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July 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.

Grains Bounce on Buying Interest and Outside Markets

Jul 30, 2009
Unexpected strong buying interest by the Chinese, strong crude oil bounce, break in the dollar, rally in the Dow and end of the month position squaring all led to a very strong price event today. I have to say the corn market is rallying only because of the outside markets and will be unable to extend the rally much unless we see solid strength in the outside markets today. July 2010 at $3.75 is starting to reach target prices where I want to sell unpriced grain that’s going to be stored into next year. 

I continue to suggest the bulls are using up a lot of energy right now. Since 1970 the March corn contract has rallied up into August and September on weather scare only seven times and then subsequently fell into March.  In fact from a historical pattern the strategy of storing corn unpriced and hoping for a rally has only worked 11 out of the last 38 years.   So I’m saying right now the odds are better than 75% from a historical prospective that prices are not going to rally. Additionally, if you review the data in the last 38 years, we never saw three back-to-back bullish trending years from the fall lows to next spring. Not since 2007 and 2008 has it been so strong, I truely believe the fundamentals are not exceptional enough on the demand or supply side to argue for a sharp trending year.

Bottom line: Storing corn in the bin unpriced and hoping for a flat price rally historically has less than 1 in 3 chance of paying off. Second, after two bullish years like 2007 and 2008 historically, the market never rallied to make storage pay.  These are the historical facts. If you are going to store unpriced, we would rather you dump the corn and buy futures rather than store in the bin unpriced, having all the storage and risk.

If you need any help in implementing a speculative or hedging strategy give us a call at 1-800-832-1488 or 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 Takes a Bounce Today

Jul 27, 2009
The corn market enjoyed a nice upward trading bias day while beans were on the defensive most of the day. We continue to recommend to clients that corn will gain on beans in the next six months. We are currently long two March corn contracts for every one bean contract. The logic behind this position is the bean acres are going to increase while the corn will decline in the March report. Additionally, I believe South American producers are going to increase bean plantings to make up for last year’s yield loss, plus alternative crops such as cotton, corn and wheat are at low prices as compared to beans.
 
The big issue that will dominate the trends in the next 60 days is the lateness of the crop and when will early frost occur. Last week as I was traveling over to the Farm Journal Corn College, a lot of corn had not pollinated yet. This means we are going to have a lot of corn pollinating around the first of August, which means to get to black layer at least 60 days will be needed for development. That means no frost anywhere before Oct. 1 and preferably Oct 15. The talk is whether or not we see a repeat of 1974.  

If you need any help in implementing a speculative or hedging strategy give us a call at 1-800-832-1488 or 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 Bounces on USDA Annoucements

Jul 23, 2009
I’ve been at Farm Journals 2009 Corn College near Heyworth, Ill., for the last couple of days. As you know, when you’re out in the middle of a corn field day, it’s hard to stay informed.  One of Murphy’s laws is that the most difficult things happen when you are usually distracted the most. So the USDA’s announcement late yesterday that they are going to survey 7 primary states to see if the corn and bean acreage numbers are correct must be classified as a surprise event. While I felt the June 28th report corn acres were too high and the bean acres were too low, this was a factor I thought would be adjusted closer to January.
 
While I’ve been calling for a significant low within plus or minus 5 days of the August USDA Supply and Demand report, this development really increases the odds that the market has put in a temporary low. As we move into August the fear of an acreage surprise, along with concern about cooler than normal conditions, should help to stabilize and even rally the market.
 
The problem I see developing is the last of the bulls’ argument could easily be used up by early September. Even if we lose 1.5 million corn acres or around 150 million bushels, we are still going to have carryover around 1.7 billion to 1.8 billion bushels instead of the current fear of 2.1 billion bushels. The problem then becomes the flat price level is considerably lower than producers want and corn is still stored into next year. Producers will not be able to sell the carry because they are fixed on the flat price. 
 
I strongly believe producers should be focused on selling this bounce into September. I suggest $3.80 or better basis the July 2010 should be targeted as the level to start scale-up selling.
 
On the other side of the equation if we do see reduced corn acres, be prepared for bean acres to be increased. So the only thing new crop beans have working for it is some near-term short correction. We have to suggest a move back into the $9.40 to $9.60 range must be considered aggressively. We would also note the corn/bean spreads are more than likely at their maximum level. Effective immediately we suggest focusing on buying 2 corn and selling one bean contracts if you like the spreads.
 
Yesterday’s USDA surprise is forcing us to recommend adjusting sooner and faster that we would like. Many producers are asking what is going on at the USDA. Can their numbers be trusted anymore? My answer: They continue to be the best numbers around, even with their failings. Maybe this is some of the government stimulus money at work!
If you need any help in implementing a speculative or hedging strategy give us a call at 1-800-832-1488 or 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. 

Weather May Determine Prices!

