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Really really crunch time

Agriculture.com Staff 06/18/2009 @ 6:57am

It's crunch time for marketing grains, the time when decisions need to be made, and made quickly, in order for good prices to be realized for 2009. Wheat and corn prices have retreated in what looks like price topping action, and they have retreated quickly. Wheat has dropped $1 or so while corn is down just under 50c from high to low the past two weeks. These price losses are indicative of trend changes in markets.

Soybeans are still holding up a bit better, although the 50c losses Monday, this week, were a reminder that the darling of the markets, soybeans, is also susceptible to a trend reversal at any time. It might be time to more aggressively market soybeans as well.

Now decisions have to be made about marketing. Pro Ag has been saying for weeks that any sale above $6.40 July CBOT wheat, $4.50 Dec corn, and $10 Nov. soybeans would be a good sale for 2009. For most grains (except soybeans), we have already fallen below these attractive price levels.

We need a bounce, however, in wheat and corn as prices have retreated so quickly from recent highs, with wheat down $1 and corn nearly 50c from highs just weeks ago. The trick will be in determining how much of a rally to hope for, as prices are likely to retreat again following a recovery. New lows may be likely as we push forward into the crop year, with crop development becoming more rapid as temps rise into summer. Although the 2009 crop started late with late planting of almost all crops, warming temps might help to speed the crop along the next few weeks, providing a period for crop development to 'catch up' to normal.

For a long time, the market factors were going in our direction, pushing grains up to the recent highs in early June. Delayed planting had center stage, but the declining dollar and rising crude oil both made for positive developments as well. The stock market also rallied from March lows at 6500 DOW to over 8500 recently. This all provided a boost to grain prices along with the torrid export pace of old crop soybeans.

The new developments aren't quite as rosy. The US dollar formed a weekly upside reversal a few weeks ago that indicated a potential reversal of the dollar fortunes. Wheat and corn followed with their price downturn, and there are some cracks in some other bull markets as well (soybeans, crude oil). Is it just a matter of time before they turn lower as well?

So now comes the art of marketing, where you make the necessary grain sales in the next few days/weeks at levels considered favorable. Grains need to be sold, and energy needs locked in at much lower levels should probably be sold back to the marketplace at a hefty profit. Changes come and changes go, and it looks like our changes are coming a little more often than they have in the past few years (about every 3 months there seems to be a trend change). Markets are more choppy and less trended than they were from 2006-2008. But then again, we can't expect a two-year rally to repeat itself more often than about every 30-40 years!

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