Farmers Need to Learn Technical Analysis

December 2, 2010 07:33 AM

The No. 1 marketing mistake farmers make is not getting educated about the tools of the market, says Mike Florez with Florez Trading, one of 15 market analysts speaking this week at the Farm Journal 2010 Marketing Rally.

“If you can learn some technical analysis and understand the tools to project market momentum, you can get some idea on your own about when the markets are topping,” Florez says. How to read charts and key in on market signals will be crucial for farmers in the coming months, he says.
In his breakout session, Florez focused on teaching farmers the basics behind the technical side of the markets and how to watch for higher highs and lower lows.
“There is a lot of education lacking on technical analysis,” Florez says. “But the technical picture gives you the hints about what is going to happen in the market. Volatility is high and any hints you can get early will help you with decision making.”
Florez says he is positive that the market will continue on the uptrend: “There is nothing I see that is projecting any type of top in the market,” he adds


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Spell Check

12/2/2010 08:35 AM

  Anlysizing and trending the data is not difficult for individuals with advance degrees in math and science and I resent the implication this isn't done. That being said there is no way that over the last two years the harvest prices being higher then the trend high during January and March prices could have bween predicted. In addition as farmers get smart this will get worse. Why do I say that? All the farmer has to do is refuse to give out his yield numbers for free. When the traders figure out you have to buy the data we then refuse to reveal out planting intentions without you buying the data.

12/3/2010 03:33 AM

  Tired I totaly agree with you when ever I am called or mailed for a survey I do not do it. Untill we all do this everyone will always know if they have to bid for our grain or not.

12/4/2010 05:17 AM

  If producers have a difficult time with technical analysis, use a marketing advisor that does understand it. Another way to view it: does the production foreman or floor manager at John Deere sell equipment or buy the inputs? No, they leave it up to marketing and marketing people leave the production to those that know how to assemble. If you use futures or options, don't argue that the day to day trading is computer driven and often with complex technical formulas and analysis. It also should be understood that producers may simply not have the time to learn the various signals or basic formulas used in technical analysis. However, they need to realize if they insist on watching the markets throughout the day, week or month that fundamentals are only a part of the picture. There is no doubt for many producers technical analysis is difficult, but farming would be extremely difficult if not impossible for the majority of analysts that make their living selling marketing services or for the professional that trades for a living. It is no different than having the accountant come to the farm for planting and combining or hiring an electrician to perform surgery. A farmer must realize whether they like it or not that technical analysis moves markets. It can also be a universal language and traders worldwide can use it no matter what words are actually spoken. It is also easy to see that the more it grows in use, more often signals become the same. Chart gaps are often a good example. If a producer uses only supply and demand analysis without technical analysis, it will make marketing as difficult as washing both hands with one tied behind their back.


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