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May Successful Marketing Newsletter Is Out

Sell crops while planting

DES MOINES, Iowa -- Being a successful marketer means you take time each day to work on marketing, and you stay disciplined.

This is just one of the key messages of the May issue of Successful Marketing Newsletter.

Al Kluis, Kluis Commodities, tells newsletter customers that the grain markets often make major moves in the month of May, right when you are busy planting. “Take time early each day to get a market update and to make sure your offers are in place.”

Already, the May farm futures movement has been volatile, with soy meal prices up 2.50%, soybeans up just .25%, and corn down 3.25%.

“You (farmers) went through some very low prices and a lot of negative news in late February and early March. Now the attitudes have changed, and market volatility has increased. These days, rather than telling customers not to panic, I tell farmers to get their orders called in, get the cash crop sold, and get some new-crop hedges in place. And do it NOW,” Kluis states in the Successful Marketing Newsletter.

Do you want to know about being a successful grain marketer? You can subscribe to the Successful Marketing newsletter online at successfulmarketing.com/deal. Or, subscribe now by calling 1-800-374-3276.

Last year, there was a three-week rally in May. When it was over, it was over, Kluis says. “Six weeks after the rally began (only three weeks after the top), prices were making new lows.”

Why are prices moving so much faster now?

  1. We communicate faster. Everyone is hooked up to the internet. The majority of farmers have smartphones, so they are able to keep up with the markets even when they are in the field. This is a global phenomenon. Buyers and sellers all over the world are constantly tuned in.
  2.  We trade longer because of electronic trading and the longer trading days. In the old days, when pit trading started at 9:30 a.m. and wrapped up at 1:15 p.m., it took a lot longer for price discovery. What used to take weeks or months is now factored into the price of grain in hours. This is especially true when you look at the 16-hour trading days.
  3. The funds are all in. Commodity funds started trading huge amounts in the grain complex in 2005. The pace of price movement has increased to match. Volume and volatility have increased. This is one trend I am sure will continue.

Kluis tells Successful Marketing customers that the funds’ involvement in the markets is not bad. “You can use the increased volatility to your advantage,” he says.

Here are some strategies.

  • Sell in smaller increments. I recommend a series of 10% sales. Spread out your sales and make scale-up sales when the rallies develop.
  • Have your offers called in as GTC (good-till-cancelled) orders. That way, you can take advantage of the spikes that sometimes develop during the middle of the night. Just watching is not good enough anymore.
  • Make sure you are using all of the marketing alternatives: cash sales, basis contracts, hedges, and put options.

Bottom line: How do you make this work for your farm? Make some sales when these price targets are hit:

  • July corn - $3.88 and $3.98
  • July soybeans - $9.98 and $10.18
  • July CBOT wheat - $4.78 and $4.98
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