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Marketing now: Time to watch and count
In last week’s column I laid out the parameters farmers can use to time sales based on the dead-cat bounce. I track prices beginning on September 1. However, the harvest low on which the bounce is timed does not usually begin until October 1 or thereabouts. I usually try to make sales a day or two before the September government crop report. This year the report was issued on September 12.
Little did I think the bounce would begin so soon after the washout in September. It now appears that is going to be the case. For comparison purposes, one needs to only look at the wheat market. As of Thursday’s close of trade, wheat futures had rallied for 10 consecutive days. The move was good for the biggest rally of the year. Something similar could be beginning in the soybean market.
It is important to watch the basis. Improvement in the basis many times is an indication of price appreciation soon thereafter. On Wednesday soybean futures were up 5 3/4 cents, but cash bids were up 12 cents locally here in Cass County. Such a move in the face of the beginning of harvest is an indication of good demand at a time when beans are coming into the elevators. I was told by a farmer in central Nebraska that the ethanol plant in his area was bidding an extra 40 cents for corn to be delivered within two days. His explanation was that farmers were too busy harvesting soybeans to deliver corn. Nonetheless, the bonus illustrates that there is still demand for cash corn.
A rally of 26 cents in two days in the soybean market hardly qualifies as the beginning of a big move. However, there have been years when the majority of the dead-cat bounce came in the first two weeks of October. If that happens this year and the price improvement is a dollar or more, it will be time to make additional sales. Watching and counting days can pay off big!