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October 2008 Archive for Outlook Today

RSS By: Bob Utterback, Farm Journal

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

Volatile markets this week in grains!

Oct 31, 2008
After a big week of volatility overall for corn and beans, the market was rather quiet today—bowing to the pressure of an expected good harvest weekend. We have three things now affecting the crops. First is harvest, beans are done and corn will be wrapping up in the next two weeks. I have to say we have more than likely no more than three more weeks to worry about harvest pressure and then the bin doors are going to shut hard.

The next big event is elections. How will the equities and ag trade as a result? I have to say the expectation going in will be if the Democrats win, it will be perceived as a victory for corn ethanol while a negative potential for equities due to higher tax expectation. 
The final factor affecting the grains is the dollar. It’s remaining quite high. The fear is it will put restrictions on the exports. I have to say much of the negative of higher dollar is being offset by the cheaper freight rates. If the dollar starts to slide, as I expect, into next year and freight rates remain low, it could actually be a boom to corn and bean exports.
So what should you be doing right now? As feed buyers, I believe you have until the third week of November to get at least six months of corn price protection in place. As for selling 2009 corn production, I’m no hurry. In fact, I would like to be a big speculative scale-down buyer close to the old lows. My primary concern is about 2009 beans. If the November report can give us any type of bullish event on yields, I want to really press at trying to get a large portion of 2009 production sold between $9.50 and $10.25 CASH. Finally, in regard to wheat I believe we are at levels that should be sold but my expectation is very limited for recovery. We are going to need a little surprise on reduce planted acres and some yield concerns to get this market back to levels where it would be a decent sale. For now all I can suggest is cross your fingers and hope for a bounce.

If you want to go over details or would like to read more daily recommendations regarding reownership or marketing strategies, email me at utterback@utterbackmarketing.com or laura@utterbackmarketing.com.
BEFORE TRADING, ONE SHOULD BE AWARE THAT WITH POTENTIAL PROFITS THERE IS ALSO POTENTIAL FOR LOSSES, WHICH MAY BE VERY LARGE. YOU SHOULD READ THE “RISK DISCLOSURE STATEMENT” AND “OPTION DISCLOSURE STATEMENT” AND SHOULD UNDERSTAND THE RISKS BEFORE TRADING. COMMODITY TRADING MAY NOT BE SUITABLE FOR RECIPIENTS OF THIS PUBLICATION. THOSE ACTING ON THIS INFORMATION ARE RESPONSIBLE FOR THEIR OWN ACTIONS. ALTHOUGH EVERY REASONABLE ATTEMPT HAS BEEN MADE TO ENSURE THE ACCURACY OF THE INFORMATION PROVIDED, UTTERBACK MARKETING SERVICES INC. ASSUMES NO RESPONSIBILITY FOR ANY ERRORS OR OMISSIONS. ANY REPUBLICATION OR OTHER USE OF THIS INFORMATION AND THOUGHTS EXPRESSED HEREIN WITHOUT THE WRITTEN PERMISSION OF UTTERBACK MARKETING SERVICES INC. IS STRICTLY PROHIBITED. COPYRIGHT UTTERBACK MARKETING SERVICES INC. 2008.
 
 

USDA adjusts production figures today!

Oct 28, 2008
So much for the USDA being unbiased and not trying to put a bottom in the market!  Instead of waiting to the November USDA Supply and Demand report to adjust numbers, the USDA in a surprise announcement after the close yesterday decided to adjust numbers today. It lead to an impressive Project (A) price bounce to $4.0975. Today the USDA lowered planted acres to 85.9 million acres down from 86.9 million with a modest reduction in yield the crop size was reduced 167 million bushels. While this was a bullish figure, it was not as much as the trade expected. Equally, they lowered usage by 100 million bushel so carryover was only reduced 67 million bushel. While encouraging, it was not near the pre-report expectation which allowed the market to fall back.

As I look at the corn complex, today’s report helps to give more confidence now that lead month corn has found a low. Feed buyers and all speculative buyers will be looking to buy between $3.80 and $3.50. The issue at hand however is how much of a bounce do we have in front of us?
The CME had a good article about demand (posted on Web site). They interviewed several ag economists who collectively came up with the opinion that demand for ag products is going to be more inelastic (usage will not change much with change in price). While I do agree to some extent, I’m still quite concerned about our exports if the global economy continues to shrink. The three impacts on corn and beans: First, livestock production could decline if it sees a significant drop in live product exports. Second, the potential for cheap import of ethanol. Third, the overall decline in corn and bean export due to end user belt tighting.
Summary: The fundamental impacts are still very fluid and uncertain. I want to be a buyer of corn and beans on breaks but I would suggest your be cautious. Don’t trade more contracts than your bank account will allow.  Bottom line: exercise good risk management.
If you want to go over details or would like to read more daily recommendations regarding reownership or marketing strategies, email me at utterback@utterbackmarketing.com or laura@utterbackmarketing.com.
BEFORE TRADING, ONE SHOULD BE AWARE THAT WITH POTENTIAL PROFITS THERE IS ALSO POTENTIAL FOR LOSSES, WHICH MAY BE VERY LARGE. YOU SHOULD READ THE “RISK DISCLOSURE STATEMENT” AND “OPTION DISCLOSURE STATEMENT” AND SHOULD UNDERSTAND THE RISKS BEFORE TRADING. COMMODITY TRADING MAY NOT BE SUITABLE FOR RECIPIENTS OF THIS PUBLICATION. THOSE ACTING ON THIS INFORMATION ARE RESPONSIBLE FOR THEIR OWN ACTIONS. ALTHOUGH EVERY REASONABLE ATTEMPT HAS BEEN MADE TO ENSURE THE ACCURACY OF THE INFORMATION PROVIDED, UTTERBACK MARKETING SERVICES INC. ASSUMES NO RESPONSIBILITY FOR ANY ERRORS OR OMISSIONS. ANY REPUBLICATION OR OTHER USE OF THIS INFORMATION AND THOUGHTS EXPRESSED HEREIN WITHOUT THE WRITTEN PERMISSION OF UTTERBACK MARKETING SERVICES INC. IS STRICTLY PROHIBITED. COPYRIGHT UTTERBACK MARKETING SERVICES INC. 2008.
 

