Aug 22, 2014
Home| Tools| Events| Blogs| Discussions Sign UpLogin


January 2009 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.

Bob’s thoughts from the road

Jan 30, 2009

Well, I’ve been on the road over the last couple of weeks and here are some of my observations so far from the winter meetings.
 
  1. Not surprising there is still a lot of unpriced grain sitting out there on farms. While it’s always difficult to say how, I get the distinct impression someplace between one third to one half of the 2008 crop is still unpriced and needs to be moved into the marketing system.
  2. While producers are obviously concerned about not being priced, they are not being pressured hard to move inventory. I sense many are going to hold inventory well into the spring and summer hoping for some type of weather event.
  3. Implications: We many not go as low as we really want to see in February for the corn market because farmers are not selling. Equally, there is a growing risk that basis could widen if we move up this spring and summer in flat price due to weather concerns.
 
Other observations: There is a lot of snow and moisture in the northern Corn Belt, especially for North Dakota and Minnesota. This concern when combined with early discussions that we could have cold wet spring is giving rise to concern about a spring weather scare event.
 
First, holding corn for the April to June weather event may pay but be sure that you don’t forget about basis exposure. You might want to start talking to your agronomist and seed salesmen about any changes you should make in hybrids and tillage practices to prepare for cold and wet.
 
In outside market influences most of the damage to the corn crop has already been done while rain could help the beans. For beans, as we move into February to March, I believe the big concern is the potential for a dock strike down in Argentina. The other commodity which is becoming sensitive to weather conditions is wheat. As we all know wheat is produced globally and it’s especially not hard to get into production which makes the potential of supplies increasing quite quickly. So far in my travels out west I’ve got the distinct impression that we are going to see few spring wheat acres due to profitability and if cool and wet steps in, you will see less production as well. As for Kansas, the trend is also toward more corn production. This all suggest to me the market is in a decent position to react to further weather problems. This implies a lot of speculative interest will start to develop in wheat in March if any sign of spring freeze like last year starts to develop. Right now for unpriced inventory I would suggest it’s time to drag your feet of forward contracting off the combine cash sales. I would however be looking really hard at locking up basis. Again, hold off flat price sales until March/April but get basis locked up.
 
Final note: We are alerting all our brokerage and internet clients of a buying strategy in corn that we want to start implementing between Feb 5 and Feb 20th. If you are interested, check our website for more information.
 
Final comment: We are now in the crop insurance season. We realize it’s a big financial expense but taking out an 80% CRC crop insurance program on beans could really give you a solid financial reward.  By having the insurance in place and then selling the cash the potential for returns will be huge. If you have any questions about crop insurance give Rowland a call here at UMS at 1-800-832-1488.
 
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. 2009.

Outside market concerns and weather are driving the grain market

Jan 21, 2009
The bean market recovered a little today on short-term oversold conditions, continued solid export inspections and concern about weather conditions in Argentina. Wheat was stronger on some Egyptian purchases along with some dry weather in Texas. I don’t see this as exceptionally bullish, it’s just wheat is essentially neutral right now, anything positive can push it a little. However, long term there is limited upside potential for wheat with larger global supplies on the horizon. I suggest you can still wait to price but if you have unpriced inventory to sell around harvest time, you have until March to get something done. Just don’t be too optimistic on price.

As for corn I still want to believe we are going to have some product movement once the weather gets better for in the Midwest.  As we move into February, corn will be moving and much of the Argentinean weather will be over. Looking forward to the February USDA Supply and Demand report, I have to suggest everybody must be getting prepared for bearish numbers in regards to the carryover numbers. Ethanol usage and exports will be prime candidates for reduction. While I’m not ready to push up my carryover numbers yet, there is a growing risk that carryover numbers for corn could be pushing 2.1 billion by early summer. This means we are going to have to have actual confirmation of more than 3 million acreage reduction, solid recovery in demand and yield reduction influence to get the corn prices back to levels I know all producers want.

While I’m trying to get producers to start preparing for a speculative long position in corn from mid-February to June, I will only consider such a position if I see a solid correction in corn below $3.60 in March or more preferred December 2009 below $4.10 to $3.85.
As for you speculators out there, I would suggest you take a look at the December cotton chart. If we can get a solid correction in February to a double bottom, I believe it will present a long term decent investment. Call if you are interested.
Final comment: We are now in the crop insurance season. We realize it’s a big financial expense but taking out an 80% CRC crop insurance program on beans could really give you a solid financial reward.  By having the insurance in place and then selling the cash the potential for returns will be huge. If you have any questions about crop insurance give Rowland a call here at UMS at 1-800-832-1488.
 
