Ready for Harvest Lows and an October Rally?

September 30, 2015 07:15 AM
 
Ready for Harvest Lows and an October Rally?

The combines are in the fields, the 2014-15 marketing year has ended, USDA is ready to release its quarterly grain stocks numbers, and corn and soybean prices are maybe—just maybe—ready to rally.

“It’s just extraordinary the horsepower and the technological advances that we’ve made. This harvest is going really fast,” observed Jim Bower of Bower Trading on U.S. Farm Report. “From a seasonal standpoint, we need to look at the seasonal 15-year charts. The market tends to actually bottom out around Oct. 6, and so looking at how fast (farmers) are going … and the technological advances that we’re making, it looks to me (that trend is likely to continue) as far as making bottom, if we haven’t already done so.”

 

He wasn’t the only one with that opinion.

“I was thinking we’d made the low (on Monday, Oct. 5), but now with the real taking that jump, (it could be earlier),” agreed Mark Gold of Top Third, also speaking on U.S. Farm Report. “If that holds during the week, then think we’re maybe pretty close to these lows, and I think we could see a pretty good rally in there.”

Watch the discussion on U.S. Farm Report here:

 

That’s good news for farmers who have been understandably discouraged about grain and soy prices. In early September, futures prices for slid to a close of $3.63 for December corn and $8.742 for November soybeans, pushing many farmers to store as much grain as they can in the hopes of higher prices or until cash flow demands a sale.

That’s not always the most effective financial strategy, according to Gold.

“I would say from a marketing standpoint that we’re historically back to some pretty low prices here, so farmers are selling off the combine. They need to re-own it with some call options and keep the upside open. If they’re going to store the grain, I think you’ve got to ask why,” he said. “There’s not enough carry in the market, in my opinion, to store the grain—either corn or beans—and if you’re going to store it, you can’t do it unprotected. Look at buying some kind of cheap put. I don’t think it’s going to pay off, but just in case there is a problem out there, I’d have that on.”

Mike Florez of Florez Trading, who joined Gold and Bower on the broadcast, also urged farmers to be flexible and honest with themselves as they assess their marketing situation this fall.

“If you’re a guy that’s got a position on and it’s not working, don’t be delusional in thinking that is going to come back and make you whole,” he said. “Trading is more about risk as opposed to gain. You have to have stops. You have to have risk parameters, and if you don’t do that, you’re not going to be a successful trader.” 

Watch more of the U.S. Farm Report discussion:

Do you think the market has put in its harvest lows? Why or why not? Let us know in the comments. 

Back to news


 

RELATED CONTENT

Comments

 
Spell Check

Mark C. Daggy
Humboldt, IA
9/30/2015 09:16 AM
 

  The rally will come when farmers hold their corn for $6. Farmer who "blink" and sell below that $6 level are the problem. Selling not one bushel until prices reach $6 and then selling until prices drop below $5 and shutting off 100% of all sales, until prices rise above $6. Repeating this $6 to $5 over and over until corn buyers realize the real price of corn. This method will work for all grains. Farmers do not need a rally....we need a method to follow that makes farming great again. The BS about feeding the world is grain dealer "bull". Last winter when corn was $4.50, China was paying $11 for corn and soybeans were $12 and China was paying $23 to the big grain merchants. The grains were sold as human food. I would like to see all farm programs end so the inefficient poorly managed farmers were gone from the scene. The USDA is simply propping up those at the bottom and interfering with market control by causing over production and cheap food for the masses. Another 8 years of Democrats at the top will give us 100 million on food stamps.

 
 
lm
warren, MN
9/30/2015 11:19 AM
 

  Mnfarmer, it doesn't pencil out that good by warren. Depending your direction from there for rent and your paying 220+ rent. One wet year and drying costs will kill you. This year was an historic anomaly for growing corn in our area...

 
 
Frank
Garden,City, KS
9/30/2015 10:03 PM
 

  Farmers the low corn prices our own fault. OVERPRODUCTION=low prices. We farmers need to get together and reduce planted acres .Forget USDA. It's time we look out for ourselves . www.afairmarketprice.com check it out and leave a comment

 
 

Corn College TV Education Series

2014_Team_Shot_with_Logo

Get nearly 8 hours of educational video with Farm Journal's top agronomists. Produced in the field and neatly organized by topic, from spring prep to post-harvest. Order now!

Markets

Market Data provided by Barchart.com
brought-by
Close