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The June Successful Marketing Newsletter Is Out

The Crop Profit Index is showing a series of M's and W's.

Trends affect more than just prices.

In this month’s Successful Marketing Newsletter, the main topic includes the June 30 USDA Acreage and Grain Stocks Report. The trade’s attention is squarely focused on these end-of-month numbers.

A lot can change with reports like these. Price trends and yield trends could take center stage. Farmers are urged to pay attention to both.

You are constantly watching trends in yield data of current and upcoming seed varieties. If the data says to plant a certain variety, then who are you to argue with the data?

The big difference between yield trends and price trends is the time it takes to see the change. It takes months to grow a crop and to see the final yield. You then compare this year’s yield to prior years. Prices can see a change in trend overnight! How can your operation capitalize as prices are rising? What should you do when prices start falling?

First, understand that price trends often follow a seasonal pattern. For example, there is a good chance to see a low in prices during harvest.

If expectations are for a big crop, the confirmation of the crop size is often found during harvest. Large supply weighs prices down. You have also come to expect a rally in the spring or summer.

This is primarily due to weather scares. If weather is going to impact production, then traders tend to add risk premium to prices. Once the weather has run its course, the risk premium fades. The fade happens faster than rising prices.

This is often reflected on the charts as “taking the stairs up, and the elevator down.”  

There are two indicators that are effective when analyzing trends. In an uptrending market, the short-term trigger to watch is when prices close below the prior three-day lows. If the bulls are in control, then prices should not trade below the prior day low for very long, let alone close below that level. Momentum traders watch this very closely.

The next trigger to watch is when prices take out the prior two-week low.

The Successful Marketing newsletter offers grain marketing analyis, charts and graphs on market trends, price targets and action items for your grain marketing plan.

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Visit successfulmarketing.com or call 800-374-3876.

I have charted for over 40 years and this is one of my golden rules. It is often incredibly difficult to sell when prices have broken below the prior two-week low because prices are typically nose-diving.

The optimistic part of being a farmer will say to wait, that prices will rebound. However, understanding that the trend has changed will tell you to get prices protected and to do it quickly.

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