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Crash and burn grains into harvest?
Grain prices plummeted the past three weeks, losing over $2 in corn and more
in soybeans, before finding a bottom this week.
With a $2 corn break, a
33% recovery is 67c, and a 50% retracement is $1 gain which should occur
in just a few short days! A dead cat bounce is not what it used to be,
but these markets are now much bigger than they used to be. This type of
recovery will be a perfect one to sell for those who have not been as
aggressive of sellers as Progressive Ag the past few weeks. We've sold
anywhere from 1.5-2 crop years of corn/soybeans as 2008 through 2011
offers have all been good ($8 corn 2008, $16 soybeans and $6.50
corn/$15.50 soybeans for 2009 through 2011).
It's funny, but everyone is always most bullish at the highs, and it was
surprising how many people were afraid to sell 6.50 corn and $15 soybeans
in the past few weeks, even after it seemed the corn market had topped.
Crude oil now has dropped from $145 to $124/barrel, and even the crude oil
market now appears that it finally formed its high. People are using
transit more, and big SUV’s finally are being ignored in car sales instead
for the economical Honda/Toyota vehicles. It's possible we have formed not
only our yearly highs, but perhaps even decade highs in crude oil, wheat,
and corn in the past few months.
While the ship has pulled out on 2008 crops, any sale over $6 corn will
still turn out to be heroic in the end (as we have been saying since corn
broke $6 months ago), as Pro Ag believes grain prices are finished now
with their multiple year bull market (a once in 35 year venture). Now
prices will likely trade between 4.50 and $6.50 corn for the next few
years, with prices still very profitable for the most part as we need to
continue the incentive to pull CRP acres out and expand production more
worldwide to meet demand. $10-$15 soybeans might capture soybean trade
the next 2-5 years as well. Note we are still in the upper end of those
ranges for both soybeans and corn ($14 soybeans and 6.30 corn for 2008
through 2011 crops), so there still is plenty of sales opportunity left in
Are you willing to accept the huge profits still offered on paper from
sales of grain? Or has the past 2 year memory of losing hedges/sales
going to prevent you from taking advantage of perhaps the best marketing
opportunity you will see in your farming lifetime? These are very
important questions to answer, and ones which each individual farmer needs
to dig deep inside his heart and soul to see what it is made of!
The information contained, while not guaranteed as to accuracy or
completeness, has been obtained from sources we believe to be reliable.
The opinions and recommendations contained are based on our judgment and
do not guarantee that profits will be achieved or that soles will not be
incurred. Recommendations should not be construed as an offer to buy or
sell commodities. There is substantial risk of loss in trading futures and
options on futures.
Grain prices plummeted the past three weeks, losing over $2 in corn and more in soybeans, before finding a bottom this week.