A strong bounce in the grains today!

Oct 27, 2008
Finally, a strong bounce off the bottom with some follow through! Most of the traders will be watching to see how much follow through we develop tomorrow. While I want to argue we are nearing value levels, I’m not positive the market can handle this level of price strength prior to the November USDA Supply and Demand report.
Early trade estimates seem to be coming out that yields may be adjusted down for corn and beans but the big uncertainty factor is demand.  With ethanol plants shutting down, will the USDA adjust back its demand projections?
The big key this week to grains' and oilseeds' ability to hold and add to gains will be what happens to the outside markets. Last week OPEC lowered daily production estimates by 1.5 million barrels. While this will help keep supplies building, the concern is will global demand will remain weak which will keep pressure on crude oil. As crude oil makes a low between 50 and 60, corn seems to be wanting to make a low between $3.50 and $3.75 and beans around the $8.50 to $8.75 level. 
Once we get solid signs the bottom is in which would be a close above the overhead resistance and long term 18-day moving average; the next test will be will we have any buying power or will the commodities essentially trade sideways for a longer period than most clients want with inventory being stored in the bins?
If you want to go over details or would like to read more daily recommendations regarding reownership or marketing strategies, email me at utterback@utterbackmarketing.com or laura@utterbackmarketing.com.
BEFORE TRADING, ONE SHOULD BE AWARE THAT WITH POTENTIAL PROFITS THERE IS ALSO POTENTIAL FOR LOSSES, WHICH MAY BE VERY LARGE. YOU SHOULD READ THE “RISK DISCLOSURE STATEMENT” AND “OPTION DISCLOSURE STATEMENT” AND SHOULD UNDERSTAND THE RISKS BEFORE TRADING. COMMODITY TRADING MAY NOT BE SUITABLE FOR RECIPIENTS OF THIS PUBLICATION. THOSE ACTING ON THIS INFORMATION ARE RESPONSIBLE FOR THEIR OWN ACTIONS. ALTHOUGH EVERY REASONABLE ATTEMPT HAS BEEN MADE TO ENSURE THE ACCURACY OF THE INFORMATION PROVIDED, UTTERBACK MARKETING SERVICES INC. ASSUMES NO RESPONSIBILITY FOR ANY ERRORS OR OMISSIONS. ANY REPUBLICATION OR OTHER USE OF THIS INFORMATION AND THOUGHTS EXPRESSED HEREIN WITHOUT THE WRITTEN PERMISSION OF UTTERBACK MARKETING SERVICES INC. IS STRICTLY PROHIBITED. COPYRIGHT UTTERBACK MARKETING SERVICES INC. 2008.
 

Outside markets dominate the grain markets!

Oct 24, 2008
Outside markets continue to dominate the trend of all commodities. Continued weakness in the stock market is acting like a domino effect. As it moves lower, more money continues to be pulled out of hedging funds. This forces funds to sell more stock which drives the market lower. All this week it’s been about the global slow down and potential negative impacts on demand.

The corn and bean markets where off sharply on project (A) on concern about continued global credit liquidity.  The beans had a significant bounce off the overnight lows and actually went positive, but you could sense it was not a rally that had a lot of staying power.

As for the corn harvest, it is moving slower than many would like. A lot of the Western producers are starting to see ponding in the fields and are concerned that harvest delays could start to develop. Normally, this would be very positive but again the negative influence of the outside markets has kept pressure on the market.

Corn and beans will have difficulty moving higher until we get past the November USDA Supply and Demand report and confirm no further bearish concerns. Second, the bin doors shut which we know will occur by Thanksgiving.  And finally, the stock market starts to see a reduction in it’s current volatility and becomes more comfortable with the belief the lows have been confirmed. We don’t necessarily have to rally; we simply have to stop going lower!

Current action: Feed buyers should be looking at getting started on next year’s feed needs. Start looking very hard at July 2009 corn between $4.10 and $3.80 for a six-month supply. As for soybean meal, one has to believe we are nearing value levels but I would not be as aggressive—locking up more than 4 months supply is about as strong as I want to be.  My long term concerns continue to be a big acreage increase in beans.

