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August Successful Marketing Highlights Discipline

Miss the rally, prepare for next one

DES MOINES, Iowa -- Being a successful grain marketer means you have to not only create but also execute a disciplined marketing plan, according to the newly released Successful Marketing newsletter.

With overall commodities recording their worst July performance on record, farmers are watching the crop futures prices drop and their local cash prices fall, too.

This environment is ripe for uncertainty in regard to grain marketing sales.

Stay Focused, Stay Disciplined

In the August issue of Successful Marketing, Al Kluis, Kluis Commodities, stresses to farmer-customers that discipline will be very important, going forward.

“This is what I hear from farmers: ‘I get your sell orders, but when I listen to the radio, I talk myself out of making the sales. Now, I’m kicking myself. Corn is down $1 a bushel from where you said to sell. What do I do now?’ Kluis states.

It is difficult to control emotions when prices fall hard and fast, Kluis says.

“The best thing to do now is consider where prices have been and what targets are reasonable on a recovery rally. Use these targets to make sales or hedges. But this time, call the order in – and do it now. Don’t wait until prices get to your target before placing the order. If prices rally again, then emotions can easily cloud judgment,” Kluis states in the newsletter.  

He adds, “When you sell grain, you need to be a realist. It might feel like you’re giving up something when you settle on a price that might not be the absolute top. Yes, you are giving up something: You are giving up risk!”

Who’s on your team?

The ability to access information today is beyond anything imagined 10 years ago. However, it takes time to sift through that information, and you may not always be able to judge its value. Having a marketing team will help you sift and judge that data and help you make those important marketing decisions. Following are some thoughts about your team, Kluis states.

  • Spread out the workload so the pressure isn’t on one person.  
  • Bring the next generation into your marketing team.  
  • Put your banker to work crunching some numbers.  
  • Put your marketing adviser to work explaining the strategies available and their price targets.  
  • Set aside some time to learn. Investing time to increase your knowledge about the tools available will only make you and your team better.  

Looking Ahead

“If timing counts are correct, then it is very likely we have seen the highs for the year, but that doesn’t mean prices will stay down through winter,” Kluis states. “Let’s look at retracement targets to establish possible areas of resistance if the market is able to rebound.”

The targets are based on the 38%, 50%, and 62% retracements. Here are key retracement targets to watch for:  

  • December corn: $3.85, $3.97, and $4.09
  • November soybeans: $10.84, $11.03, and $11.23
  • December CBOT wheat: $4.80, $4.94, and $5.07

Bottom line: Use these price targets to make some sales when the price targets are hit:

  • September corn: Cash sales are complete
  • December 2016 corn: Target is $4.68
  • August soybeans: Cash sales are complete
  • November 2016 soybeans: Target is $12
  • September CBOT wheat: Target is $5.50 

To get the full issue of Successful Marketing, sign up at agriculture.com/deal or call 800/374-3276.

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