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Honored Advisor

Re: It's OK,,,,, We can talk about it..

head and shoulders top is a chart term that represents the action of fundamentals.....

In this case the market price has risen to a price that draws enough crop sales to fill the demand and lower price for a while.  Then price returns to establish a new high above the first and is driven lower by lots of sales...  If demand is strong enough to raise prices a third time but new sales drive the price back lower without a new high.  Chart guys call it a head and shoulders top because of the appearance on the chart.  But the actual fundamental was that prices reached an area that brings on lots of sales---- three times.  It is as high as prices are going to go for a while (or until the supply of crop becomes short enough to demand higher prices...)  lots of resistance would be the term that describes it

 

technicals are just chart talk expressing fundamental activity

Senior Advisor

Re: It's OK,,,,, We can talk about it..

Well said about H&S sw. Why it is not taught that technicals are merely numeric gauges of human psychology and its impact on money flow is beyond me. Price is and always will be driven by money flow. I like to talk about how price is never really S&D, it is always, always PERCEIVED S&D.

 

Your question about the value of corn being adjusted by currency devaluation is valid, but only 1/2 the real question. It ignores productivity increases. All commodities will decline in inflation adjusted price over time as productivity, both by producers and by users increase. A better measure is has the value of the crop allowed for the maintenance of the purchasing power of the earnings from the land to remain equal too or greater than the rate of inflation. That has clearly happpened. It is why land is the best returning asset class of the last 200 years in North America.

 

Certainly the government policies on ethanol have vastly driven up the earning stream to farmland. But, it can easily be argued that government policies throughout all of history have favored the land owners over the consumers. I'll probably get banned for saying that, but it is mostly true, UNTIL the land is confiscated. That hurts the owners but not as bad as the consumers who will soon starve to death.

 

Off to cut some more soys today. It was a beautiful day to start yesterday. Yield was exactly as expected, about 10 (16%) under trend.

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Senior Contributor

Re: It's OK,,,,, We can talk about it..

Thank yo for that explantion of H&S top.  I wish technicals would have been explaned that easily in college.  I had a marketing class at Iowa Western, but all I learned from it was to hire someone that soposedly "knew" what they were doing.  Either was a losey teacher or I was 19 years old and not paying attention, (probablay the second one)

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Veteran Advisor

Re: It's OK,,,,, We can talk about it..

Not just in regard to this, yet I would have gained a much better understanding of technical analysis in college if I had more real-world experience first. 

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Senior Contributor

Re: It's OK,,,,, We can talk about it..

I agree

 

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Honored Advisor

Re: It's OK,,,,, We can talk about it..

Thanks time,,,  I for one really enjoyed that entry..  Great comments

 

Western Iowa,,,,, College marketing was like that for me as well, but in the early 80's I was trying to survive farming shoving corn through hogs.... my dad called it "passing time and trading dollars"...

I was struggling with life in general and took a month in winter to go to a fcstone office here locally to have coffee in the mornings(2 hours) and have a sanity visit with a couple of old guys(former farmers) who were pretty good marketers.  It started out as a "teach me how to hedge" session... But both those guys and the office manager were "charters" and trend followers.....things made sense..

 

 

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Honored Advisor

Re: It's OK,,,,, We can talk about it..

Time, 

 

In "trend" terms,,,,,, We are harvesting corn hard and fast,,,, Three weeks of near 100 degrees heat brought it on early... too early

 

Little worried about the beans.  I've never seen them quit before while it was still hot.....  lots of pods but changing faster than normal.

 

Corn

Three fields above trend and three hail and water damaged fields well below trend.  Sandy land leached fertilizer and low land stood water long enough to hurt..... in between some good yields...

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