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Webinar provides risk management strategies amid COVID-19

Article cover photo
It's unknown how long COVID-19 could impact the economy, says Al Kluis. He provided some marketing strategies during a webinar hosted with ISA recently. (Photo: Joseph L. Murphy/Iowa Soybean Association)

By Bethany Baratta, ISA senior writer

There isn’t a single sector that the novel coronavirus, COVID-19, hasn’t touched. This includes the grain and energy markets.

The Iowa Soybean Association (ISA) recently hosted a webinar with Kluis Commodities regarding risk management during this pandemic.

“These are challenging times, but as farmers we get through it,” said Tim Bardole, ISA president and a farmer near Rippey.

Al Kluis, marketing advisor and managing director for Kluis Commodity Advisors, said the stock market has responded to the expected slowing of the economy as a result of the pandemic.

The Dow Jones Industrial Average saw a 35% drop in prices between February 21, 2020, when the U.S. Centers for Disease Control called COVID-19 a “tremendous public health threat”, to March 26. Gasoline saw a 69% decrease in price during that time. The ethanol market lost 36% to 87 cents per gallon. Perhaps impacted the least were soybeans, which took a 3% hit to prices during that time.

He framed up the current market responses to COVID-19 to three other events in our nation’s history: the Carter grain embargo of 1980, the terrorist attacks of September 11, 2001, and the financial crisis of 2008.

Kluis said this pandemic is worse than those other three, and there can be some key takeaways for farmers to weather? this market downturn.

In the other crises, prices went lower for 2-3 months, rallied for a month, and then made new lows. Major lows came 3 to 6 months later.

Kluis said the number of new COVID-19 cases will have to move lower before farmers can expect some steam to roll into the grain and energy markets.

“We’re really not going to sustain anything positive in the energy markets or grain markets until maybe June,” Kluis said.

He says there are a few factors that would indicate a comeback in the economy, including when the U.S. stock market rallies above the 50-day moving average, the opening of U.S. Apple stores, and even when Major League Baseball makes its return.

As of yet, there’s no confirmation when prices will rally higher or when the spread of COVID-19 will slow, but Bardole said its business as usual on his farm.

“We’re going to put a crop in the ground and get a harvest this fall and hopefully 2020 is better than 2019 in a lot of ways,” he said.

Watch the recording.
Watch the recording.

For more information on the grain marketing strategies suggested by Kluis Commodity Advisors during the webinar, go here.

Contact Bethany Baratta at bbaratta@iasoybeans.com.

For more information on the grain marketing strategies suggested by Kluis Commodity Advisors during the webinar, go here.

Contact Bethany Baratta at bbaratta@iasoybeans.com.

For media inquiries, permission to republish articles or to request high-res photos, please contact Katie James, ISA Public Relations Manager at kjames@iasoybeans.com. © 2020 Iowa Soybean Association. All rights reserved.