Fund Liquidation Tips Off Market Activity

January 9, 2013 01:44 PM
Fund Liquidation Tips Off Market Activity

Advisory services advance cash sales levels into 2013

Marketing activity did pick up at the end of 2012 for the advisory services included in the Archer Financial Services Ag Hedge Program. "Most of the month’s activity occurred in the first half of November as a weaker trade, led by fund liquidation, had the advisory services advancing cash sales levels," says Scott Harms of Archer Financial Services.

Beginning more than a year ago, in mid-November 2011, the hedge funds began a massive  liquidation of long corn positions that ultimately saw their long position reduced by nearly 40% by the middle of December 2012. Fear of similar activity this year perhaps was the catalyst that caused 2012 crop corn hedges to advance 13% in November. As for soybeans, the 2012 crop soybean hedges actually declined last month, Harms notes.

Progressive Ag Marketing lifted its entire hedge position, which has since been replaced inDecember. "We had traded down the low end of the trading range and with export demand remaining so strong, it seemed like a good idea to lift the hedges," says Randy Martinson of Progressive Ag. Once the market rallied back up to a long-term resistance level ($15), Martinson says, he felt the risk of not being hedged was too great and that technically they had pushed the market enough to reestablish the hedge. "The only reason we did 100% was due to the fact that this recommendation was tied to lifting and rehedging current hedges," Martinson says. "We would not have been so aggressive if these would have been to make initial sales."

If you have any questions or comments regarding the track record information, contact Mark Soderberg, Tim Smith or Scott Harms of Archer Financial Services, Inc., at (800) 933-3996.

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