{"id":720,"date":"2023-12-19T21:14:23","date_gmt":"2023-12-19T21:14:23","guid":{"rendered":"https:\/\/welcome.combyne.ag\/resource-centre\/?p=720"},"modified":"2024-01-04T19:53:11","modified_gmt":"2024-01-04T19:53:11","slug":"grain-marketing-as-a-trend-follower","status":"publish","type":"post","link":"https:\/\/welcome.combyne.ag\/resource-centre\/grain-marketing-as-a-trend-follower\/","title":{"rendered":"Grain Marketing As a Trend Follower"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">During a grain marketing discussion, a grain trader told me, \u201cFarmers sell their grain for two reasons: Number 1: Cash Flow and Number 2: Bin Space.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">This strategy works well in rising markets where the longer we hold, the more we receive for our product.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">But the market does not always rise.<\/span><\/p>\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_58 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title \" >Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\" role=\"button\"><label for=\"item-6a09da9e49bbf\" ><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input aria-label=\"Toggle\" aria-label=\"item-6a09da9e49bbf\"  type=\"checkbox\" id=\"item-6a09da9e49bbf\"><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/welcome.combyne.ag\/resource-centre\/grain-marketing-as-a-trend-follower\/#What_if_there_is_a_more_effective_strategy_to_market_your_grain\" title=\"What if there is a more effective strategy to market your grain?\">What if there is a more effective strategy to market your grain?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/welcome.combyne.ag\/resource-centre\/grain-marketing-as-a-trend-follower\/#How_do_we_identify_an_uptrend\" title=\"How do we identify an uptrend?\">How do we identify an uptrend?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/welcome.combyne.ag\/resource-centre\/grain-marketing-as-a-trend-follower\/#Let_Our_Winners_Run_Cut_Our_Losers_Short\" title=\"Let Our Winners Run, Cut Our Losers Short\">Let Our Winners Run, Cut Our Losers Short<\/a><\/li><\/ul><\/nav><\/div>\n<h2><span class=\"ez-toc-section\" id=\"What_if_there_is_a_more_effective_strategy_to_market_your_grain\"><\/span><span style=\"font-weight: 400;\">What if there is a more effective strategy to market your grain?<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\"><br \/>\n<\/span><span style=\"font-weight: 400;\">A timeless strategy proven to work across all asset classes.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">That strategy is called Trend Following.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">As defined on <\/span><a href=\"https:\/\/en.wikipedia.org\/wiki\/Trend_following\"><span style=\"font-weight: 400;\">Wikipedia<\/span><\/a><span style=\"font-weight: 400;\">, Trend Following <\/span><span style=\"font-weight: 400;\">is a trading strategy according to which one should buy an asset when its p<\/span><span style=\"font-weight: 400;\">rice trend<\/span><span style=\"font-weight: 400;\"> goes up and sell when its trend goes down, expecting price movements to continue.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"How_do_we_identify_an_uptrend\"><\/span><span style=\"font-weight: 400;\">How do we identify an uptrend?<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\"><br \/>\n<\/span><span style=\"font-weight: 400;\">Prices trend in three ways:<\/span><\/p>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">1) Uptrends are characterized by rising prices with higher highs and higher lows.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">2) Downtrends are marked by declining prices displayed as lower highs and lower lows.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">3) Sideways consolidation with no clear direction of an uptrend or downtrend.<\/span><\/p>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">During uptrends, delaying grain marketing decisions until cash flow and bin space requirements dictate sales can be effective.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The farmer with unsold grain inventory is considered to have a Long position which is rising in value as the price trends upwards.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">We call this Letting our Winners Run.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">However, all trends come to an, and the price rise slows down or a downtrend begins.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Once the price downtrend begins, our unsold grain begins to lose value giving back gains.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">As the downtrend progresses, the limitations of the sell for cash-flow or bin space grain marketing strategy become evident.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Instead, once a downtrend begins, the most effective strategy is to sell grain and exit Long positions.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">We want to do this ASAP to avoid the lower prices of the downtrend.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">We want to Cut Our Losers Short.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Cutting Our Losers Short preserves the value of our grain, realizing greater revenue and profit per acre.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">An extra 5 or 10 percent in the sale price exponentially affects profit per acre.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">I encourage you to enter different price points into your cost of production software to develop a sense of the significance of higher or lower prices.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Let_Our_Winners_Run_Cut_Our_Losers_Short\"><\/span>Let Our Winners Run, Cut Our Losers Short<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">We publish two newsletters, the <\/span><a class=\"grain-link\" href=\"https:\/\/www.klarenbach.ca\/publications\"><span style=\"font-weight: 400;\">Klarenbach Grain Report<\/span><\/a><span style=\"font-weight: 400;\"> and the <\/span><a href=\"https:\/\/www.klarenbach.ca\/publications\"><span style=\"font-weight: 400;\">Klarenbach Special Crops Report<\/span><\/a><span style=\"font-weight: 400;\">, focusing on price and not market noise.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">I enjoy discussing the markets and can be reached at 306-463-8607 or <\/span><a href=\"mailto:trent.klarenbach@klarenbach.ca\"><span style=\"font-weight: 400;\">trent.klarenbach@klarenbach.ca<\/span><\/a><\/p>\n<p><span style=\"font-weight: 400;\">Trent Klarenbach, BSA AgEc<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"During a grain marketing discussion, a grain trader told me, \u201cFarmers sell their grain for two reasons: Number 1: Cash Flow and Number 2: Bin Space. This strategy works well in rising markets where the longer we hold, the more we receive for our product.\u00a0 But the market does not always rise. What if there [&hellip;]\n","protected":false},"author":21,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"inline_featured_image":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[1],"tags":[11,29,14,15,17,27,28],"class_list":["post-720","post","type-post","status-publish","format-standard","hentry","category-financial","tag-agriculture","tag-canadian-ag","tag-combyne","tag-crop-marketing","tag-farming","tag-grain-trade","tag-market-analyst"],"_links":{"self":[{"href":"https:\/\/welcome.combyne.ag\/resource-centre\/wp-json\/wp\/v2\/posts\/720","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/welcome.combyne.ag\/resource-centre\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/welcome.combyne.ag\/resource-centre\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/welcome.combyne.ag\/resource-centre\/wp-json\/wp\/v2\/users\/21"}],"replies":[{"embeddable":true,"href":"https:\/\/welcome.combyne.ag\/resource-centre\/wp-json\/wp\/v2\/comments?post=720"}],"version-history":[{"count":9,"href":"https:\/\/welcome.combyne.ag\/resource-centre\/wp-json\/wp\/v2\/posts\/720\/revisions"}],"predecessor-version":[{"id":737,"href":"https:\/\/welcome.combyne.ag\/resource-centre\/wp-json\/wp\/v2\/posts\/720\/revisions\/737"}],"wp:attachment":[{"href":"https:\/\/welcome.combyne.ag\/resource-centre\/wp-json\/wp\/v2\/media?parent=720"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/welcome.combyne.ag\/resource-centre\/wp-json\/wp\/v2\/categories?post=720"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/welcome.combyne.ag\/resource-centre\/wp-json\/wp\/v2\/tags?post=720"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}