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Jim Meade / Iowa City
Senior Advisor

Marketing Plan 2016

This looks like a very challenging marketing year for new crop.  I've been mulling it over and have a general idea of what I'm going to try to do.  I am not in the government program and don't have crop insurace.  Strictly raise grain and sell it.  Have enough storage for the crop.

 

I have some corn and soybean futures sales on the books at prices high enough that I'll be surprised if they get touched.

 

I'm not much good at guessing the political and trade deals.  No weather crystal ball, either, except that El Nino seems to be on the way out.   The question is when.  The Universtiy of Illinois just posted a study that says if El Nino lasts till August, yields will be better than trend line most years.  If it is La Nina by June or July we can expect measurably lower yields most years.  The latest government projection is that El Nino will be on the way out by July but La Nina may not be in right away.  Leaves a lot of room for varying grain prices this summer and fall.

 

My basic plan is to sell the board when the prices seem right this spring, maybe late March, more likley April or maybe even May.  Buy calls on a break.  Sell the board again if prices go up or try to sneak out of the calls if the market trends down.

 

This is about what I've posted earlier.  The change, if there is any, is that I'll try to see what I can learn about when El Nino goes out and osition myself accordingly.

 

Nohting on yet.

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4 Replies
elcheapo
Veteran Advisor

Re: Marketing Plan 2016

Marketing plan Smiley Very Happy

 

 

sorry.....after todays action in the wheat market, I needed a good laugh !!!

 

 

 

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Jim Meade / Iowa City
Senior Advisor

Re: Marketing Plan 2016

Well, if my marketing plan provided amusement then it's good for at least something.  🙂

 

Not following the wheat market very closely I don't have a good appreciation for what is going on there.  Over the years, seasonals have always been the pattern most comfortable to me.  That apprach is pretty simple and except in 2008 when it big me hard has generally been profitable.  

 

Following seasonals means one doesn't have to track the market all that closely except when timing or prices make it necessary to make a decision.  Perhaps it's the lazy man's way.  Sell sometime this spring, buy a little later, sell in the summer if it works out and buy at harvest.  I've never been any good at trading, but hedging has worked out well.

 

Sorry about the wheat market.

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BA Deere
Honored Advisor

Re: Marketing Plan 2016

Right now you can get $3.50  and $8.50 new crop corn and beans, there will be better opportunities, but will the next 25¢ more likely be up or down before fall?   If it`s a good summer, you could easily knock a buck off those prices come fall and hauling in $3.50 corn would put you in the top 20% of prices. 

 

Maybe Janet Yellan will bail us out, the dollar is tilting lower and oil is trying to go higher, that will be good.

 

The market`s job is to prove most people wrong and alot think corn will be in the 2`s and beans in the 7`s this fall.  FWIW

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timetippingpt
Honored Advisor

Re: Marketing Plan 2016

Jim...I'd encourage you to buy the calls over the next 8 days of so, at least in the corn. Beans have rallied to far to make calls a safe investment, I thought there was a global surplus of beans, yet they are way OVER valued versus all the other foodstuffs.

 

The big down day in wheat is being way over feared. Look at the chart, it went up nicely, and now is retracing, probably for a few more days, but daily trend in wheat is actually higher for the first time in almost a year.

 

The complaceny in the user base of grains is just as bad as the unwillingness of farmers to sell. They aren't buying either. The user can just as easily be as wrong as the farmer, since the future is not known.

 

For your plan to work you have to buy calls  (because options seldom do work) when they are cheap and when the market pessimism is at an extreme. That would be in this general area it seems to me. There are a great many TIME reasons for the grains to stop going down for now.

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