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A long road

Agriculture.com Staff 11/29/2006 @ 7:16am

Thursday I will be doing the first of my winter meetings at Grinnell, Iowa. It begins a long tour of meetings that will take me as far away as Ontario and finish up with an appearance at the Commodity Classic at Tampa, Florida in March. I love speaking to audiences and I love traveling as long as I can sleep in my own bed at home most nights.

I must admit I am a bit apprehensive about the subject matter of the meetings I am doing on my own. The "Winning the Game" workshops are pretty much developed around software that sets the agenda. Knowing what to tell farmers who expect me to know what grain prices are going to do is a totally different matter.

A lot of careful consideration went into the subject matter for this weeks meeting. I finally decided to try to put a perspective on potential demand brought about by ethanol and biodiesel. This was not easy to do because not all of the information I wanted about proposed and planned ethanol plants is available to the public. After using some estimates on planned construction, my data shows that supplies will be unrealistically tight if all of the planned plants go into production.

My suggestions for coping with this situation are as follows. First, seasonal trends will continue to be good guidelines after the initial shifting of prices to a level higher than we are used to. That is happening now. Secondly, futures options can be a tool in staying with a volatile market. Most people want to sell grain and buy calls or buy calls early to cover cash sales to be made later. My preference is to buy puts and hold cash grain or use a synthetic put in the summer to cover fall deliveries.

Third, for soybeans the"Dead Cat Bounce" will still be a good strategy. In 27 years, it has never failed. It worked better than ever this year. Because of the timing of this strategy, it picked up most of the recent rally. Finally, I firmly believe in diversification. I never commit all of my production to one strategy or one sale. Numerous sales scattered over high price times on the seasonal charts has a good track record and will probably always have.

I look forward to meeting many of you at one or more of my meetings this season. Meanwhile, happy marketing!

Thursday I will be doing the first of my winter meetings at Grinnell, Iowa. It begins a long tour of meetings that will take me as far away as Ontario and finish up with an appearance at the Commodity Classic at Tampa, Florida in March. I love speaking to audiences and I love traveling as long as I can sleep in my own bed at home most nights.

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