One of the costliest misunderstandings about financial or futures markets is the belief that current prices are rational and reflect true economic value. While we all might like to believe that market prices are a straightforward reflection of supply and demand, the reality is that prices more accurately reflect where buyers and sellers speculate the value of a company or commodity to be in the future.

 

• Where the price for a company keeps rising with no revenue or sales, investors may be betting the company will one day be the equivalent of a Microsoft or Google.
• Where prices for corn keep falling in spite of tight supplies, buyers might believe that ethanol subsidies are going away or that a large crop is on the horizon.

 

Anyone can easily study the supply and demand fundamentals or make projections of future demand or yield estimates. In the end, that is not what determines how high prices can go or when a bull market is going to end. So what are you supposed to do, short of getting a degree in investor psychology? (Which, by the way, still won’t give your crystal ball any clarity.) Though there are no guarantees that history will repeat itself and seasonal price moves may not occur every year, here’s one straightforward shift in thinking for you:

 

Instead of focusing simply on price changes or supply and demand, focus on recognizing patterns, including those moments when it seems like everyone agrees the market has changed forever, for better or worse. You may want to think of it as “taking the temperature” of the market.

 

 

Study Previous Bull and Bear Markets

 

In order to recognize when a market may be hitting a high or low, it’s valuable to study past market extremes, paying close attention to patterns that repeat themselves. Unfortunately, despite the preference of many farmers, examining past fundamentals prior to hitting the top or bottom of a market is often too varied, inconclusive, or market-specific. Technical analysis can be key in determining when a bull or bear market is running out of momentum and possibly coming to an end.

 

Consider the corn market during the first two months of the year as a good example of how technical analysis can be more illuminating than fundamental analysis. A bullish WASDE report on January 10 surprised the market with a lower production estimate and tighter supplies. As a result, March corn futures rallied from a low of $4.53-1/2 on January 9 to a high of $5.04-1/2 on February 19. By March 4, the March corn contract traded to a low of 4.26-1/2, lower than it was trading before the January 10 report.

 

As a corn seller or speculator, how would you have known to exit the market before the rally ended? After all, from a fundamental standpoint, nothing had changed. Export demand and ethanol production remained strong, and U.S. ending stocks on the February WASDE report remained flat. One clue that the rally was possibly coming to an end was the poor close for the week of February 17, signifying a bearish reversal on a candlestick chart (as circled on the chart below). This technical pattern can be a reversal signal after a significant move up or down.

 

July 2025 Corn Chart: Bearish reversal on a candlestick chart the week of February 17 hinted at the end to a rally:

 

 

Guard Against Moments of Excessive Optimism or Pessimism

 

During periods when the market is neither high nor low and most of us don’t have a lot of emotion around it one way or another, we are all pretty sure the market could go up or down on any given day. As marketers, you plan when to sell, and then act accordingly. The danger lies in those periods that seem unlikely to end, whether for good or bad.

 

To fight the emotion during extremely optimistic or pessimistic times, you may need to consistently employ a methodical, analytical approach. Every day, think about how bullish or bearish the news is on the radio or TV, or how optimistic or pessimistic the talk is in the coffee shop. At the same time, evaluate how optimistic or pessimistic you are personally feeling, and try to rate that on a scale from 1 to 10. Paying attention to when your own market sentiment is hitting extremes can help you to take action when you think the markets can only go higher and avoid selling when it seems like prices can only go lower.

 

In Extreme Times, It Often Pays to Be a Contrarian

 

When emotions are running high for farmers and analysts, prices can move to unsustainable levels, both to the upside and downside. In times like these, a key attribute of good marketers is to be able to do the opposite of the consensus. With grain marketing in particular, it can be very beneficial to keep in mind the time of year. Bull markets typically peak sometime between March and July, and bear markets typically bottom between September and December.

 

One of the most recent periods of excessive pessimism for the soybean market was during the month of December 2024. The March soybean contract went from a high of $9.99-1/2 on Monday, December 16 to a low of $9.47 on Thursday, December 19. The focus during that week of price contraction was on large U.S. and global ending stocks, a potentially larger Brazilian crop than the USDA was currently forecasting, and possible loss of export demand due to tariffs. Facing these issues after the sell-off, several clients asked if they should be selling soybeans before prices fell even further toward $8.00, especially since it seemed like everyone around them was selling before things got potentially worse. As always, we don’t know exactly what the market will do or when. We advised clients not to sell for a few reasons:

 

1. It was December, not typically a good time to sell unless prices have recovered from the harvest lows. The market had been trending mostly sideways since August and there was still time for weather to reduce the size of the South American crop.
2. Managed money funds were net short (although not nearly as short as they were in July and August) and the best time to sell is typically between March and July. In other words, past patterns suggested that sellers wait.
3. Finally, we felt that maybe, just maybe, we were approaching that bottom when it felt like things could only get worse.

 

On Friday, December 20, March soybean futures closed at $9.79-1/4, which was 32-1/4 cents above the low on Thursday, December 19. By January 10, March soybean futures closed higher for the week and above resistance at $10.25-1/4. March soybean futures continued to rally until February 5, topping out at $10.79-3/4, which was $1.32-3/4 above the December 19 low. In this case, being the contrarian paid off.

 

July 2025 Soybean Chart:  Waiting out the sell-off in December benefited patient farmers

 

 

Take the Emotions out of Marketing

 

Much of what happens in economies and markets doesn’t result from a mechanical process; rather, from human emotions. Also, remember that humans are very susceptible to recency bias. If the markets have been good, people tend to think they’ll always be good. If the markets have been bad, people tend to think they’ll always be bad. The reality is that the market and the emotions driving it are always in motion, and your job is to take note of the swings and take advantage whenever possible.

 

Resist your own emotionality. Stand apart from the crowd and its psychology; don’t join in! Taking the temperature of the market and asking yourself how you are feeling about the market on a daily basis can help you be prepared in times of extremes. Working with an advisor at Total Farm Marketing can also be a great way to avoid the dangers of your emotions when you market. We can help you understand the patterns that drive good decision-making. We can help you determine when it seems best to take action, and when it seems best to sit tight. We’re also that partner you want in any market environment – consistent, focused on you and your operation, and dedicated to your marketing success.

 

 

 

This year, Total Farm Marketing is celebrating our 40th year helping farmers.

Give us a call at 800.334.9779 to discuss your situation and how we can help you in your marketing decisions.

 

 

©July 2025. Total Farm Marketing. Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. No representation is being made that scenario planning, strategy or discipline will guarantee success or profits. Examples of seasonal price moves or extreme market conditions are not meant to imply that such moves or conditions are common occurrences or likely to occur. Futures prices may have already factored in the seasonal aspects of supply and demand. The data contained herein is believed to be drawn from reliable sources but cannot be guaranteed. Reproduction of this information without prior written permission is prohibited. This material has been prepared by a sales or trading employee or agent of Total Farm Marketing and is, or is in the nature of, a solicitation. Any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to Total Farm Marketing. Total Farm Marketing refers to Stewart-Peterson Group Inc., Stewart-Peterson Inc., and SP Risk Services LLC. Stewart-Peterson Group Inc. is registered with the Commodity Futures Trading Commission (CFTC) as an introducing broker and is a member of National Futures Association. Stewart-Peterson Inc. is a publishing company. SP Risk Services LLC is an insurance agency and an equal opportunity provider. A customer may have relationships with any of the three companies.