One of the things I do when writing this column is look back to see what I wrote about on the comparable date in previous years. November 30 was also on the last Friday of the month in 2001. My comments that day are especially eye catching, considering what is happening in the grain markets today.
Even back then, I was watching the 'dead cat bounce' carefully for a sign of when to sell my cash soybeans. On that day, I was complaining about the severe drop in the soybean price of the previous week. On the day I wrote the column, the cash price was $4.05, down from $4.17 the previous Friday. The harvest low that year was October 22 at $3.73. The rally had taken the price as high as $4.17 on November 23. That event was followed by one of the sharpest breaks in history. What I did not know, at the time, was that the price would rebound back to $4.13 on that day. The better news did not last long, however. By December 18, the price was back to $4.00.
It is hard to imagine that only six years ago soybeans were bringing only forty percent of today's price. Back then we were also playing the LDP game. The biggest LDP came on October 23 at $1.39. The goal at the time was to take the LDP when prices were low and sell when prices were high, relatively speaking. Even with the LDP the price was barely over half of today's price. Back then energy futures were roughly one fourth of today's price. Gasoline was 60 cents a gallon wholesale, compared to $2.24 today. I suppose you could legitimately say that grain prices today are not high when compared to other commodities.
Interestingly, one of my comments back then hinted that the big sell off in soybean prices was related to the financial problems of Enron. Then, as now, factors outside of the usual supply and demand were changing the psychology and causing grain prices to move. As a side note, Enron filed for bankruptcy the next week. (http://www.soyroy.com/enron.htm).
The recent slide in energy prices has me wondering how long grains can continue to rally. I sold another increment of my cash soybeans on Thursday. That leaves me with less than ten percent of last year's crop not priced. I held back roughly one truck load to play with just in case beans really do get into the teens. There was nothing magic in my method of determining when to make the sale. The $10.08 cash price locally was the highest price per bushel I have ever sold soybeans for, in almost 40 years of farming. One of my goals, since retiring, has been to deliver at harvest and pay as little commercial storage as is realistic, still getting most of the dead cat bounce rally.
In the sale made yesterday, I picked up exactly $2.00 from the harvest low on October 8. That price included a basis improvement here in eastern Nebraska of $.49. At some point, it is time to make the sale and move on. I decided that netting $10 a bushel on a crop that was nearly my largest per acre yield ever would look good no matter what prices do from here on. After looking at today's opening quotes, my sale yesterday looks like a good move.