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Check Out These Grain Marketing Jargon & Expressions
As a lot of farmers and grain traders know, the language of the grain trade is filled with unique phrases, expressions and idioms. Some make sense, some don't and others may just create more confusion than clarity! Here are a few farmers say they like, dislike and by which they are simply either frustrated or perplexed. What are your favorite or least favorite marketing terms? Join the discussion here!
This is a common one. If your market gets too high, traders are on top of it, ultimately pushing prices lower by selling to cash in on the rally. Watch for profit-taking at the end of the week, month, or quarter.
Profit-taking is just one way traders can sometimes "position" ahead of the weekend, when the two-day break can sometimes change the trade's direction depending on both fundamental and outside market factors. So, if the market is going up on a Friday morning, don't be surprised if it goes back down before the end of the day!
A 'Weather Market'
This is the "go-to excuse for ups and downs," one farmer says. Weather extremes -- flooding, drought, lingering cool and wet conditions in the spring and tough conditions during fall harvest -- have been the cause for a lot of extreme fluctuations in the grains in the last few years. If it's a weather market, that means be ready for some wild price swings.
The U.S. Dollar is Weaker/Stronger
The value of the dollar determines how far it will go in making purchases, and just as importantly, how much global trading partners' currency is worth when buying U.S. grain. It's an outside market factor that has grown a lot in its influence to the trade in recent years: some say too much.
'A Bull Needs to be Fed Every Day'
Sometimes when most market-influencing news is bullish, it's not enough. "That bull needs to be fed," means it's critical to a rally's sustainability to have fresh bullish news on a regular basis. If not, rallies can fall short if the bull's belly gets too empty.
'Buy the Rumor, Sell the Fact'
This is a big one these days. Sometimes what traders hear on the CME Group floor isn't always 100% truthful or indicative of what's going on in corn and soybean country. So, prices sometimes move in a different direction than they would if they were based solely on fundamental market factors. It can sometimes be a justification for why prices don't follow forecasts and trends.
The 'Goldman Roll'
The Goldman Sachs Commodity Index rolls forward each month preceding the expiration of a futures contract month. When that happens -- typically during the second week of that month -- it can send a contract lower or higher on its own as the Goldman funds are transferred out of a position into the next futures contract month. Think weekend positioning, only longer-term.
'It's Raining in Chicago'
Say you're out planting corn or soybeans and it's not raining on you or anybody else in the Corn Belt...except in Chicago. Some say that can be a major market factor -- bullish or bearish -- when it shouldn't be. It's a moniker for what some see as CME Group traders' narrow vision when it comes to factors like crop weather.
The Next Big USDA Report
Over the last seven or eight years, USDA reports have become enormous market drivers. Whether it's weekly crop progress, quarterly grain stocks, or annual prospective plantings, a lot of USDA data is watched closely by the trade - and, not just after the numbers are released. Increasingly often, traders try to anticipate the numbers and make trades based on those expectations. When they're wrong, look out!
'Because China ____________'
China's explosive population growth has fueled almost unprecedented consumption of everything, including grain. So, when that growth is reported as slower than normal, it's bearish. When the news from China shows greater development or growth, it's bullish.
'Short Crop, Long Tail'
This has been common the last couple of drought-shortened crop years. "With a short crop, high prices early in the marketing year signal the necessity to reduce consumption, with subsequent price declines reflecting the reduced rate of consumption and eventually a return to more abundant U.S. and world supplies," says University of Illinois Extension ag economist Darrel Good.
'The Market is Choppy'
Volatility is a common theme in today's grain markets. Sometimes the up-and-down price swings can happen within a single day's trading session. When the market is choppy, some farmers say that means traders "have no idea" why prices are swinging so high and low. So, a choppy market can make for a difficult trading day!
The 'Dead Cat Bounce'
Market Analyst Roy Smith is the guru of the Dead Cat Bounce, a theory that soybean futures typically will bounce in the fall -- usually the first week of October -- during a time when grain prices are typically lower because of harvest pressure. Last year, it happened a little later on in November. But, in the last few years, Roy's been right -- it's happened more often than not.
Spec-selling/Techs Weakening/Funds Flowing In
These types of terms -- whether speculators, fund managers or market technicals -- are usually indicative of outside market factors, or those not commonly thought as fundamental to corn and soybeans, weighing in on the grain markets. Spec-selling is typically bearish, while things like fund money flowing into the grains can be bullish.
'Like a Homesick Angel'
This one's pretty self-explanatory: If an angel's walking around on the CME Group floor and she gets a little homesick, there's only one way for her to go: Up to the sky! If the grains are moving like a homesick angel, Katie, bar the door!
Some are educational, some are silly, but they're all part of a lexicon of terms used often in the grain trade.