Buy the Rumor. Sell the News

Soybean Stocks Down 27%

Soybean Acreage Seen Lower; Corn Plantings Most Since 1936

Headlines from www.agweb.com.

Today, the US government’s Prospective Planting Report showed that there is good reason to expect soybean prices to rise, but they didn’t. Soybean prices rose steadily over the past week into the announcement. buy the rumor sell the newsI can only understand this behavior in terms of the old trader’s saw: “Buy the rumor, sell the news.” Perhaps there is more than meets the eye in these reports; and I can’t understand the true agricultural condition. But I can understand the charts and the price action as a trader. New rule: when holding a winning commodity future into a key announcement, consider selling the news the day before it is announced. If the commodity takes off after the announcement, one can re-enter.

Engaging this market, I’m back home on the old family farm, where grain, feed, and equipment costs are constantly measured against the prices of commodities produced. The futures market is a good thing for farmers. I like being part of it.

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