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March 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.

My thoughts prior to tomorrow’s report!

Mar 30, 2009
There is a lot happening today. The stock market was down hard on General Motor’s problems and continued talk of the negative impact on the general economy. While this was interesting, the real news was in the dollar. It jumped hard today. In light of all the government spending one would wonder "why?" The only explanation I’m hearing is the world economy is much weaker than expected and is dropping fast. The G-20 meeting coming up next week seems to be signaling they don’t want to inflate like the U.S. government is doing right now. Bottom line, implication is even if the U.S. economy is close to a bottom we can really go no where if the world economy is sliding deeper into a global deflationary pattern.  

I would also note we saw big drops in the energy market. December gasoline was down a remarkable 7.2% at $133.94. The realization is starting to take place that global demand for oil is not going to come back quickly. In fact I would not be surprised if the heads tonight on CNBC start talking about the potential of lead month going back below $40.

So what do this mean for grains and meats? If the stock market continues to lose ground it means that demand is going to be slow on the recovery for domestic usage. As for exports the stronger dollar does not help. So the end game is now all about planted acres, weather and finally yield.  The concern now is about wet and cold conditions. While this may help to keep prices up into April, I’m confident if producers are given a chance they will get the corn and acres planted. 

Going into tomorrow’s report I’m mentally prepared for 83 million corn acres so I have all my short positions in a defensive mode but ready to take advantage of any price bounce. In regards to beans, we will be at least 80.5 million acres or higher. Again, beans have quickly retreated from the $9 price level. Don’t be surprised if we find support at the winter lows but a recovery now above $9.20 in November beans is going to take a major weather disruption in yields. I would continue to encourage clients to aggressively sell new crop beans up against $9.

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.
 
 

Strong opening today but grains closed weaker!

Mar 23, 2009

Corn and beans opened strong on positive economic news and a bullish Dow move but failed to hold in late trading. I have to add that for the first time in a long time I’m seeing producers interested in selling 2009 corn and beans. I keep telling clients right now a margin call is the best thing you can ask for because it means your unpriced inventory is worth more. As you might surmise it’s easy to say but difficult for producers to get excited about margin calls. This is why many are focused on buying puts rather than selling futures or selling cash.  I would urge all clients to be careful about selling call premium to help offset the cost of the puts. The reason is seasonally implied volatility does increase into summer plus you will have two things to worry about, rolling the put up and defending the long call.
 
In summary: I’m not really excited about speculative trading of corn and beans. My focus is on getting a solid base under my 2009 production sales. I would suggest there are far better trades outside of the Ag. complex to trade at this time.
 
Special note: One of those commodities I would be watching would be to buy hogs on a double bottom test and sell bonds on a retest of highs. Essentially, buying June hogs below $71 cents and selling June bonds above 125.15 is suggested. As always speculators are suggested to use stops. In hogs I like the $1.50 level and in bonds I would suggest $1.50 as well which would be all time new highs.
 
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.
 
 

The grain market closed the week in choppy trade!

Mar 20, 2009
The market opened like a lion but is closing like a lamb. This week saw the Fed injecting massive amounts of money into the money supply to drive down interest rates. This helped to drive gold up sharply on concerns about inflation which spilled over into the corn and bean complex.

This week it should be noted the rally was not triggered by any strong exports or demand increases, it was all about the funds and public buying commodities in expectation of inflation worries. We don’t want to rain on their party but I must insist that you don’t have inflation unless consumers are willing to buy. Right now everybody knows why the government is stimulating so aggressively, things are bad and not improving fast. The name of the game is save to retire debt, and cash is king—which I believe is going to rule consumer thinking for several months to come!

Based upon the action of the Fed this week and expectation that the G-20 meeting in April is going to support further continuation of easy money, we are seeing great opportunities developing to refinance loans. We will be releasing to our clients next week a power point presentation of our outlooks and an explanation of how to hedge your interest rate exposure. Bottom line: Great opportunities exist to sell bonds at record highs over the next few months, don’t get left out.

In regards to corn and beans I continue to stress that only two strong factors will raise prices, a significant surprise in planting or a weather yield reduction event. I’m not really worried about inflationary pressure on grain prices between now and fall, it’s all about supply. I continue to urge clients to scale up sale corn now that we are over $4.25 and I would like to be done by $4.52. In regards to beans any place close to $9 beans is a good value in my book. 

The tool of choice right now would be to buy puts or a put vertical and roll up. I would really like to discourage the use of short calls to help pay for the puts until we get into the late May to early June time period.

Finally, in regards to corn I’ve had some clients roll their short futures to the July 2010 to keep the hedge in the weakest month possible. I would be looking to roll the July 2010 back to the September 2009 some time in May. As a guide, once we start hearing the crop is getting close to 70% completed you should start looking for a top in the bull spreads and start bear spreading for a long term move back to full carry.

In summary we want to start moving slowly—but deliberately—to get a large portion of the unpriced inventory moved and get some floors under the 2009 inventory. Our concern is still quite high producers are going to hold onto inventory way too long and potentially cause significantly lower price values in the August-to-September time period.

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.
 

Grains higher across the board!