If you want to go over details or would like to read more daily recommendations regarding reownership or marketing strategies, email me at utterback@utterbackmarketing.com or laura@utterbackmarketing.com.
BEFORE TRADING, ONE SHOULD BE AWARE THAT WITH POTENTIAL PROFITS THERE IS ALSO POTENTIAL FOR LOSSES, WHICH MAY BE VERY LARGE. YOU SHOULD READ THE “RISK DISCLOSURE STATEMENT” AND “OPTION DISCLOSURE STATEMENT” AND SHOULD UNDERSTAND THE RISKS BEFORE TRADING. COMMODITY TRADING MAY NOT BE SUITABLE FOR RECIPIENTS OF THIS PUBLICATION. THOSE ACTING ON THIS INFORMATION ARE RESPONSIBLE FOR THEIR OWN ACTIONS. ALTHOUGH EVERY REASONABLE ATTEMPT HAS BEEN MADE TO ENSURE THE ACCURACY OF THE INFORMATION PROVIDED, UTTERBACK MARKETING SERVICES INC. ASSUMES NO RESPONSIBILITY FOR ANY ERRORS OR OMISSIONS. ANY REPUBLICATION OR OTHER USE OF THIS INFORMATION AND THOUGHTS EXPRESSED HEREIN WITHOUT THE WRITTEN PERMISSION OF UTTERBACK MARKETING SERVICES INC. IS STRICTLY PROHIBITED. COPYRIGHT UTTERBACK MARKETING SERVICES INC. 2008.
 
 

Roller coaster in the grains!

Oct 22, 2008
The roller coaster continues!  Yesterday I would have sworn that November beans had found good support at the $9.02 level. Last night’s announcement that over 20 countries around the world were in recession drove the project (a) down sharply.  The stock market was down sharply today along with crude oil. Essentially, the demand bears are suggesting we simply don’t need as much inventory. With carryover at 220 million bushel and potential to go higher, fear is growing that the market could go lower than expected.

Today’s 40-plus price drop has now caused the want to be buyers to put their hands back in their pockets. I still would suggest downside risk does exist until after the November USDA Supply and Demand report. By then most of all the bearish shocks should be factored into the market. The only concern I have is how much of a bounce will we really get once the bin doors shut. My long term concern is still for increased acres domestically and potentially internationally. Unless somebody has a serious supply problem once we get into 2009, the upside potential of this market is going to be very difficult getting a $10 bushel on lead month beans.

My long term concerns are still quite high about getting a base under 2010 bean prices any time you can get between $9 to 10 net cash sale price. Unfortunately, for many we need a $1-plus rally with the wide basis to get such price levels. 

November 2008 beans' down trend is still in place. We are trying to develop a low but the verdict is still out.  We hope the market develops a trading range affair. A close above the red 18-day moving average and close above the early October gaps around the $9.80 level will signal the low is in and should trigger some strong buying interest “if and when” they show up.

If you want to go over details or would like to read more daily recommendations regarding reownership or marketing strategies, email me at utterback@utterbackmarketing.com or laura@utterbackmarketing.com.
BEFORE TRADING, ONE SHOULD BE AWARE THAT WITH POTENTIAL PROFITS THERE IS ALSO POTENTIAL FOR LOSSES, WHICH MAY BE VERY LARGE. YOU SHOULD READ THE “RISK DISCLOSURE STATEMENT” AND “OPTION DISCLOSURE STATEMENT” AND SHOULD UNDERSTAND THE RISKS BEFORE TRADING. COMMODITY TRADING MAY NOT BE SUITABLE FOR RECIPIENTS OF THIS PUBLICATION. THOSE ACTING ON THIS INFORMATION ARE RESPONSIBLE FOR THEIR OWN ACTIONS. ALTHOUGH EVERY REASONABLE ATTEMPT HAS BEEN MADE TO ENSURE THE ACCURACY OF THE INFORMATION PROVIDED, UTTERBACK MARKETING SERVICES INC. ASSUMES NO RESPONSIBILITY FOR ANY ERRORS OR OMISSIONS. ANY REPUBLICATION OR OTHER USE OF THIS INFORMATION AND THOUGHTS EXPRESSED HEREIN WITHOUT THE WRITTEN PERMISSION OF UTTERBACK MARKETING SERVICES INC. IS STRICTLY PROHIBITED. COPYRIGHT UTTERBACK MARKETING SERVICES INC. 2008.
 

Grains trading in a see-saw pattern

Oct 21, 2008
The see-saw battle continues for the grains and oil seeds. Yesterday’s gains were washed away today.  The big issue is where is the bottom. I have to continue to suggest last week’s lows look more and more like the panic bottom. I would not be surprised this week to see limited follow through today’s correction. 

We’ve been seeing very good harvest progress. Most of the inventory is going to get locked up. One still has time to get long for feed needs and reownership between now and right before Thanksgiving. More specifically, if we can get past the November USDA Supply and Demand reports and show no signficiant increase in supply or reduction in demand, I have to say all fundamentals are in place for a low for “now”.

The problem is we need time to see how much damage we have done to the domestic and global demand.  I would propose we should see a confirmation of lows in November a sideways to higher price pattern into end of year simply because of lack of selling. As we get into the new year, one simply has to wait to see how much strength will develop. Right now I would suggest a working number is lead month corn back above $5 and beans above $10 should be extremely difficult to develop. 

Bottom line: Don't fall in love with the inventory you put in the bin unpriced. You might want to consider selling out of money calls at the strike price you want to sell at and at least pay for all the storage cost to get the inventory into the time period you desire.


