Aug 29, 2014
Home| Tools| Events| Blogs| Discussions Sign UpLogin


December 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.

What is a seller to do?

Dec 29, 2009
The grains retreated a little today after yesterday’s sharp price advance. The overall bias by many continues to be firm as traders are preparing for first-of-year strength, due to expected strong index fund realignment in commodities.
 
I have to tell you I’m getting a little worried that the only reason for the market going up is more money flowing into the market rather than solid supply demand reason. Granted, they can push the market up for a little while, but it’s a false rally. The really harsh weather that is moving through the Midwest is giving producers no incentive to move corn and bean inventory into the market now, but it’s going to have to move into the system for many by early March. The corn bulls are arguing that all the corn out in South and North Dakota is a large percent of the carryover, but most producers in the area suggest while it’s difficult the crop will eventually get harvested and not really be hurt in quality that much..
 
So all this near term bullish talk has pushed beans up sharply, along with corn slightly, below the fall highs. The question comes up will these markets take off in 2010 like they did in 2008? I suggest the odds are very low that it will occur this year, but as always one needs to suggest if we were to see a sudden drastic bullish move in the outside markets and a weather event occur at the same time, anything could happen.
 
So what’s a seller to do? As I suggested in the market plan that I’ve sent out to our brokerage clients, you must first decide what you want from the market in regards to profit. Once the market achieves your target prices get a floor in place, but sell the inventory in a way that you can benefit to some degree if a price event occurs.
 
So looking forward, I anticipate some strength between the first and the 15th of January in both corn and beans. I suggest this should be a selling window for the unpriced 2010 inventory, then weakness from into late January to early February. At this time I would suggest feed buyers and hedgers wanting to defend cash or futures sales must implement some type of call protection. Then sit back and wait to see how the April to July market unfolds in regards to planting and summer weather to indicate if the winter highs hold or prices ignite.
 
Summary: A range bound situation should persist for the first part of 2010, but price activity will get very active as we move into the April to May time period. Now is the time to decide when, what price and how you’re going to sell.
 
I encourage everyone to get their market plan written down now for the 2010 and 2011 crops. Only by knowing where you want to get to, does one have any hope of accomplishing their objectives. If you are need help, call us at (800) 832-1488 [Rowland & Laura] or at (877) 898-4324 [Bob].
 
Bob’s Upcoming Speaking Engagements:
Periodically go to www.utterbackmarketing.com and click on “Upcoming Seminars.”
   
January 2010: Orlando, FL ... New Bern, NC … Louisville, KY … Indianapolis, IN.   
February 2010: Louisville, KY … Anaheim, CA.
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.
 
 

Tis the season!

Dec 22, 2009
It’s the holiday season. While most of our thoughts are probably on Christmas shopping and enjoying the holiday season with family and friends, the futures markets continue to grind on. During the next two weeks we will very likely have noticeably less of the normal players in the market. This can lead to thinner trading activity that many times moves the market in less than predictable ways. Monday was such a day. The grain markets started out calm and then suddenly jumped on limited fundamental news and more about short-term technicals and thin trading. Bottomline: A few players sometimes can move the market temporary, which is what we saw Monday.
 
Looking forward I feel today’s action took a lot of the bulls’ “energy” away from them. I believe the corn and bean bulls will need some solid fundamentals to move the market higher from this point on. One event that is coming up around the first of the year is the index funds’ realignment of commodities. There are rumors that it’s going to be big. All I can say is, when everyone is prepared and waiting for something, it can fail to meet expectations.
 
I continue to warn producers that are holding bean inventory that once we have a solid confirmation that the South American crop is on the way, it’s going to be increasingly difficult to hold bean prices together. This implies producers of 2010 inventory need to be get a floor under the position anytime it is trading between $10 and $10.50. Granted, I don’t believe it can get below $9 for some time and the risk of $12 is always in the wings; again, I believe it’s time to get a floor under expected 2010 production.
 
