Scenario Plan, Stay Focused, and Follow the 4th of July Rule

What Happened in the Market

After posting a new high of $4.79 in February led by demand, traders took profits in March ahead of Trump tariff announcements. December corn bottomed out at $4.36 March 31, traded sideways, then rose to $4.70 on wet spring planting. 

November beans hit $10.64 in late February, chopped sideways to lower, then tanked to a low of $9.71 April 9 due to an intensified trade war with China. 

In the last week, beans rallied back to the top of the range with resistance to nearly $10.40 due to wet weather and increased demand for bean oil. 

Old crop stocks remain tight and demand is decent for now despite trade concerns. 

Markets remain very sensitive to weather for spring planting. Some believe more acres may go to corn, which has put some pressure on December futures, taking prices back to $4.50 support. 

Beans seem stuck in a trading range between $10.20-$10.40 for November. Demand from other countries has provided support in beans, and if futures pull past $10.40, a run to $11 is possible. 

This week, President Trump somewhat softened his stance on China in an attempt to get them to come to the table. That has kept prices supported, giving the stock market a 2,000-point gain in the last two days. 

From a Marketing Perspective

South American crops could be huge this season. With increased corn acres, consider rewarding near-term rallies with cash sales. If December futures rally back to $4.80, you may want to be aggressive with new crop corn sales. Also, consider using out-of-the-money calls in case of dry weather this summer. 

If November beans get back to near $11, consider making sales. Being more than 50 percent sold the next few weeks could work well. Often, the summer high comes early, in May or the first part of June. It’s a good rule of thumb not to hold any old crop grain past the Fourth of July. Consider hedges on any unpriced grain near those highs as well. 

Prepare Yourself

Expect volatility to intensify. Trade talks take time, and weather is key for planting and timely summer precipitation. Stick to a marketing plan, stay focused, and block out all the noise of politics and uncertainty. Make incremental sales, establish price targets, and place orders at your elevator in advance. 

Practice scenario planning by asking yourself these questions:

1. What will I do if the market goes up some?
2. What if it goes up a lot?
3. What will I do if prices drip a little?
4. What if they drop a lot?

If you have questions, email Cathy at cekstrand@s-pelmwood.com or visit www.TotalFarmMarketing.com.