If you want to go over details or would like to read more daily recommendations regarding reownership or marketing strategies, email me at utterback@utterbackmarketing.com or laura@utterbackmarketing.com.
BEFORE TRADING, ONE SHOULD BE AWARE THAT WITH POTENTIAL PROFITS THERE IS ALSO POTENTIAL FOR LOSSES, WHICH MAY BE VERY LARGE. YOU SHOULD READ THE “RISK DISCLOSURE STATEMENT” AND “OPTION DISCLOSURE STATEMENT” AND SHOULD UNDERSTAND THE RISKS BEFORE TRADING. COMMODITY TRADING MAY NOT BE SUITABLE FOR RECIPIENTS OF THIS PUBLICATION. THOSE ACTING ON THIS INFORMATION ARE RESPONSIBLE FOR THEIR OWN ACTIONS. ALTHOUGH EVERY REASONABLE ATTEMPT HAS BEEN MADE TO ENSURE THE ACCURACY OF THE INFORMATION PROVIDED, UTTERBACK MARKETING SERVICES INC. ASSUMES NO RESPONSIBILITY FOR ANY ERRORS OR OMISSIONS. ANY REPUBLICATION OR OTHER USE OF THIS INFORMATION AND THOUGHTS EXPRESSED HEREIN WITHOUT THE WRITTEN PERMISSION OF UTTERBACK MARKETING SERVICES INC. IS STRICTLY PROHIBITED. COPYRIGHT UTTERBACK MARKETING SERVICES INC. 2008.
 

Are the lows in?

Oct 20, 2008

After being very active last week one would have thought the market would try to consolidate to build support for a bottom. Instead, the market has now moved sharply higher on Monday after a very open harvest weekend. Historically, one would have expected weakness today on harvest pressure but it was not to be. So goes the current price action, expect one thing and you get another. I have to say today’s rally was more about aggressive short covering and some end user buying hoping last week was the bottom.

Outside markets seem to be suggesting the panic low is currently in for the equities. I recently heard a good analogy about the economy—it had a heart attack, died but was shocked back to life. It is alive and stable now but we really don’t know the extent of the damage to the patient. This is what everybody is going to be breathlessly waiting to see, "how has domestic and foreign demand" been affected. We know there has been damage but to what extent. This uncertainty I believe has to keep the upside potential for all commodities in check.

The other variable that’s going to have a big impact on corn is the energy markets. OPEC is having a meeting later this week and talk would suggest that a drop of over 2 million barrels a day of production has to be seen to bring supply back in line with demand. Just like all producers they’ve gotten a little used to the good times, the issue is will they agree by all players to reduce production? Talk on the floor is crude will find good support between $65 and $70. I tend to

agree, the issue now is how fast of a bounce. I would not be surprised if we saw between $60 and $100 for some time now as domestic production starts to ramp up at a time when the economy will more than likely be producing subpar growth.

Bottom line: The market is due for a technical bounce but I don’t have any strong bias that we are really going a long way up. Instead I would tend to say a sideways trading band would be the more expected price pattern.

If you want to go over details or would like to read more daily recommendations regarding reownership or marketing strategies, email me at

utterback@utterbackmarketing.com or laura@utterbackmarketing.com.

BEFORE TRADING, ONE SHOULD BE AWARE THAT WITH POTENTIAL PROFITS THERE IS ALSO POTENTIAL FOR LOSSES, WHICH MAY BE VERY LARGE. YOU SHOULD READ THE "RISK DISCLOSURE STATEMENT" AND "OPTION DISCLOSURE STATEMENT" AND SHOULD UNDERSTAND THE RISKS BEFORE TRADING. COMMODITY TRADING MAY NOT BE SUITABLE FOR RECIPIENTS OF THIS PUBLICATION. THOSE ACTING ON THIS INFORMATION ARE RESPONSIBLE FOR THEIR OWN ACTIONS. ALTHOUGH EVERY REASONABLE ATTEMPT HAS BEEN MADE TO ENSURE THE ACCURACY OF THE INFORMATION PROVIDED, UTTERBACK MARKETING SERVICES INC. ASSUMES NO RESPONSIBILITY FOR ANY ERRORS OR OMISSIONS. ANY REPUBLICATION OR OTHER USE OF THIS INFORMATION AND THOUGHTS EXPRESSED HEREIN WITHOUT THE WRITTEN PERMISSION OF UTTERBACK MARKETING SERVICES INC. IS STRICTLY PROHIBITED. COPYRIGHT UTTERBACK MARKETING SERVICES INC. 2008.


Outside markets still impact the grain markets

Oct 16, 2008
The stock market rallied early then failed to hold its gains, broke during mid-session then came back on the close. This action continues to show the overall market’s concern to how deep will the global recession be because of the credit melt down. Other negative factors for grain have been the decline in the crude oil. Today’s weakness has forced the lead month crude close to 70 and natural gas below 7 cents.  Overall bias is growing that the decline in oil is reflecting negatively on economic growth. 

I have to say corn and beans are not going lower now because of harvest fundamentals. In fact the bin doors are already shutting and farmers are not really selling as reflected by the narrowing of basis in many regions of the country.  Additionally, by all traditional measurements the market is reaching a panic oversold level. I’m not saying we can’t go lower but the rate of decline is simply too steep to be maintained, a correction is very close.

Where do we go from here?  We know the bin doors are going to shut very tight for three to four months. Unfortunately, this may not be long enough to build any significant recovery.  The collective thinking is the first part of 2009 is going to be very weak for the economy, I don’t expect a solid recovery in corn prices much above $5 for corn and $10 for beans at best. 

Bottom line: The lower the corn and beans goes short term below the cost of production the greater the supply reduction that will develop which will result in a long term price recovery. My concern is it could be well into 2010 before prices get back to where producers want to sell.

