I had mentioned on my last post that oil should be moving into a half cycle low and thus creating the point where by a trend line can be drawn. This cycle is presently on day 13, so we should enjoy a strong bounce for the next week or two. If you wanted to participate in this trade or add to your position, you probably want to get on board today. The risk is easily managed here with a stop just below the mid cycle low near $44.50. You can still get on board near the same price as where the original recommendation was made back on June 27.
I finally have something to write about regarding grains which really is the purpose for me writing anything on this blog in the first place. I am 50% sold cash beans and 0% sold corn. I am making some substantial sales this week.
These weather rally spikes seldom last long unless higher prices become necessary to ration the crop. I don't think we are in that situation, but if we sell too much this week, we can always take re-ownership later should we need to. This is why a brokerage account is necessary for most farmers.
The chart below for JJG (corn, soybean, wheat etf) clearly shows that these events tend to last only a few weeks. They are usually triggered by some sort of event such as weather, but not necessarily. I think the overall reason these events happen is due to a large number of short contracts held by large speculators, which in the rush of getting out of positions creates buying frenzies. Eventually the market runs out of buyers (green circles) and the sellers seize control again and the market driving prices back to where they were before (red lines).
Picking where prices will move is nearly impossible. My best guess is December corn will have resistance at the $4.20 area from last summers highs. At a minimum, you should sell 50% of your corn here and probably place some sort of sell stop below it say around $4.05 if you wish to gamble with the other half. I will be at 100% sold at $4.20
If 2018 corn reaches $4.30, I am pulling the trigger on 15% of the crop.
If you only sold soybeans when you had Commodity Channel Index sell signals, you would consistently be selling at the highs. We still do not have a sell signal on soybeans yet, but we will have one soon. What we have now is beans touching a major resistance level at $10.43. You should probably price at least 50% of what you have left to sell here. This will have me positioned at 75% sold. I think we could possibly still have another push higher to sell what you have left.
I am not yet ready to sell any 2018 soybeans, but we will have a CCI signal soon. Given the track record for selling at these moments, I will probably make a recommendation to sell...perhaps in the $10.30 area. Fibonacci extensions would take price to $10.44. Price should move in that range.