LANARK COUNTY — Lambton County crop farmer Robert Johnston is the kind of guy who can make other people really nervous.
At March 4, with local soybean prices hovering at an eye-widening $17.50 per bushel, Johnston was not willing to sell his crop. He had about 11,500 bushels in the bin, which translated to just more than $200,000 but he left that on the table.
By many estimates the soybean price point was immensely attractive. What was he waiting for? All the soybean news was bullish, he said. As for his trigger point, “I don’t know,” he said. “I’m a gambler.”
He was seeing some of the best prices of his life but he was thinking there’s still more upside.
While he works with no price point in mind he does have a strategy of sorts. He sells based on a mix of intuition and information. He checks the opening and closing price everyday, scours the news and keeps an eye on two websites in particular. He likes the U.K. based Noggers blog that includes calendar charts showing when each major country plants and harvests its major crops. He also likes Market Talk on the AgTalk website, which posts comments from informed farmers and some analysts. “They’re pretty smart guys and they’re bullish,” Johnston said. “I know I’m rolling the dice big time but I’m informed.”
He calls his strategy “flying by the seat of my pants” and is quick to point out that over the years he’s been right more times than he’s been wrong and does better than the average farmer marketing grain.
So, what would make him sell his beans? “Let’s say tomorrow beans were off 30 cents. I go to a couple of places (online) to see what caused it. Either guys are taking profits today or the fun ride is over. If I don’t have to sell, I’ll ride the crazy train.”
A huge factor in all of this is that the stress doesn’t affect him, he said, adding that he is also among the smaller farms and wouldn’t recommend his strategy to others.
Johnston has a plan to cut and run, unlike some farmers who really are gamblers. Every farmer has been burned, says Lanark crop farmer John Vanderspank. “We’ve all done it. We’ve all hung on to get that extra five bucks (per tonne) and lost 50.”
Vanderspank says he hears of farmers every year who chase the top price, then hang on when the price drops, waiting for it to go back up, and end up selling when they have to at a much lower price. He figures as many as half of all farmers hang onto their crop far too long before they sell. “I’ll bet you a high percentage of farmers will not sell when it is going up and will panic sell when it’s going down. I don’t blame the guy. There’s big money in it. We haven’t seen these price increases in 10 years.”
Vanderspank’s strategy means forward contracting at a profit, even if he doesn’t like the price, to ensure he makes his November 1 payments for this farm and tractor.
“Two years ago I started selling soybeans at $460 per tonne, sick to my stomach it was such a bad price. And that year it turned out to be the best price of the year.”
In October he sold some soybeans at $470 before prices moved higher. But as he sees it: “You’re not going to go broke making a profit. So, you missed out the high this year. That should be dragging up next year’s price, so you start looking at next year.
“But have a strategy and stick to it. Know your cost of production and don’t be afraid to pull the trigger. Don’t look back.”