Bull markets eventually attract a lot of media coverage. That’s when you want to be cautious. This is an indication that the “easiest” part of the bull move is over.
If you think back to 2022, shortly after Russia attacked Ukraine, hardly a day went by without a story about how the agricultural markets would never be the same again. Although Russia’s horrible war still rages, to the great detriment of millions of innocent people, markets were already adapting as media headlines declared supplies and prices had been altered forever.
Dramatic headlines are also common during major droughts. Or major floods. Or political changes in a major commodity-producing nation.
At times, media coverage is rife with free advice on what to do or buy to profit from a price boom. This is just as true in the outside markets – Semiconductor stocks! Copper! – as it is in farm markets.
If you’re a farmer, it’s wise to realize that this sort of thing is sometimes a sign of a market top. When it’s the flavour of the day for discussion by urban media, the bull markets are usually either over or close to being over.
If you’re an investor, be careful about buying in late. By the time the news stories are telling you it’s a no-brainer to invest in certain ag stocks or farm-related stuff, the best deals are long gone. You’re no longer looking at true value buying opportunities.
If you’re a consumer, don’t panic. Even in the fallout from major global turmoil and weather events, North Americans pay a lesser percentage of disposable income on food than anyone else. Remember too, that the actual grain in a loaf of bread or cocoa in a chocolate bar, is usually less than the transportation to get that to the store shelf, less than the marketing/advertising, and often too it’s even less than the package it’s in.
If you’re running a business somewhere in the chain between the farmer and consumer, remember that agriculture is weather-dependent, and markets are cyclical. There will be price swings in the future – this is part of the history of food production and farming.
In all cases, be aware of the potential for widespread media coverage of an event to develop closer to the end of a bull move than the start. This awareness may not guarantee improved results but can help reduce the odds of following the herd to an undesirable outcome.
