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Higher highs gone for a while?

Agriculture.com Staff 02/13/2016 @ 2:53am

CHICAGO, Illinois (Agriculture Online)--Following a high of $13.41 in the March CBOT futures contract January 14, soybean prices have dropped leaving some producers wondering if they missed out on the 'beans in the teens' market.

For example, in the Marketing discussion group on Agriculture Online, 'touser' posted, "I'm wondering if this isn't the start of the Feb. break or John Deere low. If it is, then shouldn't the prices at least equal or exceed the highs that already have been made, or has the market done its job of rationing supply?

Another discussion group member, 'hardnox', says, "Markets often give a second chance. Thursday gave a second shot to sell beans. I think today or tomorrow is the chance for corn."

CBOT traders say producers that didn't sell at the $13 mark will have to wait to capture higher highs. And the wait for higher highs could last until spring or summer, traders say.

Some traders believe that unless the energy markets take off, lower markets are seen prevailing.

Carlton Numpkes, K-Commodities, says market trends show there is hope for a return of higher highs in the agriculture sector.

"Most major tops are made in double-top formations. For instance, crude topped along with gold. So, I think we'll have another shot of higher highs at some point," Numpkes says. But, it might not come until the pivotal July 4 weekend. That's when we'll know the South American crop, and we'll know what our crop looks like."


For producers still holding onto old-crop soybeans, consider rewarding the market, Numpkes says.

"If you still have soybeans from last year, congratulations, but don't screw it up now," Numpkes says.

The CBOT floor trader explains the 'smart money' is made 10% from the bottom of a market and 10% from the top. As of Thursday, the March CBOT soybeans are between 85¢ and $1.00 off the high. That's within the 10% of that 'smart money' theory.

"So, you've confirmed a high, and you didn't sell out at $8.00. Take the money on it," Numpkes says. "I think you'll see some people screw up marketing their crop by trying to squeeze the rag until it's totally dry."

Meanwhile, there can be a strong seasonal high in the May-June period, but producers that are unsold may have to lug that crop to July to see over $13 soybeans, a floor trader says. "The producer will have to hope volatility takes the market to higher levels."

Because ethanol is profitable at current market prices, there are proposed higher government mandates for renewable energy, and the world is still tight on grain stocks, the markets can only break so far, floor traders say.

"I don't see any wholesale slide in commodities, but we're not measured against the highs until the next fiscal quarter," a floor trader says.


On corn, Numpkes urges producers to sell Dec. corn $6.00 calls for 15¢. "Sell 10% of production, that's 15¢ you take to the bank. So, worst-case scenario, you're going to let 10% of your corn go at $6.15 per bushel."

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