If you want to go over details or would like to read more daily recommendations regarding reownership or marketing strategies, email me at utterback@utterbackmarketing.com or laura@utterbackmarketing.com.
BEFORE TRADING, ONE SHOULD BE AWARE THAT WITH POTENTIAL PROFITS THERE IS ALSO POTENTIAL FOR LOSSES, WHICH MAY BE VERY LARGE. YOU SHOULD READ THE “RISK DISCLOSURE STATEMENT” AND “OPTION DISCLOSURE STATEMENT” AND SHOULD UNDERSTAND THE RISKS BEFORE TRADING. COMMODITY TRADING MAY NOT BE SUITABLE FOR RECIPIENTS OF THIS PUBLICATION. THOSE ACTING ON THIS INFORMATION ARE RESPONSIBLE FOR THEIR OWN ACTIONS. ALTHOUGH EVERY REASONABLE ATTEMPT HAS BEEN MADE TO ENSURE THE ACCURACY OF THE INFORMATION PROVIDED, UTTERBACK MARKETING SERVICES INC. ASSUMES NO RESPONSIBILITY FOR ANY ERRORS OR OMISSIONS. ANY REPUBLICATION OR OTHER USE OF THIS INFORMATION AND THOUGHTS EXPRESSED HEREIN WITHOUT THE WRITTEN PERMISSION OF UTTERBACK MARKETING SERVICES INC. IS STRICTLY PROHIBITED. COPYRIGHT UTTERBACK MARKETING SERVICES INC. 2008.
 

Long liquidation and new selling in grains

Oct 15, 2008
Corn, beans and wheat were under heavy pressure today. Their inability to hold recent technical support gave way to aggressive long liquidation and some new selling. We all know the market is excessively oversold, we know it’s seasonally time for a low, we even know it was a full moon last night which many times leads to people doing crazy things. What we don’t know right now is where the bottom is?

We are effectively moving into price ranges where producers are not going to sell off the combine. This is evident by the narrowing of the basis. Producers who are storing unpriced grain may really want to look forward to locking up basis against future sells because when we eventually start to rebound basis could widen just as fast and neutralizes a lot of the flat price gain.

So what has to happen to get a bottom? Again as I suggested yesterday the outside markets are very important right now. We have to see a regain of confidence that the domestic and internationally economy is not going to shrink any more. Frankly, this is going to take time perhaps all the way into next spring. Second, we have to get harvest done and see the bin door shutting. What I’m suggesting is the bottom could be in today and as easily as it could be as long as prior to Thanksgiving. 

This would all suggest if you are a feed buyer or a speculative producer wanting to buy, “NOW” is not the time to be an extreme aggressive buyer. I would suggest tight risk management. My first preference would be to buy in the money calls, and my second would be to buy futures with rather tight stops. 

So when do we really get long? Frankly, right now we have to have a solid sign of a bottom. The first one would be a lower open and higher close on good volume. The second technical indicator would be to close above overhead downtrend resistance and a solid moving average of say 8- to 13-day period.   Essentially, I’m suggesting you should be a slow buyer of weakness and really wait for strength to buy.
If you want to go over details or would like to read more daily recommendations regarding reownership or marketing strategies, email me at utterback@utterbackmarketing.com or laura@utterbackmarketing.com.
 
BEFORE TRADING, ONE SHOULD BE AWARE THAT WITH POTENTIAL PROFITS THERE IS ALSO POTENTIAL FOR LOSSES, WHICH MAY BE VERY LARGE. YOU SHOULD READ THE “RISK DISCLOSURE STATEMENT” AND “OPTION DISCLOSURE STATEMENT” AND SHOULD UNDERSTAND THE RISKS BEFORE TRADING. COMMODITY TRADING MAY NOT BE SUITABLE FOR RECIPIENTS OF THIS PUBLICATION. THOSE ACTING ON THIS INFORMATION ARE RESPONSIBLE FOR THEIR OWN ACTIONS. ALTHOUGH EVERY REASONABLE ATTEMPT HAS BEEN MADE TO ENSURE THE ACCURACY OF THE INFORMATION PROVIDED, UTTERBACK MARKETING SERVICES INC. ASSUMES NO RESPONSIBILITY FOR ANY ERRORS OR OMISSIONS. ANY REPUBLICATION OR OTHER USE OF THIS INFORMATION AND THOUGHTS EXPRESSED HEREIN WITHOUT THE WRITTEN PERMISSION OF UTTERBACK MARKETING SERVICES INC. IS STRICTLY PROHIBITED. COPYRIGHT UTTERBACK MARKETING SERVICES INC. 2008.
 

Near-term trading bands for corn and beans?

Oct 14, 2008
The bean market has been all over the place today. The market started out extremely strong on project (A) then started to fade and actually closed lower.  I have to say I’m a little disappointed with the beans inability to hold the gains. Basis has started to narrow which should be positive to the flat price. A rain event is coming in which also should help support beans. I suggested clients buy the breaks in beans today. We day traded profitability for one trade and went home long on the lows looking for a bounce into tomorrow.  I hate to say it but the beans look range bound. I would be a buyer of support and seller of overhead resistance. My bias is a trading band rather than a trending market will be the pattern for the near term.

As for corn, it started out strong, gained some mid-session strength but came under pressure on the close as the bean market lost ground. Corn is showing the same pattern as beans, it really does not seem like it wants to go lower and good buying develops at the recent lows but neither does it want to rally. I would not be surprised to see a sideways trading band develop over the next weeks with no significant upside price momentum develops until: 1. The stock market shows signs it can hold it gains. 2. The corn harvest is close to 75% done and the bin doors start to shut. 

