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Waiting for new year, new prices

12/28/2012 @ 1:47pm

I find it difficult to have something profound to say during this two- or three-week period. I expect the soybean market to make a high and turn down, if it has not already done that in November or early December.

This is the season of double highs; one came in October and the other in early December. There was a feeble attempt to duplicate the latter high this week, but the attempt was unsuccessful. On the day of the last attempt at a rally, I sold all but the last 10% of the soybeans from the 2012 crop. As of today, that appears to have been a wise move. I also reversed the position in my spec account on Thursday.

I got out of the long January contract and sold a March contract. I did it on Thursday instead of Friday, which is the average date on the long-term seasonal chart, to be sure to get it done before the weekend and subsequent holiday next Tuesday. For those of you not familiar with my speculative account, I use it to test the seasonal strategies in real-time trading. So far, this year, the results have been negative!

Corn prices, likewise, have followed the tendency to drop during this holiday season. I have observed many times that corn futures prices, on the long-term chart, typically are flat from early fall through the following spring. Any cash price appreciation is from basis improvement or carry between nearby and deferred futures. This year has seen futures beginning a sell-off beginning around December 1. The trend continues through the holiday time period.

In my area, there is not a lot of corn being stored in bins. It will be interesting to see where the supplies come from in the spring when harvest time supplies are used up. The real question will be whether demand destruction has been sufficient to offset the reduced supplies from the 2012 crop. If not, markets will be very interesting about the time the 2013 crop is being planted.

My time has been used this week doing year-end financial balancing. I normally enjoy this part of farming. However, this year it has been difficult and frustrating because of the so-called fiscal cliff. Putting off balancing the budget does not work any better for a government entity than it does for a farm.

I keep wondering why that principle seems to be a mystery to the federal government and some individual states. I guess that is a puzzle to ponder while playing with the grandchildren over the holiday. Maybe I should ask the kids to help solve it since they will be paying for it long after my farm is being run by someone else.

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