tough to make good decisions when emotions are high. I had a customer who didn't sell when the price was high, and then he sold when the price went down, and later it went back up to where it was earlier. Rather than sticking with a plan, people make decisions and then are discouraged.

"The second issue is 'high price syndrome.' If prices are good now, people wonder how high they'll go later. The reality is we're at the top of crop prices historically. It makes life difficult. High prices tend to discourage people from sticking to their plan.

"I know it's been discussed before, but old crop/new crop are two different animals. There's no guarantee the new crop price will reach the old crop price in the future. Separating the two crop years can be difficult, but they're actually two different products.

"Regarding new strategies, we're pretty traditional. For me, in a year of high volatility and high prices, trying new strategies isn't something I am crazy about. Many numbers have been locked in: seed, fertilizer, chemicals, revenue protection, etc. I would encourage taking advantage of profit when it's available and using target orders. Target orders are a very simple tool that takes the emotion out of constantly watching the market. It's a simple, easy way to lock in numbers that work for your operation."