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No. 1 Rule With the Markets: Don’t Wait to Sell if Prices Offer a Modest Profit

At a time when commodity markets are murky due to the trade war, Al Kluis’s advice is to grow the most bushels you can and be vigilant to sell, in increments, whenever prices give you a modest profit. 

“This first week is March isn’t the time to sell, I can tell you that right now,” the 44-year veteran of commodity trading told a standing-room only crowd at the Commodity Classic mainstage sponsored by Successful Farming. “We are at the bottom of the market this week. But prices are going to trend upward from here on out providing opportunities.”

Hope is not a marketing plan, Kluis emphasized with his observations. “There is always this fear among farmers that if they sell ahead when it is profitable that the market will hopefully go higher in the future.”

Kluis explained that if the market goes higher, you just keep selling in profitable increments both this year’s crop as well as the coming year’s crop. “If you have sold all of your 2019 corn on a rally, look at where 2020 corn is. There has been way, way more money lost than made holding on too long. The last couple of years, holding corn and soybeans (to sell) until July and August has been a big marketing and financial mistake.”

Also, in today’s markets, you need to sell early and sell often, he explained.

Kluis pointed out that there is a lot of worry about China’s decline in demand for soybeans. “We may not be selling as many beans to China next year (once the trade war issues are ironed out), but we are going to sell a lot more to Europe, Egypt, the Middle East, and the rest of Southeast Asia. As long as the global demand for beans keeps on going up (regardless of China’s slowing consumption), we are still in a very good business (with soybeans),” he observed. 

So, Kluis asked the audience, what is the No. 1 rule for marketing in 2019 and beyond? “Don’t wait to sell when prices are positive,” he responded to his question. 

But be warned. The number of days that you can sell at a profit are getting fewer. “Back in 2011 or 2012 you had months to sell at a profitable level. Now we have days and weeks (to sell profitably),” Kluis adds. “And the markets are global. Brazil and Argentina have become major global players in soybeans. They have increased their production by 400% to 500%. And Russia is now the largest exporter of wheat in the world. So you need to be aware of the influence news regarding their crops has on the prices.”

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