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Winter doldrums?

Agriculture.com Staff 12/15/2006 @ 12:40pm

It is difficult to find something profound or even interesting to say at this time of year. On my long term seasonal corn charts I call this period "The Dead Zone". With prices where they are, that obviously is not a term that applies now. However, with prices more than a dollar above where they began in September, maybe they have gone high enough for a while.

Most recent news about the ethanol issue is that plans for some plants have been put on hold. The plant that was under consideration just three miles from me was shelved last week. Increasing construction costs were cited as the reason. It is possible that the lack of water, shortage of corn in the immediate area and no place to go with by-products could also have been factors!

I don't think we have seen the last of the excitement in the corn market, but further moves higher might have to wait until the trade sorts out real demand from anticipation.

The soybean market seems to have completed its "Dead Cat Bounce" move right on time. The top of the move was 50 cents higher than I anticipate in even a good year. However, the timing of the top was almost perfect, coming at the end of November as shown on the long term charts.

Cash prices seem to have found a comfortable level about 30 cents below the November high. They could hold in this range through the winter while the trade tries to sort out how many acres will be shifted to corn next spring. The low on the long term charts is the middle of February. Prices could be setting up for that to happen again in 2007. There are no guarantees, of course.

There was discussion on the "Marketing" talk page this week about advisory services. I commented on one of the threads that it was important to read and understand the disclosure statement on the promotional material. I was unable to add to the discussion because of being gone most of the week. My point in making the comment was that disclosure statements are included because no marketing service is correct all of the time.

My experience is that I am correct in anticipating the price direction 70 percent of the time. No marketing service or broker is going to be much more accurate than that. You can go on the AgMas (http://www.farmdoc.uiuc.edu/agmas/index.asp) web site and find out specific track records for individual services. All advisors have their own personalities and approaches to marketing. I would not like a service that does a lot of trading and needs to be in the market every day. However, that pattern fits some farmers just fine.

The important factor is not whether they can predict the price direction correctly every time, but whether their style is compatible with yours. No advisory service will know your business or your personality as well as you do.

Several times I considered starting a marketing business myself or affiliating with a marketing company. There is a lot of paper work in meeting government regulations. There is also a lot of liability exposure. I finally decided that at my age, I was more suited to providing information and training. I firmly believe that most farmers are better off doing their own marketing unless their personality and level of ability are totally inadequate.

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