Hello from the National Farm Machinery Show in Louisville, Ky. I spoke to a group of about 450 yesterday afternoon (sponsored by Farm Journal and SFP). I polled the audience before starting my presentation and got the strong impression that more than 30% of old and new crop beans still needs to be sold by farmers for inventory stored on farm. As for selling new crop, I asked for a show of hands of those that had sold more than 20% of inventory for both corn and beans. As I expected, the number was low--only three people. As for the cost of production, there was a common agreement that they will need more than $5 for corn and $11.25 for beans to pay for all costs, including fertilizer, cash rent, crop insurance, any marketing related expenses and a 10 percent profit objective.
When I said the old crop bean high was more than likely in, you could hear a collective sigh of frustration. They knew they had walked away from some very high values last year. If you have been reading my copy lately, you know I strongly believe we are in the best time for strong price action. I ask you, if the bean crop cannot rally on USDA’s confirmation that the Argentina crop has been potentially reduced over 210 million bushels, what do you want?
Another piece of information I picked up was a confirmation of what I’ve been sensing in my discussions with farmers in the southern part of the U.S.--there could be a big shift of cotton acres to beans. I’m not ready to go above the 4.5 to 5 million acre levels, but at this time I fear that if there is going to be a surprise in the market, it’s going to be more bean acres. This continues to put pressure on the new crop bean prices.
I was impressed that over 60 people out of about 450 indicated they plan to reduce corn acres. This, plus what I’m picking up from the seed corn people, suggests corn acres are contracting.
So where does this leave my corn buying market plan? As many know, I want to develop a seasonal corn buying plan for February to May. Today’s sell-off is getting the market close to levels where I’m going to suggest speculative players and feed hedgers start buying. If you’re interested in the specific target prices and tools I’m planning to recommend, call us at 1-800-832-1488.
I’ll be speaking again tomorrow [10:00 a.m.] in the South Wing. Stop by and say “Hello” if you are in the area.
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.
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.