SoyRoy: Marketing Mistakes Can Happen
Regular readers of this column know that I test my seasonal theories by trading a small speculative account in the soybean market. I use futures to give me a realistic test of how accurate the seasonal price charts are. I trade a real market with real money and take the profits, as well as the occasional loss that comes with futures speculation. Since I enter positions based on price action prior to the trading day, I am in the market, either short or long, all but one week of the year.
Usually, tracking the position and changing only when there is a signal is not a problem. That was not the case with the most recent trade. My goal every year is to have all of the cash grain from the prior year delivered and sold before July 1. I was busy last Friday, Monday, and Tuesday of this week hauling corn to empty the last two bins. Things did not go well. My 1974 vintage truck, which runs on propane, had been giving me problems all winter. Time spent in repairing it distracted me from my hauling.
Next, the unloading motor on the vertical auger quit. Since it is a relatively large and expensive motor, I did not want to spend the money to replace it. A quick call from the repair shop informed me that parts are no longer available for that 1980 vintage equipment. After some heartfelt discussion, we guessed that epoxy glue might work as a temporary remedy. We were lucky in that effort and the repairs held together to finish emptying one last bin.
As I was preoccupied with the truck and auger problems, the thought came to my mind that the day to reverse my soybean speculative position had come and gone. When I got home that night, a quick scan of the long-term charts showed that I should have sold November futures on June 20. I missed my target date by three trading days. In 15 years of trading, that was the first time I had missed the correct date. My only choice to keep the test going was to make the trade on June 25, three days after the scheduled target. I sold the November beans that day for $12.28. If done correctly, the trade would have been at $12.31.
There is a Murphy’s law that says, “The market punishes those who make mistakes.” In this case the punishment was 3¢, pretty small for a mistake in the futures market. The true test of the system will come on the next trade. My system will be short until August 14. That is a long time to hold a position, especially if the weather turns hot and dry. From the looks of conditions now, that does not look like a big risk. Here in Cass County, Nebraska, our crops look very good. I will lose about 9 acres to flooding on the Missouri river. Otherwise, the crops are doing as well as we could hope for.
The frustrations of the planting season are past. The irritation caused by breakdowns of loading and hauling equipment are behind me – I hope. I am hoping that the epoxy repairs will hold together until the time I quit farming for good. The last loads of corn were sold this morning. I look forward to some less hectic time now until it is time to think about harvest.