Sometimes people ask me why the market moved a certain direction at a certain time. My answer is 'because it was time'. I try not to be flippant when answering such a serious question. However, looking at my seasonal price charts after the fact, the answer to the question seems obvious.

The move in the soybean price since January 1 is an example of this principle. The price move from October 1 through December 30 followed almost exactly the normal pattern for a 'Dead Cat Bounce'. In an average year, the most the cash soybean price rallies is 60 cents off the harvest low. In rare years, it goes as much as a dollar. This year the price rallied 93 cents.

Seldom does the bounce last past the end of December. This year the peak was January 4. Clearly it was time for the rally to end. Many fundamental factors came together to cause prices to drop. Probably more important, however, is the psychology caused by the anticipation that did not materialize of fund money coming into the market.

Unfortunately, the next seasonal bottom on the long term charts is over a month away. I hate to think how far prices could drop if there is no change in the psychology before next month. Cash soybean prices are high enough that they can go down quite a ways before the marketing loan kicks in. There is no down-side protection in the meantime.

Most farmers took the LDP on corn so there is no protection there either. The government report was not as bearish on corn as it was on soybeans. I hope that means the drop in price will not be as drastic.

The attitude in farm country is usually quite negative going into the end of February. There are bills to pay, payments to make and supplies to be ordered.

Sometimes people ask me why the market moved a certain direction at a certain time. My answer is 'because it was time'. I try not to be flippant when answering such a serious question. However, looking at my seasonal price charts after the fact, the answer to the question seems obvious.