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Exciting market not always good

The soybean market was exciting last week. Boring would have suited most of us a lot better. Reaction to last week’s government report was gratifying. It was also unexpected given that most farmers and traders anticipated  bearish supply numbers and a negative response. That, for sure, did not happen. When the dust settled, cash soybeans here in Cass County, Nebraska, were 29 cents higher. Five cents of that was basis gains.  Improving basis is almost always a good sign for future price direction.

The improvement in the cash bid was enough to hit orders to sell an increment of my 2013 crop beans. I based the order placement on being 35 cents over the harvest low of $12.07 on October 1. The extreme bullishness of the market on Friday made me question if I had placed orders too low and too soon.

By the close of trading on Friday, November 15, my seller's remorse was replaced by relief that I had approximately half of my beans priced within the parameters of a normal dead-cat bounce. Years of experience have taught me to be satisfied with selling close to the top. I do not have to hit the annual peak to be satisfied, as long as it is a profitable price. 

Selling beans on the dead-cat bounce looks so easy in retrospect. This year’s chart should be framed and hung within view of the telephone to illustrate how tricky picking highs and lows can be. Since October 1, there were chart lows on October 1, October 15, and November 5. There were three highs on October 12 at $12.79, October 23 at $12.83, and November 13 at $13.01. All prices quoted are January futures. Hitting any of the three highs should have resulted in profitable returns. Hitting any of the three lows would have been disappointing if not disastrous.

Hope that next week prices will work boringly higher. That will probably not happen. There is time for more of the dead-cat bounce. I still have part of my old crop not priced. I continue to look for targets for the next sale.

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