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| After 49 yrs of bumping around as a young guy in a grain cooperative, then responsibility with a major exporter and and as a long ago CBOT member, always involved in futures, there are no real secrets to marketing except to formulate your own strategy to trade-off risk versus pure speculation. In this era of accelerated information, no one has an inside track on information. Gone are the old days (darn it) whence a few of us had access to short term secrets.
Follow the money. The advent of the giant hedge funds have introduced a healthy new flow of capital into the markets. Shorts have to be covered (buyers) and Longs have to liquidate (sellers). As a NYC located friend of mine pointed out the other day -he handles giant sized quantities of money--there are a couple of funds capable of buying an entire crop. Most of these folks buy or sell some of everything based on some strategy or model and care little about crop yields or whatever, they look at a combination of macro factors.
Most of this past 3 week advance in prices is based on the USDollar-OWN SOMETHING, NOT DOLLARS-has been the strategy. Of course, this strategy has been reinforced by bullish news on wheat and exceptional importer demand due to the cheaper dollar. Monday night, the USDollar revealed some signs of technical strength & it was time to go to the bank for awhile. Overnight, the dollar has again begun to fade.
There are two types of market scenarios, those fed by strong demand (never try to pick a top in this situation) and those fed by reduced supplies (short-lived); we used to say "you kill a crop 3 times a year." Those old season rules appear (to me) to be no longer valid with the presence of so many big players in these markets.
I take the experts with a grain of salt. A big corn crop, sure, but we have a large supply of animal numbers; there is some question about ethanol demand, but I would not expect much wheat to be fed this next year. Exports depend on the dollar.
Wheat is a demand market. Is it over? Might be, but I doubt it. The big question between now and next April, is acreage. I feel producers like to raise corn..not sure we have bought sufficient soybean acres yet. I feel the same about wheat.
If you own grain or are long futures, you get that queasy feeling in your gut when prices either race upwards or collapse; everyone gets that queasy feeling...just learn not to act on that emotion...learn to anticipate what the crowd is going to look at as the next challenge.
Flexibility is also very important. Sell enough product to ensure you can remain in business, the balance is risk capital. Regardless of what you read, or are told by experts, there is a lot of luck involved in this business.
At this point, international traders prefer to own Euros, not dollars. At this moment, they view owning an asset is a better strategy than owning US currency...wheat, corn and beans are assets, a currency you control, but best to market in small quantities over time. When you see the market racing...shorts covering...usually is a good time to sell something.
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Thoughts on Marketing
