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Roy Smith: Never Let Them Forget!

Agriculture.com Staff 03/22/2009 @ 11:00pm

My study of seasonal price trends has resulted in numerous thumb rules for marketing the soybeans and corn I produce on my farm. There are certain things that it is not wise to do at certain times of the year. There are other times of the year when action is a good thing. Of course we must always keep in mind that markets tend to do the unexpected about 30 percent of the time.

One of the principles I have learned over the years is to never sell grain in February. I have stated in this column many times that the function of the market in February is to make farmers depressed. It usually works very well, as it did this year. Another of my seasonal concepts is that psychology turns positive when the calendar turns from February to March.

One of the rules for being a market analyst that did not make my Murphy's Laws list is "If you are ever right, never let them forget"! That principle applies today. On February 6 and 23, I wrote that the time for price strength was coming soon. In fact, the change in trends came almost exactly as I had anticipated. The price rally that I noted on March 13 continued through last week.

Prices got high enough for me to lock in futures sales on the first increment of 2009 soybeans and corn. Since I was going to be gone Wednesday through Saturday, I used good-till-cancelled orders which were subsequently filled on Thursday. The price levels were above the crop insurance guarantees and high enough to lock in a profit if yields are equal to or higher than my APH.

It is easy to be optimistic when prices are rising. There is still plenty of time for prices to go higher. However, another principle I have learned over the years is that many times the biggest part of the spring rally is during the first three weeks. As of Monday, we are exactly three weeks from the March 1 low. Also, one of the indicators I watch is warning that the grains are getting into over bought territory. I never use a technical signal as the only reason to sell. Given the other factors and the fact that I had nothing priced for the year, it was prudent to take action. I hope that there are opportunities to make later sales at higher prices!

Today is my last "Winning the Game" workshop of the season. Last week I traveled to Western Nebraska for two meetings in the panhandle in the far northwestern part of the state. I was a hundred miles further from home than the previous week when I was in Illinois. I enjoy meeting farmers and sharing marketing ideas with them. It has been a hectic schedule but also very rewarding. I hope to meet many of you this summer or next year. I am sure that there will be something exciting between now and then as there always is in the grain markets.
Soyroy

My study of seasonal price trends has resulted in numerous thumb rules for marketing the soybeans and corn I produce on my farm. There are certain things that it is not wise to do at certain times of the year. There are other times of the year when action is a good thing. Of course we must always keep in mind that markets tend to do the unexpected about 30 percent of the time.

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