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It’s turning into a full-blown weather market. The internet is awash with drought comparisons between 2012 and 2023. This is why the market has rallied so significantly in the past few days. In the “I” states where corn and soybeans reign there are no signs of rain for at least ten days and it will be HOT. According to some farmers and commentators, the situation is pretty serious and it sounds like the situation is like Central Alberta was, up until last week. If things don’t change then trendline yields will simply not happen.
Why This Matters Impact on You
One of the biggest mistakes farmers make is assuming that a weather market will never end. They assume the market will go up forever. Of course, this never happens, because weather markets are driven by emotion. The minute it’s over the market comes crashing down to a new price level. These weather markets are an excellent opportunity to put some new crop sales on the books. This is the time to let the market overreact and take some profit off the table.
Quick Tip What you can Do
The best way to market in weather markets is to use technical analysis and target prices. You set your target price at a significant support/resistance line.
Bulls and Bears
Technical: [Canola Futures]
Major support levels are at 720 and 800.
A minor level is at 740
A target price of 17 is not out of the question.
18 could happen if it remains dry.
Technical: [Kansas Futures]
Major resistance is 880 on the Kansas futures.
This would equate to a $12.00 CPS FUTURES.
AKA. A good fall price would be 10.50 – 11 For CPS. Add 50 cents for HRS.
*Very rough calculations
Technical: Expect barely to trade at a discount to corn as the barley crop in Canada is no longer threatened. The Lethbridge barley market will be slow to react and don’t expect much price action until August.
Bulls: Major corn production problems.
Bears: Canada’s barley production is expected to be average.
Much of the corn and soybeans are in a drought.
10-Day Rain Forecast. No Rain in Corn and Soybean Areas. Windy.com
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