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Summer Weather Best and Worst to Trade On, Soy Roy Says

In my marketing meetings, I try to stress that that the summer weather has good odds of producing some of the highest soybean and corn prices of the year. It can be one of the best times to make sales, especially for new-crop grain. Having promoted that concept for many years, to be realistic I must also add that it is one of the most frustrating times to try to pick a high in the market. There are many reasons why this situation continues to make marketing a tough job for many individuals. 

The risk of not having a crop to sell is the reason farmers do not look favorably on selling a crop that is still in the field. The production risk can be largely offset through the use of crop insurance or options. In many cases the individual has little exposure other than the premiums on these financial tools.

A bigger factor is pulling the trigger on sales. Odds of having a total crop failure are very small, especially in areas of high rainfall or under irrigation. However, lack of good risk management strategies is a convenient excuse for doing nothing.

There is always the perception of the anticipated crop size. Folks who perceive that their crop is smaller than normal will be reluctant to commit to deliver a portion to their market. My experience over more than 40 years of farming is that the closer a farm is to the board of trade in Chicago, the longer it will take for the grain trade to recognize a production problem. This is being illustrated by the current situation in the soybean and corn markets.

My cousin who owns a farm in central Illinois says that in his area the crops look terrible. The result is that persons in the grain trade in Chicago see this problem. Therefore grain futures are rallying in anticipation of a smaller crop in 2017. Here in eastern Nebraska, the crops could hardly look better. Huge planters and other modern equipment allowed farmers to get the crop planted in good time. The possibility of large acres and good yields are of little concern. Acres on farms in Nebraska and surrounding states seem to be of little interest to the grain trade in general.

This is a simplistic view of why markets do what they do. Somewhere there is an economist who will tell you that my theories are full of hot air. That is fine. It will not be the first time.

They are simple and I find them also generally profitable.  

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