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To sell or not to sell

Comments on this week’s actions in the soybean market are pretty straight forward and easy to understand. 

In October, November and December, I watch closely for moves in the soybean market that I call the “Dead Cat Bounce”. For most of the last two months, the signals have been confusing. In the first week of October, the action was mostly straight up. For the last week, price action has also been straight up. In the meantime, there were several tests of support around the $12.00 level. Cash soybeans at my local elevator ended this week $.75 above the support that started at the low on November 5 at $12.00.

I normally want to sell soybeans at a rally objective of $.35, $.50 and $1.00 above the harvest low. I got the sale made at $.35 last week. Now I need to decide whether to wait out the next 25 cents or to fade the objective and sell at the level prices closed at today. My inclination is to shoot for the dollar level since I already have sales made at lower levels. My suggestion is to sell an increment here, if you have not sold anything. If you already have sales made, waiting on the next increment seems logical.

If waiting is your preferred strategy, keep in mind that there is a negative carry of 12 cents going out into March futures.  This is normally a positive indicator for future prices. It also means that processors are telling us that they want beans now, not in March. With that in mind, it is also a sign that South American beans will become available next spring. This is looking more and more as if the dollar bounce is a realistic target. As with most things in marketing, there is no guarantee. 

I wish I could say that the corn market will follow the same pattern as soybeans. Unfortunately, the corn market is acting just as I suggested last week. At least for two days this week, the big moves have been the right direction!

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