Finally, I’ll be on the road tomorrow in Illinois. If you are in the area, come, the door is always open. For details just hit this link to our Web site to see upcoming seminars.
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. 2009.
 

Outside market concerns and weather are driving the grain market

Jan 20, 2009

Regardless of your politics, one has to be proud of the smooth transition of presidential power from George W. Bush to Barack Obama. We wish the new president wisdom in trying to reign in a serious of major problems he faces. In the end, it’s going to be all about jobs. Jobs need to be at the private sector rather than the public sector. This begs the question how do we motivate private individuals and companies to take risk and employ more people when, if successful, you are only going to have to pay more taxes and handle more paperwork? So again we hope the new administration can help improve the economy so all individuals can improve their economic condition and in general get rid of all the fear I sense around the country.

The commodity that has recently surprised us the most has been corn. We just did not see the magnitude of the rally Friday and on project (a) last night.  Last week we posted a low of $3.60 on 1/15, rallied hard on Friday and early last night we posted a high of $4.07 or a 47 cent rally in two trading sessions in January!  As we said this was all short covering and some limited speculative buying because of the weather concerns with the Argentina crop and potential dock strikes. Once this short covering rally ended, the corn market had no buyers; the commercials and feed buyers were not interested. Outside market influences were negative. Crude oil was down, gold was down and the dollar was up which for the last several months would have implied very bearish price action. We have also picked up that several leading analyst around the country suggest ethanol demand is going to be significantly lowered. In fact many 2009 projections are now being lowered from the 4.2 billion level down to 3.8 billion. So in summary there are a ton of reasons for the corn market to break into February and we see only one reason for the rally, weather. If we start to see some rains, prices could get really weak fast. That’s why we continue to suggest if you need cash flow and want to sell corn focus on getting it done on this unexpected strength in March corn above $4.

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. 2009.

 

Frigid weather in the Midwest and volatile markets!

Jan 19, 2009
While it was frigid in Chicago Thursday, the bean pits were hot! The market started out on project (a) with some weakness associated with some rains but then things exploded in nearby beans today. We saw a range from $9.576 to $10.24 or 68 cents because of stronger than expected exports. Lead month March is now going premium to the deferred contracts which I have to suggest is the beginning of the end of a bull market move.  With the market being closed on Monday I have to suggest there is great risk the bean market will start to slide next week if any type of rain comes into the market.  My guidance continues to be if you can get November beans back above $10 you need to be getting a floor under your 2009 inventory.

As for corn it was a rather dull day. We did see a brief time period of positive price action but overall you could sense the corn market was only up because beans were rallying. The corn exports were dismal late in the week and we are setting up for the potential that exports and ethanol consumption may have to be eventually dropped by USDA as early as the February USDA Supply and Demand report. More tomorrow.

If you have any questions or would like to read more of my 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. 2009.
 
 

Supply and demand report forces limit-down price activity

Jan 12, 2009
The reports came in negative across the board for corn and beans which lead to limit-down price activity. The corn number was at the top of our trade expectation of 1.79 billion, this along with producers’ need for cash flow should keep the March contract under $4.20 now until confirmation corn plantings are down and some type of solid weather problem. The corn market will close today with a very large pool of unfilled short orders. This should put the corn market down on project (A). Downside risk is difficult to judge now with the fund activity but the bullish expectation of inflation seems to have subsided for now. My suggestion now is to simply wait until the end of January to early February to start buying the corn market for a spring and summer market bounce. I would suggest you focus on the December 2009 futures.

I’ve been suggesting for some time now that we are entering a period of critical highs for beans. Today’s report I believe is the beginning of a long-term downslide to some very weak values this fall. Again, I strongly urge all producers to be aggressive in selling November 2009 beans. More than likely, a $9.90 or higher price is going to be touch and go right now.  I expect day traders will be looking to sell a hard sell off in March beans on project (A) tomorrow.  As we move into late-week trading, the amount of rainfall down south will have a lot of bearing on how big a bounce we get 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. 2009.
 
