Another bull market in corn and soybeans has come and gone, and the results are essentially the same. Most producers watched it go up, watched it go down and are now wondering what to do.

Some producers took advantage of the market and did extremely well. Big crops and big prices produce big profits. But nearly 75% of producers sold very little, or nothing, when prices were high.

Why do the majority of growers continue to wait too long every time there's a bull market? The answer is simpler than you might think. Markets do change over time and different fundamental factors impact different markets.

For example, in the last bull market in corn eight years ago, few concentrated on the bullish fundamentals of ethanol. But while factors change from one bull market to the next, one thing never changes — people!

People still get too bullish at tops and too bearish at bottoms. It's true in the stock market as well as commodity markets.

Seven Stages Of Marketing

For years we have used the graph above to illustrate the emotional stages of marketing to our subscribers and clients of The Brock Report. As individuals, we need to recognize which of these seven stages we are in because we react differently to news based on what phase we are in. For example, in Phase 4, the exuberant phase, which occurs at market tops, most the news is going to be bullish, and if there is any negative news we have a tendency to under-react. In Phase 5 and 6 most people freeze and can't react at all. In Phase 7, once the news all turns negative, the average producer has a tendency to grossly overreact.

Some producers think that Cargill, ADM or somebody out there has a crystal ball and knows exactly what's going to happen. I can assure you that is not the case. Traders in these companies are often as emotional as farmers when it comes to pulling the trigger on making marketing decisions.

Having “perfect information” actually provides very little help for most people. I some times joke at seminars that if God guaranteed farmers exactly what was going to happen in the market, 80% would still go home and wait to see if he was right.

So what phase do you think we are in right now in corn and soybeans? Most of you will probably disagree with me, but I believe we're somewhere between Phase 5 and 6 — hope and angry.

Why do I think that is the case? There are two reasons. First of all, more than 70% of the corn crop has been LDPed and there is still no sign of a bottom. That means at least 70% of farmers think corn has already made a bottom. In other words, a majority of farmers have tried to pick a bottom! History indicates that approach is normally extremely costly.

The other reason I think we could still be in the hope phase centers on the fact that many producers still remember last year's bull market and that they should have held their corn — and particularly their soybeans. So this year they're going to store their soybeans even though last year the trend was up and this year the trend is down.

Where To Go From Here?

While most readers do not want to hear this, corn that has already been LDPed will not likely be sold at higher prices. History tells us grain is going to be sold at lower prices based primarily on fear.

If higher prices were needed to move that grain off the farm then why wasn't it priced months ago when it could have been sold at much higher prices?

The answer is that particular group of producers really doesn't know what they want for their grain — they just know that today's price is not high enough. Consequently, the trigger will be pulled on remaining bushels based on emotions, not economics. More grain is sold based on fear than any other emotion and that takes us in to Phase 7 — and we're not there yet.

Some of you may say, “Yes, but if Asian rust hits or we get a drought, that's going to be bullish.” You might be correct, but I think the more important question to ask in the midst of one of the biggest bear markets in history is, “What happens to prices if we don't have widespread Asian rust and if we don't have a drought?”

Richard A. Brock is president of Brock Associates, a farm market advisory firm, and publisher of The Brock Report. For a trial subscription and information on Brock services, call 800-558-3431 or visit www.brockreport.com.