Al Kluis: Looking into the future
“Will you use those seasonal patterns to make cash and new-crop sale recommendations after this year? It did not work real good in 2010.” That was the question and comment from a farmer in western Iowa.
I had to admit to the farmer that 2010 was a very unusual, counter-seasonal marketing year.
Corn and soybean prices put in a major high in early January, a major low in late June, and then rallied right into and right through harvest.
Yes, I told that farmer, I would still use seasonal patterns as one of my market analysis tools in 2011.
I view late June as being a key change-of-trend time period. Here is an excerpt from the front page of the June 26, 2010, Al Kluis Report weekly newsletter, where I wrote this analysis about timing the grain markets:
“June 18-21 and July 2-6 are two of the most important change-of-trend time periods. In 2008 and 2009, those time slots had major highs in the corn and soybean markets. Be ready this year for the opposite.”
The seasonal odds analysis that I have used for over 30 years is the concept that corn and soybean prices will usually peak in the April-through-June time period and then bottom in the August-through-October time period.
I have sorted through the most recent 20 years of price data and provided two seasonal charts that I think are the best illustrations of the seasonal concept. I have also provided the five-year corn and soybean seasonal odds charts. I want to emphasize that none of these patterns have 100% reliability, but the examples shown have a reliability of 60% to 80%.
So what did I use this year besides seasonal odds in 2010? And what will I use in 2011?
I used three marketing tools in 2010 that had me making sale recommendations as prices worked higher. These analysis tools also helped me avoid any sales at the low.
1. Price And Profit Sales.
I made a cash sale of the 2009 crop corn and soybeans and recommended a 10% sale of the 2010 corn crop in January 2010. Prices were at a good enough profit level to make a cash sale and get some new-crop corn hedges on.