I assume some have sold a large percentage of their expected 2010 corn crop; I will be asking producers to decide on how much risk they want to take on short positions during the seasonal [April to July] weather scare time period. Since I assume most producers have locked up fair profits, I will be arguing to defend rather than selective trade the positions. We will be discussing buying techniques in our upcoming AgWeb comments. What form do you want to use to hold short positions for expected 2010 production?
 
I encourage everyone to get their market plan written down now for the 2010 and 2011 crops. Only by knowing where you want to get to, does one have any hope of accomplishing their objectives. If you are need help, call us at (800) 832-1488 [Rowland & Laura] or at (877) 898-4324 [Bob].
 
Bob’s Upcoming Speaking Engagements:
Periodically go to www.utterbackmarketing.com and click on “Upcoming Seminars.”
   
January 2010: Orlando, FL ... New Bern, NC … Louisville, KY … Indianapolis, IN.   
February 2010: Louisville, KY … Anaheim, CA.
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.
 

Markets Down on Global Fears

Dec 17, 2009
The log jam finally broke today and the bulls decided it’s the holiday season. Their attitude is: "Let’s take a break and get ready for next year." This has lead to a lot of long profit taking, along with some producer selling, to put solid pressure on corn and beans. It should be noted that the Dow has been down more than 100 points and the U.S. Dollar is also rallying, which are fueling concern by the bulls that profits need to be taken. 
 
I believe there is still a very strong bias under the market to buy weakness. As we have mentioned in the last few weeks, there is concern that many index funds will be realigning their funds to include more corn and beans. All I can say is I’m aware of the situation. How big of an affect will it be? I don’t know, but one needs to be aware.
 
Should producers who have old crop corn and beans sell? Old crop beans are the biggest risk right now, in my opinion. Once we know that the South American crop is assured and the Chinese turn their buying attention to South America, I think we are going to see very limited bean interest. This, coupled with the potential of several million more acres going to beans this year, should concern all producers holding old crop beans.
 
I suggested dumping them when the market got to more than $10, which we have seen for weeks now. I know the basis is wide, but with limited carry incentive in beans, any basis gain should be offset by storage cost. Close your eyes, get it done and focus on selling the expected 2010 crop. If you feel you must be long, focus on buying the vertical calls in soybean.
 
Special note: We are working on a marketing plan worksheet for 2010. We hope to be introducing it to all our clients by the end of the year. If you are interested, give us a call at (800) 832-1488 or (877) 898-4324.
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.
 
 

Holidays are upon us!

Dec 14, 2009
Over the years, I’ve seen both boring and very aggressive markets but one thing is for sure—many traders choose to take a break during this time period.

Thin trading during this time does allow for some unexpected price movements. The market should find very solid overhead resistance at the $4.20 to $4.25 level basis the March contract. The big concern that will start to develop for the first couple of weeks of January is the realignment by the big index trading funds. I’ve been hearing of some big numbers but frankly it’s sometimes difficult to separate the “hype” from reality. I feel there will be some index buying as they realign their portfolio but its been talked about for so long that I believe many are not going to be caught off guard.

In fact, I would not be surprised if many people try to sell a bullish price bounce. We do know there is a big crop out in the bin. Granted there is still some corn to be harvested in the Northern Corn Belt but overall the crop is going to get harvested. The issue is how much crop loss will be eventually seen due to low-test weight and late harvest. My estimate is it will be some place between 150 to 250 million bushels. This coupled with the increased potential ethanol usage we will eventually need 13 billion bushels of production and frankly a 1 million to 2 million increase in acres will be needed this spring.

In summary: I really like selling the March contract above $4.20 but I don’t expect until the first of the year and right before the January USDA Supply and Demand report. I would not try to participate in any type of short term speculative buying strategy for the potential fund buying event expected the first of the month.
If you are interested in a detailed marketing plan outlook call us for a trial to our internet web site.  Ask for Laura at (800) 832-1488 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 up, beans down and a cold burst over the Midwest!

