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Volatile grain market could go either way in coming weeks

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This market has all the emotions, but mainly we’re battling between hope and fear right now.

Remember this old adage? Marketing involves three emotions: greed, hope, and fear.

Most folks who read this blog know all of these better than you want to admit. Greed for high commodity prices, where complacency sets in and sometimes a producer might opt to not price any portion of their grain since market outlook is quite friendly. Then, when market prices break lower the producer feels they cannot sell and begin to hope prices will rebound higher. Then – sometimes - fear kicks in when markets plummet lower, resulting in panic selling. You’re left with less than stellar sales. Or sometimes you feel fear because you can’t forward contract now because you’re not confident in what your crop will yield.

These thoughts and feelings are quite real and felt by many producers across the country this spring.

Waiting for news

Prices for many grains have rebounded from the recent sell off, and hover around long term support levels, teetering back and forth, waiting for the next piece of market news to dictate price direction.

Can prices return to recent highs, or even extend higher? Or will there be an ample crop, and prices slowly slide lower as summer continues?

Add into the mix two big USDA reports this month: A regular monthly supply/demand report on Thursday, June 10, and the Quarterly Stocks and Acreage report on Wednesday, June 30.

Scenario planning

Start creating scenarios for what could happen. Be ready for prices to potentially test the 2012 highs thanks to strong demand and a potentially smaller crop. Yet, also have a plan ready in case the upcoming USDA reports have a negative tone that keeps a lid on any price rally.

Prices are truly at a point where the grain market has the potential to explode higher depending on summer weather. With the Northern Plains experiencing drought, frost/freeze, harsh winds, and blazing temperatures all within a two week time frame, there will be much weather and crop conditions to monitor in the days and weeks ahead.

Yet also, there is tremendous value to protect unpriced bushels should the bullish news come to a halt. Having your marketing strategy balanced, to protect both downside risk and to capture a potentially bullish scenario, is not being wishy washy. It’s called being prepared for whatever Mother Nature and the USDA send your way.

Reach Naomi Blohm: 800-334-9779 Twitter: @naomiblohm and [email protected]
Disclaimer: The data contained herein is believed to be drawn from reliable sources but cannot be guaranteed. Individuals acting on this information are responsible for their own actions. Commodity trading may not be suitable for all recipients of this report. Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. No representation is being made that scenario planning, strategy or discipline will guarantee success or profits. Any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to Total Farm Marketing. Total Farm Marketing and TFM refer to Stewart-Peterson Group Inc., Stewart-Peterson Inc., and SP Risk Services LLC. Stewart-Peterson Group Inc. is registered with the Commodity Futures Trading Commission (CFTC) as an introducing broker and is a member of National Futures Association. SP Risk Services, LLC is an insurance agency and an equal opportunity provider. Stewart-Peterson Inc. is a publishing company. A customer may have relationships with all three companies. SP Risk Services LLC and Stewart-Peterson Inc. are wholly owned by Stewart-Peterson Group Inc. unless otherwise noted, services referenced are services of Stewart-Peterson Group Inc. Presented for solicitation.
The opinions of the author are not necessarily those of Farm Futures or Farm Progress. 
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