Mar 17, 2009

Grains were higher across the board on strong outside market influence. The dollar was the big news today and it continues to retreat after making a double top at the 90 cent level. The dollar was down over 71 points to the 86.75 level. It really appears the dollar has topped near term and is going to retreat. This is giving hope to the continued strong export recovery in corn and beans.
 
Additionally, another bullish reason cited was the continued talk by many economic and elected officials of several countries around the world the need to have a concentrated stimulus program. Since the G-20 meeting is coming up in April many traders are reading between the tea leaves and suggesting that even more government spending is on the agenda. This is being seen as bullish for commodities.
 
While there is still snow on the ground in the northern Corn Belt, I’ve heard that planters are starting to run in Missouri today. At this time it appears the concern about a cold and wet spring is still a concern for the market which is also giving a bullish undertone to the market.
 
We have gotten past the John Deer lows? I would suggest if producers did not move inventory to make necessary cash flow needs by now they have decided to hold all the way to May to June in hope of seasonal strength. While this is helping to firm prices now I continue to stress the net impact on producers net cash selling levels will be limited because of the potential for basis to widen. Here at UMS we hope you did lock up your basis on any old crop sales and are going to use the current price bounce to move inventory. Our suggestion continues to be $4 lead month corn futures, $9.50 lead month bean futures, and $5.50 lead month wheat should be levels where one should seriously consider pricing all basis contracts.
 
Question:  Dec 2010 corn is at $4.35 today, what price is it going to take for you to get interested?
 
If you look at Dec cotton and July wheat, deduct the local basis many are saying prices are at major loses. This raises the question will the invisible hand of economics motivate the producers to stop producing and go to other crops like corn and beans?
 
I’m going on the road to New York midweek to talk to some of the surviving investment firms. It will be interesting to see what’s on their mind about ag.
 
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.
 
 

Grains up on the week!

Mar 16, 2009
The stock market ended the week with a 4-day rally which has not been seen since 2007. This helped to set a positive tone which has infected almost all markets. The big new today was some private industry estimates on planted corn and bean acres. Their seemed to be a general agreement that wheat acres would be down 4% to 5% and bean acres would be up around the 80 million to 81 million level. The big disagreement has to be on corn acres. One service suggested slightly below last year’s planted figures in the 85.5 million acres level where another widely watched group came in with a suggestion of more than 81 million acres.  The initial reaction was for December corn to test $4.20 Friday and November beans to break hard $8.19.

I generally agree that bean acres will be around the 80 million to 81 million which implies bean carryover will double even with solid demand from China. I’m becoming a little concerned that there is more interest in planting. This places me solidly in the camp that the acreage report this month will be bearish for corn and beans.

In regards to corn, I have to suggest new crop sellers need to be get some type of floor position in place between $4.20 and $4.52. I would really prefer right now to be a buyer of puts and roll up rather than sell cash and buy a call. The reason for puts rather than futures is simply lower potential cash flow exposure. I would strongly urge you to refrain from selling calls to help pay for the puts until we get into the May to early June time period.

In regards to beans the stocks are as tight as they are going to get. If beans can rally on a 185 million bushel carryover I don’t believe there is a lot of hope for old crop beans. In regards to new crop beans, the test and failure to close above $8.50 is serious. Here again, getting a floor is imperative. If you decide to sell cash, I would not defend upside risk exposure until you see November beans close above $9.40. I just want to sell the cash and be done with it.

Finally, the wheat market continues to be plagued by big supplies. We hoped for an end of March to early April early weather freeze. Since weather has stayed cool and wet the risk of a freeze like last year is dropping fast. Looking long term the only encouragement I have is we are going to plant less acres so one should be getting prepared for a major low prior to harvest this May.

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.
 

The grains could not hold their gains!

Mar 11, 2009
If you have been reading my copy or reviewing our website, you know we have been holding a rather sizable hedge position. When I first saw the numbers, short-term I felt it could be rough for the hedger but an opportunity for unpriced subscribers to get caught up. Corn carryover was reduced down to 1.74 billion bushels which I frankly thought would have been up and bean carryover was reduced down to 185 million bushels on strong continued export projections. It was at the low end of carryover projections.  If ever there was an excuse for the bean market to take off, today was the day. 

T
hen, after reviewing the numbers a little more, the world stocks numbers suggested that carry was actually being increased. When you put add the extremely negative numbers of the wheat complex it all added up to a potentially bullish report for beans and corn but with concerns.

Before the open everyone was talking 15 to 20 up in beans, 5 to 8 up in corn, and 2 to 4 in wheat. Granted the market opened firm but it quickly became obvious that the trade was not interested in bidding up prices. As the wheat market started to move lower you could sense it was pulling down corn and beans along with it. Finally, as it moved into the last hour of trading the corn and beans threw in the towel.

Looking forward I have to suggest the December 2009 corn and November 2009 beans' inability to hold gains is extremely troubling. In fact I’m becoming a little more concerned about new crop corn and bean acres. I would not be surprised if the March figures are higher for both! This all suggests to me that December corn at $4.12 and November beans $8.42 are now going to be stiff overhead resistance levels. I fear the odds are no better than 40% that we will see a retest of the $4.22 to $4.35 price level. 

