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RSS By: Bob Utterback, Farm Journal

Bob Utterback has more than 26 years of experience and offers producers a disciplined approach to marketing.

2014 Prices Still Not Looking Favorable

Nov 12, 2013

The government report last Friday did one good thing for the market. It took away the fear that the market was going to fall below $4 in lead-month corn. Today the market has seen a decent short covering rally, but it should not be expected to move much higher.

To move lead month Dec corn above $4.50,

  1. We will first need confirmation that the crop is getting smaller rather than the expected pattern of getting bigger.
  2. Corn exports will have to exceed expectation. The key is China; how much are they going to build in their reserves? The hope is high they will stock pile, but why do so if the U.S. farmers are willing to hold their crop, and prospects are good for solid acreage above 93 million next year.


For some time we have felt the market was going to be range bound. This report does nothing to change that expectation. We expect a moderate rally into December as the bin door shut and harvest pressure stops. Then the need for cash flow sales brings inventory into the market between January and March. I would not be surprised to see a double bottom in the lead month charts.

In our opinion, the real upside potential starts in May when we see how many acres get planted and what weather pattern(s) develop. We expect the bull spreads will have some moderate recovery during this time.

In summary, we see no reason for 2014 prices to explode unless we see a significant weather event. We want producers to continue to sell rallies in the deferred contracts and then manage the spreads and sell puts to enhance the trade. Next year is a year to simply get through with the least damage to the bottom line rather than treat it like a home run year!

If anyone has questions and would like to discuss marketing strategies, call Bob or Laura (1-800-832-1488). We will also try to answer questions in upcoming blogs and we welcome emails to laura@utterbackmarketing.com or utterback@utterbackmarketing.com.

THIS MATERIAL HAS BEEN PREPARED BY A SALES OR TRADING EMPLOYEE OR AGENT OF UTTERBACK MARKETING SERVICES, INC. AND IS, OR IS IN THE NATURE OF A SOLICITATION. THIS MATERIAL IS NOT A RESEARCH REPORT PREPARED BY UTTERBACK MARKETING SERVICES, INC. BY ACCEPTING THIS COMMUNICATION, YOU AGREE THAT YOU ARE AN EXPERIENCED USER OF THE FUTURES MARKETS, CAPABLE OF MAKING INDEPENDENT TRADING DECISIONS, AND AGREE THAT YOU ARE NOT, AND WILL NOT, RELY SOLELY ON THIS COMMUNICATION IN MAKING TRADING DECISIONS.

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THE RISK OF LOSS IN TRADING FUTURES AND/OR OPTIONS IS SUBSTANTIAL AND EACH INVESTOR AND/OR TRADER MUST CONSIDER WHETHER THIS IS A SUITABLE INVESTMENT. PAST PERFORMANCE, WHETHER ACTUAL OR INDICATED BY SIMULATED HISTORICAL TESTS OF STRATEGIES, IS NOT INDICATIVE OF FUTURE RESULTS. TRADING ADVICE IS BASED ON INFORMATION TAKEN FROM TRADES AND STATISTICAL SERVICES AND OTHER SOURCES THAT UTTERBACK MARKETING SERVICES, INC. BELIEVES ARE RELIABLE. WE DO NOT GUARANTEE THAT SUCH INFORMATION IS ACCURATE OR COMPLETE AND IT SHOULD NOT BE RELIED UPON AS SUCH. TRADING ADVICE REFLECTS OUR GOOD FAITH JUDGMENT AT A SPECIFIC TIME AND IS SUBJECT TO CHANGE WITHOUT NOTICE. THERE IS NO GUARANTEE THAT THE ADVICE WE GIVE WILL RESULT IN PROFITABLE TRADES.
 

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