Published on: 14:18PM Jun 23, 2008
For some time now we said there was the potential for a mild correction as we moved closer to the USDA acreage report. We expect the report will be neutral to slightly bearish because it’s not going to reduce acres as big as the trade would like. It will not be until the August USDA Supply and Demand report before we get some solid information about how bad the flood damage was in regards to acres lost. So our bias is for the market to move sideways to perhaps lower unless weather changes.
The big factor that will determine exactly how fast the market will rally will depend on how hot the weather gets in July. Remember, much of the crop is two to three weeks late and this will affect pollination but how much?
So right now the market is simply catching its breath. We are experiencing a decent correction which actually makes the market better off for a solid fall and winter rally. As for time to buy, I still like buying late July to early August, as for value I would like to see price below $7 but I believe it’s going to be very difficult to achieve.
I’m getting a lot of requests regarding buying the market. I know many of you have sold a lot of cash inventory and want upside risk exposure. Exercising good money management will be the key to surviving what could be a crazy six months. First, don’t over trade your account. Second, make sure your positions are adequately capitalized and third, have a solid plan for how you going to handle downside risk if it occurs. In general, I like buying futures first in late July but the selling of puts and buying of calls could be a solid alternative. Give us a call at 1-800-832-1488 if you want to go over details or would like to read more of my daily recommendations regarding reownership or marketing strategies, email me at [email protected] or [email protected].
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