Readjust Your Thinking Cap

What Now?

As bearish as I am long term because of the cutbacks in demand, there will be other good marketing opportunities in corn and soybeans for farmers.

As harvest draws to a close, grain-bin doors will be slammed shut and it will be very difficult to move corn and soybeans off the farm from now until January. It would not be at all surprising to see a 50% retracement of the declines in September. Should that occur, the target in March corn futures is approximately $6.85 and the target in December 2012 corn futures is approximately $6.10. For soybeans, the target for the November 2012 contract would then be approximately $12.85.

The market will need to maintain some strength to assure that the acres do get planted as expected. But marketing plans and approaches need to change. Up until September, as we all know it did not pay to be an aggressive forward seller. What worked last year will not likely work this year since we have shifted from a bull market to a long-term bear.

Last year was a year for traders to buy dips. Now traders and farmers should be selling rallies.

Let’s keep in mind that today’s prices based on historical five-year averages are still extremely high and still very profitable. Unless production problems materialize next summer, these are markets that will have a high likelihood of making an intermediate top sometime around planting time followed by a bear market into harvest of 2012.

Readjust your thinking cap from what worked last year.