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Words of wisdom from a 30-year grain trader

Where should you make sales in this volatile market?

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.

  1. 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. 
  2. Use a time plan. On the big up weeks, make a 10% to 20% sale.
  3. If prices collapse because of fund liquidation, wait and do not panic.
  4. Plan to have at least 90% of your corn and soybeans sold by planting time. 
  5. Through a combination of hedges, cash contracts, or puts, get at least 60% of your 2022 crop sold by the middle of June.

Final thoughts

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.

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