In general I like buying December corn between $4.09 and $4.01 but with defensive stops below $3.92. My upside objective is $4.45 to $4.65.
If you want to go over details or would like to read more daily recommendations regarding reownership or marketing strategies, email me at utterback@utterbackmarketing.com or laura@utterbackmarketing.com.
BEFORE TRADING, ONE SHOULD BE AWARE THAT WITH POTENTIAL PROFITS THERE IS ALSO POTENTIAL FOR LOSSES, WHICH MAY BE VERY LARGE. YOU SHOULD READ THE “RISK DISCLOSURE STATEMENT” AND “OPTION DISCLOSURE STATEMENT” AND SHOULD UNDERSTAND THE RISKS BEFORE TRADING. COMMODITY TRADING MAY NOT BE SUITABLE FOR RECIPIENTS OF THIS PUBLICATION. THOSE ACTING ON THIS INFORMATION ARE RESPONSIBLE FOR THEIR OWN ACTIONS. ALTHOUGH EVERY REASONABLE ATTEMPT HAS BEEN MADE TO ENSURE THE ACCURACY OF THE INFORMATION PROVIDED, UTTERBACK MARKETING SERVICES INC. ASSUMES NO RESPONSIBILITY FOR ANY ERRORS OR OMISSIONS. ANY REPUBLICATION OR OTHER USE OF THIS INFORMATION AND THOUGHTS EXPRESSED HEREIN WITHOUT THE WRITTEN PERMISSION OF UTTERBACK MARKETING SERVICES INC. IS STRICTLY PROHIBITED. COPYRIGHT UTTERBACK MARKETING SERVICES INC. 2008.

Is it time to go long corn?

Oct 13, 2008
We have been getting calls from a lot of feed buyers and producers on when to buy the corn market.  We have suggested waiting until a technical signal develops. I would prefer to see a sideways trading ban lasting say two or more weeks. Once a solid overhead resistance line has developed, one would start buying after the double bottom on say an 8 to 13-day moving average line. Right now, I feel it will occur when corn harvest is say 60% to 70% completed.

More than likely a break out signal can not really develop until after the November USDA Supply & Demand report and more than likely right before Thanksgiving. As we all know, a lot will depend on what happens to the Dow over the next couple of weeks.  Please note: When you decide to buy, I would really encourage buying deep in the money lead month futures if you are bottom picking.


The December 2008 11-day is at $4.59 and 18-day is at $4.95. This is just above the gap made last week. We would suggest buying 1/3 of your desired bushels at these respective chart points. Please be aware these levels change daily. Our bias would be to buy in the money calls or long futures with tight stops. Either way effective money management now is the key to hanging on until the market turns.

If you want to go over details or would like to read more daily recommendations regarding reownership or marketing strategies, email me at utterback@utterbackmarketing.com or laura@utterbackmarketing.com.
BEFORE TRADING, ONE SHOULD BE AWARE THAT WITH POTENTIAL PROFITS THERE IS ALSO POTENTIAL FOR LOSSES, WHICH MAY BE VERY LARGE. YOU SHOULD READ THE “RISK DISCLOSURE STATEMENT” AND “OPTION DISCLOSURE STATEMENT” AND SHOULD UNDERSTAND THE RISKS BEFORE TRADING. COMMODITY TRADING MAY NOT BE SUITABLE FOR RECIPIENTS OF THIS PUBLICATION. THOSE ACTING ON THIS INFORMATION ARE RESPONSIBLE FOR THEIR OWN ACTIONS. ALTHOUGH EVERY REASONABLE ATTEMPT HAS BEEN MADE TO ENSURE THE ACCURACY OF THE INFORMATION PROVIDED, UTTERBACK MARKETING SERVICES INC. ASSUMES NO RESPONSIBILITY FOR ANY ERRORS OR OMISSIONS. ANY REPUBLICATION OR OTHER USE OF THIS INFORMATION AND THOUGHTS EXPRESSED HEREIN WITHOUT THE WRITTEN PERMISSION OF UTTERBACK MARKETING SERVICES INC. IS STRICTLY PROHIBITED. COPYRIGHT UTTERBACK MARKETING SERVICES INC. 2008.
 

Great Opportunities Ahead!

Oct 08, 2008
I’ve been out of the office for a couple of days due to a death in the family.  I have to say the funeral was more pleasant to participate in that the markets. Most market players are looking for a neutral to positive USDA Supply/Demand report in regards to supply but the big question will be demand expectation.  Right now everybody is on pins and needles as to where we are heading, a major global economic melt down or simply recession!

This uncertainty is causing everybody to become cautious which in itself helps increase the potential of bad times ahead. Right now we need some bold action by our government officials but we seem to be heading the other way. We have a lame duck president that nobody has confidence in and a Congress that wants to “do nothing” because they want to blame the Republicans for all the country's woes. Just think starting in January we have the potential for the Democrats to have the majority vote from the President down to U.S. House and Senate. I wonder what they are going to do. Increase taxes on the wealth and start massive government programs to stimulate the economy? It may work for a short time but my bias is until we build future growth on solid demand and supply fundamentals rather than printing money, you are not really going to get things to turn around as much as we all would like.

