Why is technical analysis useful to clients?
Example: It is useful for a poultry feeder to know when corn has bottomed so he can build inventory and buy forward contracts for future delivery from farmers and the commodity exchange. On the other side, he will need to hedge his inventory and his forward purchase contracts when the grain price has topped. He also needs to know the technical development of the basis, which is the price difference between near and deferred contracts. He needs to hedge his energy costs, and lumber costs when involved in new construction. The technical development of currencies is important for analysis of the economy and export prices. He needs to hedge his interest rate risk and lock in the lowest rate possible. Both interest rate, stock market and economic index analyses help him in financial planning and managing his personal investment portfolio. Finally, we provide technical analysis of competing meat contracts for him.
