Words of wisdom from a 30-year grain trader
I have lived through multiple grain embargoes, a trade war, and droughts, but this week was one for the record books. The $1 plus trading range in soybeans and wheat on Thursday were the largest daily trading ranges I have witnessed.
I don’t know if the Thursday high is the ultimate high, but now I know the major chart resistance levels and where I will make sales.
The big question farmers had all week was whether the grain market rally was over. I don’t think that is the right question. The question should be, “Where should I make sales in this volatile environment?”
Here are five ideas to consider.
- Take your cash inventory and plan to make a series of 10% or 20% sales. If the grain markets get within 10¢ of the Thursday high (March corn at $7.19) (March Soybeans at $17.65), get some of your inventory sold.
- Use a time plan. On the big up weeks, make a 10% to 20% sale.
- If prices collapse because of fund liquidation, wait and do not panic.
- Plan to have at least 90% of your corn and soybeans sold by planting time.
- Through a combination of hedges, cash contracts, or puts, get at least 60% of your 2022 crop sold by the middle of June.
The historic seasonal studies suggest that higher prices may be possible by the May-June time period. Also, prices are likely to be much lower by harvest. The collapse in prices this week shows how important it is to have a plan, to have resting offers above the market, and to stay disciplined.