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Look for Post-Harvest Market Rallies

October 28, 2011

This information is provided by Archer Financial Services, Inc., 800-933-3996.

 

The grain markets were mired in another quiet week as the absence of significant fundamental news limited the trade activity. 
 
The first half of the week was especially quiet as all eyes were on the economic meetings in Europe. The lows for the week were made on Wednesday as doubt crept in as to whether they would be able to arrive at an effective solution, but a deal was struck late on Wednesday night and a rally ensued on Thursday. 
 
Exports were rather pathetic across the board this week. Although that limited the buyers at times on Thursday, the results were double digit gains for corn, soybeans and wheat. The outside markets provided good support this week as the stock market surged and crude oil had its largest weekly percentage gain since February 2010. 
 
It will take quite some time for it to turn around, so the grain markets simply need to start to look past the European economic situation. Unfortunately, until the grain markets receive usable fresh fundamental news it may tend to react and over react to outside influences. 
 
These markets are poised to break out one way or the other very soon.  The 64 million dollar question is, which way. I believe that breakout will occur to the upside in the next couple of weeks. This is a rally that producers should use to extend hedge coverage. 
 
As harvest is winding down, it is important to have a plan in place to take advantage of any post-harvest rally conditions. We are looking at a plan to establish longer term hedges using options that set a comfortable and attractive price floor, yet it also includes a provision to participate on the upside.
 

 

(click the charts below to enlarge)

 market movement chart 10 28 11

 

Prices 10 28 11

 

COT 10 28 11

 


 

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