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Another opportunity

Agriculture.com Staff 04/03/2009 @ 2:06pm

The positive government report and better grain prices this week motivated me to go back to my price data base to see how soybean and corn prices normally act at this time of year. I have been working with the long term seasonal charts all winter in marketing meetings. Even then I forget the details of exactly how markets react to the changing psychology as the season progresses.

In my file of December corn futures and November soybean futures I have the ability to look at averages of the most recent 10, 20 and 30 years. This allows me to study not only price patterns but how those patterns have changed over the years. Surprisingly, the seasonal patterns have remained pretty consistent between the early years and more recent times.

The charts show both soybean and corn prices making two highs in the March to late June time period. I consider the most recent 20 years to be the best period for comparison. The twenty year chart misses some of the very low prices of the 1980’s and moderates the effects of the most recent very high prices. On that chart highs came in the soybean market on March 9 and June 23. For corn the high dates were April 9 and June 17.

The lows during that time period were only a dime below the highs for corn and 12 cents for soybeans. Picking the top any time during those months was less important than selling a large portion of the crop on price strength. Prices have a strong tendency to fall apart after fear of planting delays and weather problems are past. About seven years out of ten that happens shortly after the July 4 holiday.

The price drop from the March through June high to the low at harvest time is 77 cents for soybeans and 41 cents for corn. Those averages include the odds years like 2007 when prices rallied from planting through harvest. That difference should be a big motivating factor for any farmers to be aggressive in making new crop sales.

Price strength this week should not have been unexpected by anyone familiar with seasonal price trends. The market is giving another opportunity to lock in good prices on both old and new crop grain. For the time being, the psychology has changed. How long this improved outlook lasts is anyone's guess!

The positive government report and better grain prices this week motivated me to go back to my price data base to see how soybean and corn prices normally act at this time of year. I have been working with the long term seasonal charts all winter in marketing meetings. Even then I forget the details of exactly how markets react to the changing psychology as the season progresses.

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