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What a marketing year!

Some days it is difficult to find anything interesting to write about. This is not one of those days. The challenge is in deciding what to leave out. To say that 2012 has been interesting would qualify as the understatement of the year. One old timer, now living in a nursing home, was bold enough to say that this year was more extreme than the 1930’s. If prices are factored into the formula, I will tend to agree with him.

I was not around in the 1930’s, but I have my parents’ farm record book that gives somewhat of a picture of what it was like. The big difference is that back then every farm had a variety of crops as well as livestock. The average family survived by selling eggs and cream to pay for sugar and flour. Cattle and hogs provided meat for the family table. Small grains made up a part of the crop rotation that made it possible to endure the drought damaged corn crop.

Today, we are seeing the price of corn increase by 40 cents per bushel. My father did not even get 40 cents per bushel for the corn he raised in many of those years. I doubt that he had any to sell at any price.

Phone calls and e-mails indicate to me that farmers are under a lot of stress from both the lower production caused by the drought and the subsequent volatility caused by the less than expected yields. I do not like the unknowns that accompany the current supply and demand situation any more than the next person. My answer to farmers who are frustrated by the irrational markets is that the time was right for prices to drop after the huge run up that has been going on for most of the summer.

In my marketing workshops, I have long advocated selling a day or two before the September Crop Report.  I have also pointed out that the drop that frequently follows the report is the most reliable move in the soybean marketing year and results in the sharpest price erosion.  Historically, the price drops an average of a dollar a bushel. So far this year, it has dropped $1.28 depending on what is used as a bench mark. The net move also depends on what the market does between today and next Wednesday, October 3, which is the average date for the harvest low for soybeans.

My hope is that the low on the charts for Thursday, September 27 is the harvest low this year. Maybe the swoon in market prices, the past two weeks, was the opportunity for grain buyers to buy stocks for the coming year at prices that are not as wildly bullish as it appeared that they might be. Maybe a 50 percent retracement of what was lost will give us an opportunity to sell at prices that were close to the highs of September. The government reports that were issued on September 12 and today, September 28, indicate that the excitement is not over. Let us hope that the excitement is positive!       

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