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Nail biting time!

Agriculture.com Staff 11/07/2008 @ 9:20am

I made the first soybean sale of the 2008 "Dead Cat Bounce" this week. Usually I wait until the rally is three weeks old before pulling the trigger. This time the move was only 14 trading days, or a day short.

However, the price had exceeded any bounce in history except for the one in 2007. In a normal year, a dollar rally at harvest time is the absolute maximum. Early this week the posted cash soybean price here in Cass County got to $1.20 over the harvest low on October 15. My target for this sale was $9.00.

When the markets opened on Election Day over that figure, I decided it was time to pull the trigger. In fact, the cash price on the close was 14 cents below where I made the sale. Looking back, selling during the day on Tuesday was a good decision-so far. I say "so far" because there is always the possibility that prices will rebound and make a new high.

It is unusual to see the price shoot up, make a top and go right straight back down. There are normally several opportunities to make sales before the soybean market goes into the doldrums for the winter.

I still have a small portion of my 2008 soybeans to sell. This is nail biting time, wishing I had sold them all on Tuesday but hoping that the prices act true-to-form and rally back to make new highs. The odds of prices going down following a presidential election are about 50:50. However, my instinct tells me that after the euphoria of a new guy at the top fades, reality sets in. There are still a lot of financial problems that need to be cured before the economy gets a lot better.

We also need to keep in mind that markets seldom go straight up. Besides the soybean market, the stock market has had a great, short term, rally. The meager portfolio I have in my IRA went up 20 percent from October 27 to November 4. No one should be surprised that there were a couple of bad days in the stock market as well as in grains since then.

I will continue to watch the charts for an indication of whether the bounce is over or not. Meanwhile, I am thankful for some good early forward contracts and the chance this week to participate in a short, but profitable, rebound.

I made the first soybean sale of the 2008 "Dead Cat Bounce" this week. Usually I wait until the rally is three weeks old before pulling the trigger. This time the move was only 14 trading days, or a day short.

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