John Roach lives about 1,500 miles from the farm where he grew up in Carlisle, Iowa. But the perspective about the challenges of farming and those investing in farming never leaves him.
People too often forget perspective these days in a 24-7 information overload where “hot takes” by analysts and the opinionated can try to outshout voices like Roach who stress the importance of history.
“Market mayhem,” “global meltdown,” “recession’s return” filled short-sighted politicians’ mouths, talk shows, and social media doomsayers after the Dow dropped 2.6% on Monday, and the S & P 500 dropped 3%. It was their worst session in about two years.
But the U.S. financial markets built themselves back up in the days that followed, showing that Monday’s volatility may have been a bump in the country’s multi-year economic recovery from 2020’s onslaught of the global pandemic.
RELATED: The Wall Street Journal followed the stock market’s down and up for the week, as well as detailing how weekly initial unemployment claims fell to put them more in line with recent figures. Read that here.
Roach, who has been a licensed commodity broker since 1973, advises investors not to get too stirred up with any day’s financial reports or agricultural forecasts. He knows how things change.
“We went to a boom time in agriculture,” Roach said about when he entered agriculture as a young adult in the 1970s but then experienced the dreaded Farm Crisis that followed in the 1980s.
“That was a pretty humbling period of time when we really got to know farmers very well, because we became very personal during all those difficult times.”
Roach is the CEO and Founder of Roach Ag, LTD, which he founded in 1978. The company has expanded to now include a daily e-newsletter, publishing, marketing, and retirement services.
He moved to Boca Raton, Florida, in 2001 for no more cold Iowa winters or state taxes.
Roach joins his son, Todd, daily – thanks to Zoom technology – for a Midwest to East Coast debrief, where they partner on a daily newsletter focused on the commodity markets.
Land values are still at historical highs in many places. And while farm incomes may drop this year compared to more robust times two or three years ago, the industry is still strong, Roach believes.
He also doesn’t believe that the commodity markets will suffer as much as some others do. Again, it comes back to perspective.
Roach cites the surplus supplies that lingered in 2020 as COVID-19’s arrival paralyzed some parts of the agricultural, consumer, and commercial systems with so many people sheltering at home.
“Give me another time when we had big production and poor consumption,” Roach said comparing 2024 to 2020.
“It’s pretty easy to go back to 2020 and take a look at what are the inventories that we were dealing with at that time because that was the last major low in the market.”
Flashback: “A Shock Like No Other” headlined this report from the World Food Bank in April 2020 as COVID 19 formed its grip on the commodity markets. The report provided an early glimpse of the implications.
Roach recalled how inventories grew as the pandemic shocked the system. A “real emotional impact,” Roach said.
“We didn’t know what that was going to do to long-term demand. We had no idea.”
He added, “What we were worried about was the short-term demand was getting killed.”
Roached chose corn to provide a “then and now” comparison. Inventory was about half a billion bushels more in 2020 compared to 2024.
In 2020, the ethanol market collapsed as demand for gasoline hit the brakes. Some people forget that these days as they post messages on social media longing for the days of cheaper gas in 2020.
Do they want the country’s economic paralysis to return as well? Probably not.
Perspective.
Corn surpluses could end up being bigger than expected in 2024, and prices may fall. That is still possible, Roach said. But, overall, he feels like things are in a better position than they were in 2020. That is why he has more optimism than some others that commodity prices may not sink too low.
“We’re not as surplus as we were in ‘20,” Roach concluded, “We should not have cheaper prices than what we had in 2020.”
Perspective.
RELATED: John Roach is a frequent contributor to “Market to Market,” the weekly agricultural show on Iowa PBS. Roach examined the ethanol industry in a December 2021 analysis. Watch that show here.
