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278384

Give Your Grain Marketing a Jolt, Analyst Says

From a marketing perspective, what can you do?

From roughly 2005 to 2014, big volatility was the main feature in commodity markets, particularly corn and soybeans. Since then, prices have been mostly sideways, with a little opportunity appearing at times.

Monthly charts would suggest the trend for corn and soybeans is sideways, and not ready to break out any time soon. Markets can move at a whim and, when least expected, make big moves. However, with ample world inventories, expectations are that supplies will continue to dampen rally potential. Good demand will continue to provide underlying support. We can only expect more of the same, unless there is a significant event that generates volatility – an event that drastically changes the supply or demand pictures.
 
From a marketing perspective, what can you do? Perhaps it is time to give your marketing a jolt. This implies that you may have to become more aggressive in looking at strategy than in the past few years. While it may make sense to wait for price rallies when prices are at the low end of the trading range, it’s important to be more aggressive when prices are at the high end of the range. In addition, look at other marketing tools that can bring value. This all means stepping up and taking a more offensive approach.
 
Take some time this winter to learn strategies such as a fence, straddle, and strangle. These can add value and shift risk. As with any tool, know your risk and reward potential. Also, know your risk and reward potential of doing nothing, or waiting. Be a student of other market alternatives such as a forward contract into carry, hedge-to-arrive contracts, and even some of the more exotic contracts that elevators may offer.
 
It is our experience that farmers often shy away from advanced strategies because they really do not understand them. Take a deep dive and take time to learn. Ask the right people the right questions. Put the math behind the strategy and compare this with other alternatives, including the most popular strategy, which is to store and see what happens. A resource available to you is titled “Inventory Management.” This paper reveals multiple marketing strategies encompassing cash, futures, and options strategies incorporated into a balanced approach.
 
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If you have questions, comments, or if you would like an electronic copy of "Inventory Management," contact Bryan Doherty at 800/334-9779, ext. 129.
 
Futures trading is not for everyone. The risk of loss in trading is substantial. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. Past performance is not necessarily indicative of future results.
 
 
Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. Hypothetical performance results have many inherent limitations. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. No representation is being made that scenario planning, strategy or discipline will guarantee success or profits. The data contained herein is believed to be drawn from reliable sources but cannot be guaranteed. Reproduction of this information without prior written permission is prohibited. This material has been prepared by a sales or trading employee or agent of Stewart-Peterson and is, or is in the nature of, a solicitation. Any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to Stewart-Peterson. Stewart-Peterson refers to Stewart-Peterson Group Inc. and Stewart-Peterson Inc. Stewart-Peterson Group Inc. is registered with the Commodity Futures Trading Commission (CFTC) as an introducing broker and is a member of National Futures Association. Stewart-Peterson Inc. is a publishing company. A customer may have relationships with both companies. Accordingly this email is sent on behalf of the company or companies providing the services discussed in the email.
 

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