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Better prices coming

Agriculture.com Staff 02/06/2009 @ 2:23pm

February is a time when it is difficult to get excited about marketing. In most years the best marketing activity is to make a marketing plan for sales of grain to be grown this summer and harvested in the fall.

In many previous years the lowest price of the year was posted in February. I called this time the "John Deere Low" because it is when farmers sell grain to make machinery and other term debt payments.

In recent years the February lows have not been so low. Since South American production has become a major part of world supplies, prices have tended to be higher in the spring as harvest approaches in the southern hemisphere. This is probably a "weather rally" based on production problems south of the border.

In earlier years, I told farmers who were gloomy about winter prices that the function of the market in February is to make farmers depressed. In most years it worked very well to dampen enthusiasm about the coming growing season. In fact it worked so well that I follow the principle of never selling soybeans in February.

While that seasonal factor has changed somewhat, I still think that there will be better sales opportunities ahead. Price action this week has reinforced that thinking. After a couple of bad days triggered by rain in Argentina, the rebound has been impressive. Even the equity markets, which have been bad for so long, seem to have found a spark of life in the past few days.

February is a time for patience. Seldom does anything good happen to the markets. Having prices hold together in the face of negative fundamentals is a sign that there is hope ahead when the temperatures rise and the fields dry up. If the rally continues I will not discourage sales if they are at a high enough level to lock in profit. I have my targets set high enough that they will probably not be hit until February is past and the calendar turns again.

February is a time when it is difficult to get excited about marketing. In most years the best marketing activity is to make a marketing plan for sales of grain to be grown this summer and harvested in the fall.

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