So what should you do?  Frankly, I’ve not handled this year well.  As a bear I got beaten down in the first half of the year. Yes, I sold some inventory but not near enough. I remember telling some clients back in May and June that this rally could not continue. Frankly, I thought everything above $6 corn and $12 beans was too much and the big correction would occur by 2010. I misjudged the overall strength of the economy and completely missed the banking system melt down. This goes to show us how much outside markets really influence the ag commodities.
That’s now in the past—what should one do now? First, fight the fear or flight strategy to do all or nothing approach. I would suggest you make small decisions rather than one big one. If you have not sold inventory by now I would have to suggest storing corn first and beans second.  As the market breaks and basis improves focus on locking up basis for the time period you are going into. Third, rather than hold inventory unpriced into the spring and face all the flat price risk and storage cost I’m encouraging producers to sell out of money calls at the strike price they want to sell inventory. The objective would be to at least pay for all the storage cost and have a specific price objective where you would actually move inventory.
Second, in regards to off-farm assets like 401K accounts, there is still time to adjust. I would move “only” a portion into strictly cash accounts. I see nothing wrong in being conservative.  I would suggest moving back into bed rock blue chip stocks when we get a solid technical buy signal in the S/P say a close back above the 18-day moving average. This is what I’ve done in my account. I diversified my holdings so I can sleep at night, again it’s the strategy of several small decisions rather than all or nothing approach.
Third, should I be buying land or building cash reserves?  This is always a problem for farmers. It seems land only comes up for sales when it’s the most difficult to buy it. So the answer really is simple. If you are planning on being in farming for more than 10 years or have sons coming up in farming, controlling the land is going to be key to your long term financial survival. Therefore, I believe you have to keep your money in land rather than cash or equities. I must however suggest regardless of how bad you want the land now is not the time to get your operation “top heavy” in regards to debt. Borrowing much above 30% of equity may be dangerous for the next couple of years. This means I would encourage you to look around for investors. They are hiding but they really do want to invest their money in something more solid like land.

Is the super commodity bull cycle over or is this simple a hard correction? On the surface it looks like its dead for at least a year!  I would be quick to point out we still have all the future buying demand for China and India which is where the world’s population growth is going to continue.  I would like to paraphrase the late Earl Butz, who once suggested you may have people who need our product but unless they have money there is no real demand. This is the issue at hand how long will it take before consumers have confidence to spend domestically and internationally? My bias is the quickest would be second quarter of 2009. So my answer is the super bull cycle has only been put on hold, great opportunities are ahead!

So when should feed buyers or people who have sold their inventory and want to reown get long? The bias is to be long immediately because the market has moved lower than we all thought possible. My suggestion is to fight the desire to try to buy the bottom. If you are going to try you need to be buying calls or long futures with very tight stops or long puts to defend. The theme is don’t over play your hand; keep your losses small in searching for a bottom. The conservative way would be to wait for a bottom formation hopefully in the form of a distribution bottom and then buy on strength. Buy a break out of overhead resistance or a break above a long-term moving average. The implication is you are not fighting the trend, instead you are moving in unison. I don’t know how fast this will develop all I know is it is the pattern I want to see before pressing the long side of the market. At this time patience is a virtue rather than a curse!
If you want to go over details or would like to read more daily recommendations regarding reownership or marketing strategies, email me at utterback@utterbackmarketing.com or laura@utterbackmarketing.com.
BEFORE TRADING, ONE SHOULD BE AWARE THAT WITH POTENTIAL PROFITS THERE IS ALSO POTENTIAL FOR LOSSES, WHICH MAY BE VERY LARGE. YOU SHOULD READ THE “RISK DISCLOSURE STATEMENT” AND “OPTION DISCLOSURE STATEMENT” AND SHOULD UNDERSTAND THE RISKS BEFORE TRADING. COMMODITY TRADING MAY NOT BE SUITABLE FOR RECIPIENTS OF THIS PUBLICATION. THOSE ACTING ON THIS INFORMATION ARE RESPONSIBLE FOR THEIR OWN ACTIONS. ALTHOUGH EVERY REASONABLE ATTEMPT HAS BEEN MADE TO ENSURE THE ACCURACY OF THE INFORMATION PROVIDED, UTTERBACK MARKETING SERVICES INC. ASSUMES NO RESPONSIBILITY FOR ANY ERRORS OR OMISSIONS. ANY REPUBLICATION OR OTHER USE OF THIS INFORMATION AND THOUGHTS EXPRESSED HEREIN WITHOUT THE WRITTEN PERMISSION OF UTTERBACK MARKETING SERVICES INC. IS STRICTLY PROHIBITED. COPYRIGHT UTTERBACK MARKETING SERVICES INC. 2008.
 

Today's market rocks ag commodities

Oct 06, 2008
I have to say the tone of the market today is now as bearish as it was bullish at the top. We all know that a bull has to be fed every day, but a bear can simply wait and if things don’t improve they go lower.

The action now is all about liquidity!  As the financial crisis has spread to the international markets everybody is starting to worry about their job and cash flow. When emotions start to rule the best thing I can say is time to move to the sidelines and allow the market to stabilize.

The key now is where is value?  What is absolute bed rock support? The number I keep hearing is some place around the $3 cash. With today’s hit in corn and beans and wide basis levels, we feel the market is getting very close to bedrock support.

Will the market go lower this week? More than likely, with global markets in major retreat and harvest just getting started there is no real reason to expect the market to stabilize until the dollar, gold and crude oil stabilize. This implies a stabilizing of the Dow which more than likely is going to take a few months to occur. As for corn and beans, I really don’t see prices starting to stabilize until we start getting close to seeing harvest more than 70% done and the bin doors shut.

