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| If in a normal year, we are right now in the midst of the period when KC wheat is strong compared to other row crop prices. Personally, I feel old crop wheat (Chicago) will bump over $10 by 50 or 75 cents. But, I might change my mind tomorrow.
Wild bull markets typically put in a top after one or more limit-up days with shorts covering; that blow-off top generally will remain in place for quite awhile. I don’t sense that atmosphere yet; I do think we are entering the phase when we will now see some hair-raising breaks and rallies. It is time to be nimble.
What are the yet unanswered questions? Will Australia receive a late season rain? Will enough US wheat acres be planted? Where is the dollar headed?
The 08 crop will top (has?) when sufficient acres are thought to have been planted.
Repeating myself, we lack benchmarks. In previous wild markets, history is made & everyone gets too optimistic…the next season brings more supply…following that season prices collapse, but the production costs remain, placing producers in a real squeeze.
Your strategy of stops is sensible assuming you place them in a meaningful location. Frequently folks place them just below technical support areas and sell in a ‘hole.’ The July has a gap between 6.55 & 6.57 the market ‘wants to fill’ –if this gap is not filled by next Wednesday, it most likely will remain intact for quite awhile. A good bull market has the tendency to open lower and close higher, I get queasy on higher openings.
In a normal year, the carrying charge between July & Dec. will range between 10-20 cents; currently it is too narrow, so selling should be in the July option. We have to assume, when placing a hedge, the crop will be large & normal.
If the US Dollar, next week, again begins to slide, I think the bull will resume. In this type of market where bullish news is constantly rehashed and discussed it is often best to ignore news and watch prices.
I ran across this web site searching for some ideas on acreage intentions. It is a good place to exchange ideas. I would appreciate anyone’s thoughts on acreage intentions.
None of us have all the answers. I do know I have never made a dime on the advice of experts. We all have to learn “to kill our own snakes.” And as I near senility, I find I have mostly questions. Good luck.
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For what its worth
