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Key dates for grain prices

Agriculture.com Staff 04/02/2010 @ 11:02am

The first week of April has historically been a key time for corn and soybean markets. Calculating average corn prices for the last 30 years, the average date for the yearly high has been during the first week of April. For soybeans, average date for the high is a bit more likely to come the first week of May.

However, the difference between April and May is so slight as to be almost insignificant. A quick glance at the current charts reveals that the high for 2010 is probably not going to be next week!

More important than the average date for the yearly high is the probability of prices going down from now through harvest. Corn futures prices have dropped 23 times in the last 30 years between the first week of April and harvest, around October 1. Soybean futures have dropped two-thirds of the years between the first week of May and harvest. For both crops, the indication is clear that making sales during this time period is, on average, a profitable strategy. No marketing strategy is profitable 100 percent of the time. However, making sales while there is still production risk has better odds of hitting favorable prices than waiting until the size of the crop is known.

It is difficult to make sales after prices have dropped. My philosophy is that if you have already forward priced some of your 2010 crop, there will still be time to add to sales on any rebound from recent drops. If you have no sales made, getting something sold takes on added urgency. Evaluate bids for new crop delivery. If they are above your break even with average yields, sell something. I do not believe in forward pricing this far in advance below the cost of production. There is still time for a weather generated rally.

Keep an eye on the spread between nearby soybean futures contracts and new crop November futures. For the past several months the nearby futures have been higher than new crop. This is normally a bullish indicator. Reaction to the report on Wednesday was that the nearby futures dropped more than the distant contracts. This trend continued on Thursday with nearby futures rallying only a penny while November futures went up seven cents. This kind of price movement indicates that the attitude in the trade is less optimistic than it previously was. If the trend continues, it might be a sign that it is time to add to forward contract sales for the 2010 crop.

As of the close on Thursday, November futures were down only a fraction following the report. Nearby May futures were down 32 cents. If cash soybeans in the neighborhood of $9 are profitable for your operation, there is still time to lock in a profit before prices drop any further.

The first week of April has historically been a key time for corn and soybean markets. Calculating average corn prices for the last 30 years, the average date for the yearly high has been during the first week of April. For soybeans, average date for the high is a bit more likely to come the first week of May.

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