Weather Markets Mean Extreme Volatility

Markets Now AL
“I think if you push through a level that we haven't really pushed through for five or six years, you probably get a pretty rapid explosion to the upside,” he says. “Again, it will probably be rapid and over within the blink of an eye.”

( Farm Journal )

Corn markets rallied to the upside most of the week on rain and a forecast that indicates farmers will be sidelined for a bit longer. The old saying, “What goes up must come down,” is certainly true with weather markets. Analysts warn farmers to take advantage of profitable opportunities the moment they arrive. 

“The producer has to make sure and take advantage of some of these prices,” Don Rose of U.S. Commodities told U.S. Farm Report host Tyne Morgan. “You can't lose sight of that and get caught up emotionally, because short crops have a long tail. There's no doubt about it. Weather markets are very short—they’re usually three to five weeks in length. We're coming into week number three. So, I mean, be careful.”

This week December corn pushed up against $4.50, a long-time point of resistance for the contract. If markets can break that ceiling, they could crest $5, says Dan Hueber of the Hueber report. 

“I think if you push through a level that we haven't really pushed through for five or six years, you probably get a pretty rapid explosion to the upside,” he says. “Again, it will probably be rapid and over within the blink of an eye.”

He warns farmers to be prepared to take advantage of any good pricing opportunities. For corn prices to reach $5, Rose says, there will need to be at least 5 million prevented plant acres. 

“And you're probably going to have to have a yield that looked pretty destructive at that time, because I just don't see it with the world markets the way they are,” he said adding that currently demand for U.S. corn is down substantially. “We're talking about the supply side right now, when it’s stopped, we'll talk about the demand side and that is not pretty.”

While markets are in the favor of farmers now, Rose warns producers to exercise extreme caution. 

“We take the stairs up and the elevator down on trading, so you got to be careful,” he says. 

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