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A sure sign of when it's time to sell corn

02/11/2011 @ 1:56pm

I am getting a lot of questions from farmers and others about when and how high the corn market is going to go. That has been especially true following the bullish crop report this week. Trying to predict the top in a bull market propelled by psychological factors is dangerous. It is easy to say that the trend is your friend. It is difficult to say when that will no longer be true.

One of the old maxims propounded by individuals who have been watching markets longer than I have is that when your doctor and lawyer start asking how to get in on the corn market, the top is near. So far, I have only had one local businessman ask me how to buy corn futures. That was a couple of weeks ago. It hardly qualifies as a trend. However, it is a hint that the public is starting to take notice of grain prices.
 
Possibly I should look at other markets for an indication of an imminent trend change. Last fall I started getting telephone solicitations wanting me to buy gold. Calls increased to the point where it seemed like every day I had a call promoting one scheme or another that involved gold. Looking back at the price of gold, it appears that the high, at least for the time being, roughly paralleled the number of cold calls I got.

On a side note, being mostly retired and not so busy this winter, I find that keeping the cold callers on the phone for as long as possible to be entertaining. When they find out my goal is to waste their time, I usually get a reaction that indicates they will not bother me again. Sharon says I have too much time on my hands!

More directly to the point, the government crop report this week certainly did not give any indication of when the top might come for the corn and soybean markets. The corn numbers were more bullish than the soybean numbers. Considering the fact that the only way to get more acres of corn is to reduce the acres of soybeans and other crops, Prices for all crops should be on solid footing for the foreseeable future.

I have long promoted the policy of not making sales in February. This strategy has proved to be very wise over a long period of years. It indicates that the top in both markets is still at least two and a half weeks ahead. There is always the possibility that my rule will not work this year. With the underlying fundamentals as strong as they are, I am betting that waiting until March or later will be a good idea this time as well.

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