Al Kluis: Long-Term Lows Are Due This Fall
Watch for a harvest low.
“Do your chart patterns work when you have earthquakes, tsunami, and a nuclear meltdown?” was the first question from a nervous farmer before the meeting even started. The meeting was on the day last March when corn and soybean prices had dropped the limit down. Her second question and comment were, “Why is this so hard? The volatility has made it impossible for me to sleep some nights. I feel like I don’t have any control even though I watch the markets all the time.”
Answer To Question #1
The chart patterns I work with do not work all of the time, but they do work the majority of the time.
When you have a dramatic fundamental event (like the earthquake and tsunami in Japan this winter), grain prices can move sharply higher or lower for a few days before other global fundamentals again take control of the price action.
Day to day, no one can forecast fundamental changes, so no one can predict the short-term gyrations in the market. I believe if you are farming and marketing your grain, you should not be so close to the market that you are watching every tick.
I use all kinds of market cycles and studies of patterns to fine-tune the recommendations that I make. The study of time cycles has helped me make better decisions. The longer-term patterns have been very reliable and useful in making decisions.
The long-term patterns will help me avoid having to sell in the months when prices are low. The short-term patterns are not as reliable, but they can help me get the crop sold on the right days and avoid the lows when prices collapse.
The corn and soybean markets tend to move up and down together. But the timing of when prices put in major long-term highs and lows is quite different.