Dec 09, 2009
Good day from frigid Midwest. Temps are going to be 10 to 15 degrees below normal as the northern cold moves across the Midwest. This is going to bring some serious snow which should delay shipments for a day or so. The positive side of the equation is the wet fields are now going to freeze up and allow some much needed harvest in many parts of the Corn Belt. 
 
The corn market bounced today off the recent weakness. I don’t see this as a start of any long-term trend reversal. In fact with the weak cash market trend and potential for continued harvest pressure I would not be surprised to see a little more weakness in the market as we head into the end of month and end of year trading. 

Please note: if the market does correct 10 to 15 cents more, it will be set up for a very solid first of year price bounce as many trading funds enact their first of year portfolio realignments.  The numbers that I’m hearing are very big, the only issue is most of the trade knows about the realignment. So will it be the old bullish report/bearish reaction situation. We would strongly recommend catch-up sellers in the corn complex try to sell close to the recent highs if at all possible.
 
In regards to the bean market, many have been talking about a retest of the old highs above $11 as a near term objective. The problem beans are having is near term exports have been solid which is the bull side of the equation. At the same time all indications are the South American crop is off to a solid start which is bearish.  We continue to side with the argument that once we get into the next year beans will start to lose their bullish luster. Our concern still resides with getting a floor in the 2010 bean market with a base price as close to $10 but with significant upside potential if any type of weather event hits the global suppliers. 
If you are interested in a detailed marketing plan outlook call us for a trial to our internet web site.  Ask for Laura at (800) 832-1488 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.
 

Hello from Chicago!

Dec 04, 2009
Hello from Chicago! I’ve been participating in two-day Farm Journal Marketing Rally, featuring 16 of the leading ag analysts in the country. One would suspect at such an event there would be a wide divergence of opinion simply to set one apart from the crowd. I have to say the majority of the analysts suggested that the profit being offered for 2010 corn and beans requires some steps to be taken to protect profits. The way that one should protect and how aggressive one should protect is where the great divergence in opinion developed.

There was some concern about a first-of-the-year event when many large trading funds must realign their positions. The implication was this could lead to significant market bullish expectation. I tend to side with the crowd that believes most of this bullishness has been anticipated and many of the longs that are in good profits will be looking to sell into the new long position. I suggest if a first of year event does occur, producers should use it to make catch-up sales, especially if November 2010 is above $10.50 and July 2011 is above $4.70.
 
It seems of those attending are quite aware that the profit potential needs to be sold. The problem is the fear of selling and being wrong. All I can say is there is no magic bullet; but here are some suggestions to aid producers in getting inventory sold:
 
(1) Focus on locking up as much of the estimated 2010 production “costs” now. One of the biggest lessons I’ve learned from 2008 and 2009 is if you don’t have your input costs locked up, it is difficult to sell. This means fertilizer, seed, fuel and interest.
 
(2) Be realistic in the price you want from the market. We all want to sell the high and waiting and watching the market go up is exciting, but all I can say is when this market tops, the downside is not going to be slow; I think it could fall off the cliff and the last step is a LULU. In my 28+ years in the market, I’ve meet very few producers who can sell a large percentage of their crop “after” the high is in. We always want last week’s high and, if not careful, end up holding it all the way down.
 
(3) The better the financing, the better the results. If limits are put on costs and cash flow, it may work; but the odds of success are reduced. Essentially, it has been my experience that those who embrace margin calls will long-term be a winner. And I would venture a guess and say that most producers will only sell 100% of their average crop, which almost always leaves bushels to sell. So, if short at a good profit and prices go higher, simply improve the average as prices rally.
 
(4) My final suggestion—when you wake up tomorrow, look in the mirror and say this to yourself at least three times:  I LOVE THE BEAR AND I WANT MORE MARGIN CALLS SO I CAN SELL MORE AT A HIGHER PRICE! 
If you are interested in a detailed marketing plan outlook call us for a trial to our internet web site.  Ask for Laura at (800) 832-1488 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.
 
 
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