Todd's Take

It doesn't seem that long ago that I was a kid sitting down for the noon meal at Grandma Cram's house after a morning of walking soybeans. You never knew what the table topic was going to be, but there was one hard rule. No talking allowed when Grandma turned the radio up for Grandpa to hear Arnold Peterson report the markets on WOW. I didn't get it then, but it was obvious from Grandpa's face, those prices were important. His facial expressions said it all.

Both my parents were from the farm, met at college and eventually moved to town. That made me a first-generation town kid, except during the summer when I got to have this other life, working on the family farm and hanging out with my grandparents and cousins. Good times, I wouldn't trade.

In college, I majored in Business Administration, but it was the economics classes that got my attention. My dad was a teacher, a World War II naval officer, a school Superintendent in our town and later became a stockbroker. After college, I tried a short stint with him, but I wasn't the salesman type. I eventually realized I was the analytical type.

In the mid-1980s, a friend introduced me to Larry Hagan. Discount brokerages were starting to pop up and Larry was putting together an office on 46th and Dodge in Omaha. Larry had a keen mind for business, and I am thankful for the job he gave me as a young commodity broker at Delta Futures. I had a front row seat to observe markets in action and met a lot of interesting personalities.

It didn't take long to see the shortcomings of the economics courses I took in college. Watching corn trade below $2 a bushel and sugar fall below 3 cents a pound, I quickly figured out theories of price equilibrium and rational behavior don't hold up when people get frightened. It was also about this time I started to trade notes with my Uncle Gary, a lifetime farmer turned market adviser. He and his neighbors formed a study group after suffering more than their share of bad market advice. From their study, Gary came up with an effective way to hedge risk on the farm that did very well without relying on making predictions.

When I started as a broker in January 1985, spot corn was roughly $2.70 a bushel and now it is around $3.80. That's not much of a change, compared to the price of everything else since then. The Dow Jones Industrial Average, on the other hand, is now up more than 33 times its price at the start of 1985. If that doesn't show the difference between owning a perishable asset versus owning assets that generate income, I don't know what does. Don't tie up your money in holding crops for too long. Get it into assets that go to work for you. Old timers would tell you farmland has been very good to them.

As readers of this column know, the changes in farming over the past 40 years have been dramatic. Even though our grandparents would marvel over today's equipment, I can't say farming as a business is getting any easier. In my short time, farming has been one of the most difficult ventures the world can't do without.

It has been a happy coincidence that DTN was an important part of my early days as a commodity broker and circled back again, later in life. In the fall of 2011, I joined DTN and slipped into the role of market analyst in the spring of 2013, working with Lead Analyst Darin Newsom. As many know, Darin is a DTN legend in my humble opinion. For fans of the old TV show, Dragnet, Darin once said I had a "Joe Friday" approach to markets. I gladly take that as high praise.

If there was one thing I wish people knew about my co-workers at DTN's award-winning newsroom, it is how much we all care about the readers we serve and how hard we all work to get the facts right. We are a mixed bag of personalities that make mistakes, cuss and argue one minute and laugh the next. We're not as physically close since COVID-19, but we still care about agriculture and each other. I know I will miss my DTN family.

After 40 years of observing and learning from commodity markets, here are two bits of advice to ponder.

1. Have a healthy skepticism of any market view you hear, no matter who it comes from. Thanks to my dad and Uncle Gary, this is one advantage I had from an early age. "Experts" are just as fallible as the rest of us and surprises do happen. As the old theologian G.K. Chesterton once said, life's wildness lies in wait. Don't strain your brain trying to outguess the future.

2. Try to keep these two opposing thoughts in mind: First, markets are people, sometimes sober and reliable and sometimes emotionally erratic. Second, have respect for the breadth and complexity of information that goes into the expression of prices. Much like all of us, the market is flawed, and the emotional aspect makes prices more volatile than they otherwise would be. Even so, those prices say something about the market's underlying condition. I've blamed USDA and speculators for their roles in distorting prices and have often wished I were King. In the end, we all have to deal with what is. The sooner you understand that the better chance you'll have coping with this very difficult business.

Today's crop prices are in the dumps and the number of farmers is dwindling with each passing year. I know just enough history to know that life is full of miracles we tend to overlook. Thank you for talking markets with me all these years and best wishes in the days ahead. If you happen to visit this fall's Farm Progress show in Boone, Iowa or Husker Harvest in Grand Island, please stop by and say hi.

Until next time, Aloha.

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Comments above are for educational purposes only and are not meant as specific trade recommendations. The buying and selling of commodities, futures or options involve substantial risk and are not suitable for everyone.

Todd Hultman can be reached at Todd.Hultman@dtn.com

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