Before we look at a single chart, we have to look in the mirror. The grain markets are not just driven by supply and demand; they are driven by human emotion—specifically, Fear and Greed.
Anchoring happens when you fixate on a specific price from the past. Perhaps you sold Canola for $24.00/bu in a previous drought year. Now, in a year where the market is trading at $16.00, you refuse to sell because it "feels" cheap compared to the historic high.
Many producers treat their grain bins as bank vaults. They believe that as long as they hold the physical grain, they are safe.
To execute a professional marketing plan, you must understand the language of price. The number you see on a text message from your local elevator is actually a composite of three different forces.
The futures price (traded on exchanges like ICE for Canola or CBOT for Corn/Soybeans) represents the global opinion of value. It is influenced by macro factors:
Futures provide the "baseline" price. However, you cannot sell "futures" directly to your elevator; you sell "cash."
This is where the battle is won or lost for Canadian and American farmers.
{Cash Price} = {Futures Price} + {Basis}
Basis represents local supply and demand. It is the premium or discount applied to the futures price based on how badly your local buyer wants the grain.
Strategic Insight: Never confuse a futures problem with a basis problem. If futures are high but your local basis is terrible, you shouldn't necessarily sell the cash grain. Instead, you might lock in the futures price (using a hedge or futures contract) and leave the basis "open," waiting for it to improve.
Turn on the farm radio or open Twitter, and you will find a dozen experts predicting where the market will go. "Corn is going to $6.00!" or "The bottom is in!"
At Klarenbach Research, we do not predict. We are Trend Followers.
Why? Because predictions are often wrong. Even the largest hedge funds, with billions of dollars in research, get it wrong. As a farmer, you cannot afford to bet the farm on a guess.
Trend Following is about humility. It admits that we don't know the future, but we respect the Price Action.
We look at charts to identify the direction of the momentum.
The hardest part of being a Trend Follower is discipline. When a trend turns down, you must sell, even if the news says "there is a shortage." The chart is the only truth that matters.
One of the most common questions I get is: "Should I store my grain until spring?"
The answer isn't a guess; the market is literally telling you the answer through Market Structure (also known as "Carry" and "Inverse").
This happens when future months are priced higher than the current month.
This is the opposite. This happens when the current month is priced higher than future months.
To execute a sophisticated plan, you need more tools than just driving to the elevator and asking, "What are you paying today?"
This locks in a price for delivery at a later date.
This locks in the Basis (the difference) but leaves the Futures price floating.
This locks in the Futures price but leaves the Basis floating.
Options are underutilized by most farmers because they seem complex. Think of them simply as insurance.
You don't need to be a Wall Street trader to use charts. You just need to recognize the major road signs. At Klarenbach Research, we rely on a few key indicators to remove emotion from the decision.
Think of price like a ball in a multi-story building.
The Breakout: When price smashes through a Resistance ceiling, that ceiling often becomes the new Support floor. This is a classic "Buy" or "Hold" signal.
These are lines on the chart that smooth out the daily noise to show the true trend.
Markets rarely move in straight lines. They move in waves. After a major rally, the market will almost always "retrace" a portion of that move before continuing. Fibonacci levels help us predict where that retracement will stop. It sounds like magic, but because so many algorithms and traders watch these levels, they become self-fulfilling prophecies.
A plan in your head is just a dream. A plan written down is a strategy. Here is how to build your grain marketing plan for the upcoming season.
You cannot know what a "good" price is if you don't know your cost.
Don't try to pick the top. Sell into the rally.
Sometimes price doesn't hit your targets. You need time-based exits to clear bin space and generate cash.
This is the hardest part. When your price target hits, you sell. You don't say, "Wait, it's going up fast, let's hold for another dime." You execute the plan. If the market keeps going up, great—you have more bushels to sell at the next target. If the market crashes, you will thank yourself for locking in profit on that first increment.
Farming is one of the few industries where the CEO drives the tractor, fixes the combine, manages the HR, and trades the commodities. It is an overwhelming burden.
However, the difference between a farm that just survives and a farm that thrives often comes down to the marketing. You can grow the best crop in the county, but if you sell it at the bottom of the market because you ran out of cash flow, you have donated your hard work to the buyer.
Grain marketing is not about guessing. It is about discipline.
It is about understanding the difference between Futures and Basis. It is about recognizing the difference between a Carry market and an Inverse market. And most importantly, it is about having the courage to follow the Trend, even when your emotions are telling you to do the opposite.
At Klarenbach Research, we act as your partner in this process. We don't just give you a newsletter; we give you a framework to make decisions with confidence.
The 2025 crop year will bring volatility. Volatility brings risk, but it also brings opportunity for those who are prepared.
References:
For a deeper dive into long-term industry lessons, check out this interview with industry veteran David Nobbs, which covers the harsh realities and huge wins of Canadian grain marketing: Lessons From 30 Years in Grain Marketing.
.avif)
.png)