Bottom line: If ever there was a year when we need a weather event to trigger a spring to early summer rally now is that year!

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.

The stock market broke to new lows and what it means for grains!

Mar 05, 2009

The stock market broke to new lows today erasing yesterday’s gain. This helped to cast a very negative tone over the Ag complex today. Granted, I believe the market is oversold and I’m preparing to buy a bearish Supply/Demand report and test of old lows but upside potential really seems limited. Today we also saw the dollar moving higher along with gold.  So what does it all mean for the grain and livestock markets?
 
Frankly, I’m having to go back to school just like many of you in learning the relationship between bonds and interest rates as it reflects to inflation and subsequently on Ag. prices. As I said I’m a student right now not a master so I’m asking as many questions as I can answer but here are some of the ones that are on my mind.
 
 
  1. The bond market has been in a bull market since 1981 when interest rates hit their high and bonds their lows. The easy money policy plus with global demand especially stimulated by China have all contributed to last year’s price event.  Was this a multiple year high?  Are we structurally moving into along term pattern of tighter banking regulation and loaning policy? What will be the effect on agriculture if banks move from an asset loaning strategy to an income based loan? Will it have an effect on carrying charge spreads? If you’re a borrower of short term or long term money what’s the risk and how do you defend?   
 
  1. What causes inflation?  The books suggest it caused by grow in money supply plus active participation by consumers to buy (i.e. more money chasing fewer goods). One way to measure is velocity; we have experienced a drastic drop and in fact the biggest drop in over 48 years of data in the recent quarter. Without velocity, you don’t have inflation.  How fast can velocity (consumer buying) come back? What impact will this have on commodity and subsequent land values?  I will be talking about this in my upcoming seminar here in New Richmond, Indiana.
 
I have a ton of questions to ask, but that’s another day.  In conclusion the outside markets are doing things that we haven’t seen in our life time and the current administration is enacting policy to punish business rather than stimulate. More than ever as corn and bean producers we need to increase our knowledge of the outside markets so we can make effective and informed decisions about the future. 

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.







 

It's time to wait and see!

Mar 03, 2009
Beans saw a nice bounce today in old crop but new crop continues to be weak under longterm concern of a big acreage increase. As for corn, it was a very quiet market as the market digests yesterday’s big price break to good support levels.

Overall, the tone seems to be wait and see for now. First, will the stock market turn up? Second, will next week’s USDA Supply and Demand report have any major surprises on carryover for corn and beans? Finally, what will the acreage report suggest?

I continue to urge all clients to lock up basis on any hedge-to-arrive contracts in corn for spring or early summer delivery. As for upside price potential, it’s going to be really difficult getting December 2009 corn back above $4.20 in my opinion.

In regards to beans I continue to suggest the March report next week should be the last really bullish event for old crop beans. My biggest fear is that we may find more beans production in South America. I would not be surprised to see global stocks build and I continue to be concerned about downside price risk in November 2009 beans longterm. Right now I’m in the “hope” phase for a bounce to get more inventory sold.

Just a quick note on out side markets, lumber and copper had a strong price bounce today. They could be putting in an important low. Gold’s under pressure but should be difficult to get June gold below $880. Cattle and hogs are stable. Supply has tightened, but consumers both domestically and internationally are not spending yet.  Most traders want to be buying on technical corrections. As a seller of inventory I would only be protecting downside risk with a limited cost put right now rather than a net short futures.

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.
 

Grain markets down with break below 7000!

Mar 02, 2009
Just got back in the office after spending time with producers at the Commodity Classic and my staff members suggested that today’s sharp selloff might be the trend associated with me being back in the office and maybe I should leave again! As you mostly know already the corn complex was weaker from the opening bell. The big negative was the Dow’s ability to break below 7,000. Fear is growing that the government is not effectively putting the breaks on the bank and insurance company melt down. In fact, the problems are getting even more dangerous in the international market. Essentially, everyone is bulling in their bullish horns and putting their money in their pocket. Granted, this could build up savings and when consumers get more confident you could see a respectable bounce in outside market forces.

Other news that’s getting farmers’ attention is the Obama administration's budget which essentially takes away government payments from all full-time farmers. This coupled with the increase in tax rates is really going to put pressure on all business concerns.

Last weeks’ USDA commodity forum suggested wheat acres could be down at least 5 million acres. The acres were going to be essentially divided between corn and beans. Along with cotton acreage reduction, the attitude that’s developing is that the market does not have to buy acres. Yes, you read it right, the market does not have to go higher to buy acres this year. In fact, we really need to plant LESS acres!

Finally, the situation of producers having too many bushels of unpriced inventory on hand continues to concern us. We should get a little dumping of inventory now but I fear we are going to see a lot of the inventory held all the way into summer. If we don’t have some type of weather event it could get really brutal in early fall trading.

In summary: things are about as bearish as one could expect.Right now the trader is trying to buy dips in the hope the market is getting too negative. I’m concerned that limited upside activity can really be seen in the corn complex until we get past next week’s USDA Supply and Demand report.

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.
 
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