 

Looking forward to Monday’s USDA Supply and Demand report

Jan 09, 2009
Traders have been working all day at getting ready for Monday's USDA Supply and Demand report. Expectation going into the report is for beans to be bullish, wheat to be neutral and corn bearish. The obvious question is will the bullishness of beans overpower the bearishness of corn? So far beans have been the leader and I would expect this pattern to prevail until we get some rains down in South America. Today’s weather reports have taken much of the rain out of the forecast which pushed beans sharply higher today. 

So looking to Monday, I will be watching March corn carefully as to how it trades between the $4.21 and $4.28 level. If it gaps above on strong buying because of the bullish beans, I will be watching to be a strong day trader on the short side.

In regards to beans I truly believe the bean bulls are just about to factor in all the bullish elements. We could have one more bullish event which will be the final 2008 production numbers later this month. As we move into early February, I see little to no reason for beans to continue their upside price moves in the November 2009 beans. My focus will be to watch very carefully for a bullish report and bearish reaction in the deferred contracts. I continue to stress the potential for a large increase in acres which will put big pressure on November beans.

So in summary: I would like to sell a bounce up in corn and price on correction into early February and then be neutral to bullish corn all the way into early summer while beans would be the complete opposite pattern. In the end, this should add a lot of confusion and volatility to the market. All producers can do is decide what they want from the market and be prepared to act when opportunities are given.

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.
 
 

Concern is the name of the game

Jan 07, 2009
Right now the name of the game is concern in regards to inflation due to the anticipated massive government spending.  Essentially, a lot of big money is looking around at low yields on interest rates, a stock market that is very nervous, dropping housing values and uncertainty about land values. When investors look at their alternatives they have decided to invest a lot more into the commodity sector. They simply point to last year and say why not again this year!

This all sounds good and even feasible on the surface but I have to say that unless the underlying fundamentals are solid, it will not be able to sustain a rally. Granted you can have a bubble and drive out all the shorts but eventually there has to be a reason for the market to rally.

This concern about the market is getting a little ahead of itself and I believe it all came back into focus today. While we did not erase all of yesterday’s gains we did work off a lot of the overbought status. I have to suggest there is a strong tone of wanting to buy breaks right now than wanting to sell rallies even after the amazing rally we have seen in corn and beans over the last 30 days.

I still suggest that the January USDA Supply and Demand report should be bearish for corn but bullish for beans, but the final push—The question obviously is which is more important?  I believe for corn long-term upside potential we really need to keep prices on the defensive in January and February. This will give more incentive for larger bean acres and smaller corn acres. We could see a big payoff for to store corn later 2009 to 2010. I feel all short term traders who are now speculatively short should be very careful, a close now above $4.28 would be a clear technical breakout.  As for hedgers it may be prudent to put on a short term February corn call which is called a serial call. I would hold for the reports, if the market rallies you are ok. If it breaks as I am suggesting, take off the calls at a modest loss.

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. 2009.
 
 

Corn and soybean outlook

Jan 05, 2009
Corn and wheat are weaker today, while beans hold on to gains. We would not be surprised to see a continuation of this tone for the week.

Two primary bearish factors should be coming into play on corn now. First, exports should continue to be weak and the expectation is still quite high that the January USDA Supply and Demand report will be bearish and eventually stocks are going to grow. Second, we are getting close to the time period where producers need cash flow. Roads are in decent shape in the Midwest allowing winter grain movement. Between now and early July the mid-January to early-February time period will be the most bearish time period for corn. If you have inventory to move in the next 60 days, we would do it now. If you can hold and wait until summer we would do so at this time. 


As for beans we continue to argue the complete opposite pattern. Exports are decent and the upcoming January USDA Supply and Demand report and final production numbers are expected to be positive. We should see the tightest stock numbers for the year in the next 60 days. After that, we fear beans will be fighting constantly to hold gains as producers shift big acres to beans. While we could bounce in the summer if a weather event occurs, the extent of the rally will be 100% related to weather. We continue to suggest that both old and new crop sales must be aggressively placed at current levels. We like selling old crop in the cash market and new crop as well in a forward cash contract where basis is locked up. We would only suggest defending upside risk exposure if we see a clear technical breakout to the upside after early April. At that time we suggest a very aggressive selective futures buying strategy or a straight long call strategy.

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.
 
Log In or Sign Up to comment

COMMENTS

 
 
 
The Home Page of Agriculture
© 2014 Farm Journal, Inc. All Rights Reserved|Web site design and development by AmericanEagle.com|Site Map|Privacy Policy|Terms & Conditions