Introduction to Long Term outlook and Phase Analysis:

First, when I say longer term, I am talking about no more than 6 months.  Since we are encompassing that long of time period, I will write in concepts not specifics.  My outlook has to do with Supply and Demand and these factors have their own phases.  It's like the four seasons of the year. 

Phase I...Supply Issues - Planting through crop growth to just before harvest

Phase II...Supply vs. Demand  - Harvest through the first three months post harvest

(Remember, when the word Supply is stated first, this is where the market can have the most volatile swings.  When Supply is a question, weather can change the output dramatically.  When Demand is the first word as in numbers three and four below, then changes are usually not as sudden and we tend to see longer trends form.  That is what we want to see.  Trends.)

Phase III...Demand Issues - Mid Crop year to when planting decisions are being made.

Phase IV...Demand vs. Supply- The final three months of the crop year when carryover more certain.

Please note there is a difference between the "Supply -Demand" phase and the "Demand - Supply" phase which in our particular list is Phases II and Phase IV.  Think of the first word as the big gorilla.  Right after harvest and the supply is the greatest, supply is driving the market but will over time change toward a demand market as the supply is used up.  The question is how much more of a supply do we have over demand.  Thus it's Supply verses Demand.  In contrast, the Demand verses Supply phase is right at the end of the year when the question is, how much demand will lower the remaining supply?  Right after harvest, it's supply and just before we end the crop year and plant another one, it's demand.  Big difference.  Putting it in trend views, when Supply is the first word, we are more likely to have Supply driven markets.  When Demand is the first word, we are more likely to have Demand driven markets.

The characteristics of a Supply driven market is volatile swings, steep trends, and rapid direction changes.  This is where you make the fastest money when you are right and lose the most if you are wrong.  In a demand driven market, the market has tendency to trend longer, be less volatile, and the trends seem to be shallower.  Here is where you can make the safest money and for my book, the most.  Nothing is better than getting on a good 6 month bull or bear market and riding it to the end.  Believe me, this is the best situation even thought the supply driven markets are the most exciting.