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The cat lives!

Agriculture.com Staff 11/20/2009 @ 10:54am

Two weeks ago it sure looked as if the 'dead cat' had exhausted its nine lives and was headed into the winter doldrums. On November 6, cash soybeans actually were priced at less than $9 per bushel here in Cass County. Adding to the insult, the previous high was on November 3, only three trading days before, the day I started harvesting my soybeans. Since I finished my soybean harvest, the trend has been almost straight up.

The theory of the 'dead cat bounce' says that if you drop a dead cat far enough, it will bounce. That does not mean that there is any life left in it or that it is going to get up and go anywhere, it just means that anything that comes down so far so fast is bound to bounce a little bit. With Thursday's cash price $1.43 over the harvest low of October 5, I am starting to wonder if the cat is alive and going places. Once the cash price gets more than a dollar over the harvest low, I have no guidelines telling me when to make sales. I prefer to sell in increments to spread the risk. As the price went up, I made sales at $9.00, $9.29 and $9.74. I still have a fourth of my 2009 crop left. Today commercial storage charges go into effect because the beans have been in the elevator for 15 days. I prefer not to pay storage on the beans, but a few pennies for a short time can be a good investment to spread price risk out over a longer period.

I feel comfortable using the 'dead cat bounce' technique to trigger soybean sales. Occasionally it causes me to miss a bull market later in the marketing year. There were also years when selling on this bounce as opposed to holding into the following spring saved me the anguish of paying storage and still getting a low price for my soybeans. After cutting back the size of my farming operation in 2003, I no longer raise enough beans to fill a bin. Maybe more importantly, at my age, I no longer want the burden of cleaning soybeans out of a grain bin and hauling them to town. At the very least, I have avoided that chore for 2009.

Two weeks ago it sure looked as if the 'dead cat' had exhausted its nine lives and was headed into the winter doldrums. On November 6, cash soybeans actually were priced at less than $9 per bushel here in Cass County. Adding to the insult, the previous high was on November 3, only three trading days before, the day I started harvesting my soybeans. Since I finished my soybean harvest, the trend has been almost straight up.

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