PLEASE NOTE: Either the cost of inputs is going to have to come down very fast or we are building a major problem for the 2009 season. Producers are telling me they are simply not going to take the risk when prices of cotton, wheat, beans and corn are all below the cost of production for new crop. What do you think will happen?
If you want to go over details or would like to read more daily recommendations regarding reownership or marketing strategies, email me at utterback@utterbackmarketing.com or laura@utterbackmarketing.com.

BEFORE TRADING, ONE SHOULD BE AWARE THAT WITH POTENTIAL PROFITS THERE IS ALSO POTENTIAL FOR LOSSES, WHICH MAY BE VERY LARGE. YOU SHOULD READ THE “RISK DISCLOSURE STATEMENT” AND “OPTION DISCLOSURE STATEMENT” AND SHOULD UNDERSTAND THE RISKS BEFORE TRADING. COMMODITY TRADING MAY NOT BE SUITABLE FOR RECIPIENTS OF THIS PUBLICATION. THOSE ACTING ON THIS INFORMATION ARE RESPONSIBLE FOR THEIR OWN ACTIONS. ALTHOUGH EVERY REASONABLE ATTEMPT HAS BEEN MADE TO ENSURE THE ACCURACY OF THE INFORMATION PROVIDED, UTTERBACK MARKETING SERVICES INC. ASSUMES NO RESPONSIBILITY FOR ANY ERRORS OR OMISSIONS. ANY REPUBLICATION OR OTHER USE OF THIS INFORMATION AND THOUGHTS EXPRESSED HEREIN WITHOUT THE WRITTEN PERMISSION OF UTTERBACK MARKETING SERVICES INC. IS STRICTLY PROHIBITED. COPYRIGHT UTTERBACK MARKETING SERVICES INC. 2008.
 

Outside markets impact agriculture

Oct 01, 2008
Like all of you, I’ve been reading and watching all the market comments regarding the financial markets. We are looking for clarity in this time period of great volatility and uncertainty. 

First, the greed of a few is going to cause great harm to us all. Essentially, everybody that was betting on inflation to lift housing values and subsequently provide income to live on has now seen that play vanish. I would suggest significant belt tightening is now going to occur. To buy a house is going to take a good job and 20% down just to get consideration. This is going to drive a lot of people out of the high price houses and back to lower price houses. Bottom line: Everybody is going to learn that debt is dangerous.

What impacts do I see on agriculture? The immediate impact will be uncertainty about demand.
Will corn and bean exports shrink due to reduction in global demand or will China's desire for more pork production help off set the decline?

Will consumers stop eating out and start cooking at home more? Could this actually increase livestock demand rather than reduce which would be good for feed usage? The new ethanol plants are coming on board now and production is up. Will the government change direction in regards to ethanol support?

When I think about demand I have to say fear of the financial market is more than likely making the expectation of demand dropping worse than it will actually occur. The real new for me is the potential for expansion of demand in 2009 has been significant affected which is a significant departure from what we have been seen occur in corn demand over the last few years. While sideways demand is not really bad, we all feel like it’s a major let down.  I would suggest it simply going to take some time before we get use to this new structure in demand.

With all the financial uncertainty, the other implication I see developing is banking flexibility is going to be significantly affected. I would envision bankers next year will not be as eager to lend to producers that may be on the edge. With all bank lines of credit reduced, one has to anticipate a significant impact on "crop mix" decisions. Producers will move in the direction of low input/low risk crops versus high input cost. The implication is cotton and corn acres will become more questionable if current prices exist while bean acres will increase.

End result: I believe November 2009 beans needs to be sold on rallies. If you are short at significantly higher prices, I would not be eager to take off hedges. If you are concerned with the high profits I would focus on getting a call strategy in place to protect future or cash sales. The winners will be December 2009 corn and December 2009 cotton due to reduced acres being planted. However before you get too bullish, I have to suggest that everybody’s  upside expectation must be tempered for the spring of 2009 for corn and beans cause of the overall fear of the market of depth of the global recession.
If you want to go over details or would like to read more daily recommendations regarding reownership or marketing strategies, email me at utterback@utterbackmarketing.com or laura@utterbackmarketing.com.

BEFORE TRADING, ONE SHOULD BE AWARE THAT WITH POTENTIAL PROFITS THERE IS ALSO POTENTIAL FOR LOSSES, WHICH MAY BE VERY LARGE. YOU SHOULD READ THE “RISK DISCLOSURE STATEMENT” AND “OPTION DISCLOSURE STATEMENT” AND SHOULD UNDERSTAND THE RISKS BEFORE TRADING. COMMODITY TRADING MAY NOT BE SUITABLE FOR RECIPIENTS OF THIS PUBLICATION. THOSE ACTING ON THIS INFORMATION ARE RESPONSIBLE FOR THEIR OWN ACTIONS. ALTHOUGH EVERY REASONABLE ATTEMPT HAS BEEN MADE TO ENSURE THE ACCURACY OF THE INFORMATION PROVIDED, UTTERBACK MARKETING SERVICES INC. ASSUMES NO RESPONSIBILITY FOR ANY ERRORS OR OMISSIONS. ANY REPUBLICATION OR OTHER USE OF THIS INFORMATION AND THOUGHTS EXPRESSED HEREIN WITHOUT THE WRITTEN PERMISSION OF UTTERBACK MARKETING SERVICES INC. IS STRICTLY PROHIBITED. COPYRIGHT UTTERBACK MARKETING SERVICES INC. 2008.
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