Get ready for a potential rally

A combine harvesting soybeans. (Journal photo by Jennifer Theurer.)

You’re likely getting ready to head to the field to begin spring planting in the coming days, but do not forget about your grain marketing plan.

Traders will now be monitoring United States export demand, ethanol demand, soybean crush demand, weather in Brazil on the Safrinha corn crop and spring planting conditions here in the United States. Once the U.S. crop is half planted, traders will quickly focus on summer weather patterns, with grain futures potentially gearing up for a “summer rally.”

From a marketing perspective

Recalling previous years of summer grain rallies, many times the rally seems to occur in late May, June or early July depending on various fundamental factors. Sometimes it can seem like the summer price high occurs when you’re busy wrapping up spring planting and lack time to focus on marketing. Sometimes the price high may occur on uncertainty of a potential drought-stricken summer weather forecast.

It is in those moments of uncertainty regarding crop production size and weather scares that the market responds, and prices may trade higher.

Should a summer grain market rally occur, history suggests that the price rally could be fast and furious. Also remember, often, prices will then come crashing down as fast (or faster) than when they rallied, leaving you with mere days or minutes to capture the rally. You need to be ready to capture the opportunity! Be disciplined and be ready.

Prepare yourself

Consider calling your grain elevator now and setting cash sale price targets for both old crop and new crop sales. Think about what percentage of new crop sales you’ll want sold on the books. Then have the discipline to follow through with placing the order and sticking to your plan.

Be strategic with your marketing by setting targets now for cash sales for both old and new crop grains sales.

If you have questions, you can reach Naomi at [email protected] or find her on twitter @naomiblohm.

Futures and options trading involve significant risk of loss and may not be suitable for everyone. Carefully consider whether such trading is suitable for you in light of your financial condition. Examples of seasonal price moves or extreme market conditions are not meant to imply that such moves or conditions are common occurrences or likely to occur. Futures prices have already factored in the seasonal aspects of supply and demand. Total Farm Marketing refers to Stewart-Peterson Group Inc., Stewart-Peterson Inc., and SP Risk Services LLC. Stewart-Peterson Group Inc. is registered with the Commodity Futures Trading Commission (CFTC) as an introducing broker and is a member of National Futures Association. Stewart-Peterson Inc. is a publishing company. SP Risk Services LLC is an insurance agency and an equal opportunity provider. A customer may have relationships with any of the three companies.