Jul 20, 2009
It was great sleep weather this weekend with the windows open. We saw some mid-70’s for daytime highs. Great for humans but not for the corn. I really thought we may have been up a little stronger today on concern about the corn crop getting behind on growing degree days. The market bounced early but could not hold and closed slightly off. September corn at $3.18 is getting very close to our $3.02 to $3.10 downside lead month targets. It’s getting really difficult to suggest new sales but a lot of calls are coming in from producers who have to make off the combine cash sales and are not done on selling.

I have to suggest if see a bounce in the December back to $3.40 or better you need to be selling. While I do anticipate a bounce from mid-August into early September by the market, it’s really difficult to say how much. With the weekly crop conditions staying strong it’s going to be difficult getting December corn above $3.50 unless there is actual crop yield loss due to cold weather. Since it’s still more than 60 days away one has to side with the market continuing to fall under the weight of a good potential crop and big supplies of inventory still in farmers hands.

At this time I continue to argue for a near term low 5 days before after the August USDA Supply and Demand report. A brief rally into September will be heavily influenced by the level of frost injury. If we are able to avoid a frost and have a normal one around mid-October I fear that we are setting the stage for a harvest flush in basis and flat price.

Bottom line: Sell any bounce above $3.40 for corn that must be sold off the combine and the look to reown on paper if we can get December corn below $3.
If you need any help in implementing a speculative or hedging strategy give us a call at 1-800-832-1488 or 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.
 
 

Today Was About Short Covering

Jul 17, 2009
Short covering was the name of the game for all commodities. After yesterday’s strong down day, many sellers decided to take their profits and run. The concern about the cool conditions developing next week seems to be overpowering the concerns about Chinese grain sales. 

I have to say its way too early to talk about frost. Yes, the crop is pollinating a lot right now, we need a full growing season, and yes it’s unusually cool. I would equally point out that Monday’s crop conditions ratings will more than likely show overall improvement rather than the seasonal decline associated with hot and dry July and August pattern.  
I still anticipate a sideways to lower pattern into the end of the month to early August. I’m working under the assumption that December corn will find it extremely difficult staying below $3.05 to $3.10 for any length of time right now. I’m planning for a low five days before or after the August USDA Supply and Demand report. Then a short covering and rally to put in some weather risk premium into early September. If the frost event does not show up and we have a cool but weather free event until mid-October, I have to suggest that corn and beans will make new lows in October on harvest pressure. 

What to do:
  1. All corn and bean hedgers with big profits should start preparing for the September bounce by early August. You can roll deep in the money puts to at the money positions. Buy short term call positions to defend futures. Or take off position entirely.  At this time if we could see December corn at the $3.05 level and November beans at $8, I would suggest taking profits.
  2. For the feed buyers out there: I believe you have to buy the August low even though the potential for the October low being lower does exist. As for the speculator, I would suggest you start selling puts and bull spreads and wait until a good technical double bottom before using futures. We will be talking about the different type of buying strategies in an upcoming special report for all our clients. If you are interested, you will need to be members of our internet site to get the publication.
In summary:  We are approaching a time and price where sellers need to start adjusting their thinking and be satisfied with the profit. As for the buyer, I believe we are going to have a lot of time to buy. I would start being cautious and only get aggressive when you are well into harvest and you have a solid technical close above resistance. 

If you need any help in implementing a speculative or hedging strategy give us a call at 1-800-832-1488 or 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 market bounced early but could not hold gains

Jul 15, 2009
The market bounced today but ran into strong resistance and sold off into the close. There seems to be a growing concern amoung many producers that the crop is not out there. Obviously, I’m hearing from those who are missing the rains but overall I have to say the USDA crop conditions are leaning the right way. The crops are alot better off than we would have thought 45 days ago when it was wet and late getting in. The real problem for this crop is going to be growing degree days and how will the crop fill out.  As I’ve suggested in copy several times, I have to anticipate some type of short covering rally and some bottom picking after the August USDA Supply and Demand report.  The trades going to have a little weather premium in the market from late August to early September. If the frost does not develop and we have an Indian summer, the potential for October lows taking out the August lows is high as the excess inventory that can’t be stored on farm is flushed into the market.

This is great for the producer who has hedge protection in place, it’s great for the feed buyer who wants to get his yearly production locked up, it’s great for the producer who wants to start buying upside price insurance for 2010 and beyond sells. It’s only bad for those clients who are unsold and have to sell off the combine.

Looking ahead: My greatest concern is the crop yield is confirmed now and we push the carryover closer to 2 billion bushels. Producers end up storing some of last year’s crop and a larger precent than normal of 2009 into the spring of 2010. The market tries to rally but demand is stable at best, acres remain above 86 million since fertilizer price have moderated and producers simply don’t like changing production. The spring rally fails to excite farmers to move old crop inventory and sell new crop. The fear about El Niño prevents producers from selling $4-plus 2010 and 2011 corn. A normal spring develops.  In the end farmers take corn out of the bin cheaper than then put in and storage cost is not covered. Producers are behind on selling 2010 corn and waiting into 2011 for some type of miracle to bail them out of a very tight financial situation.

If you need any help in implementing a speculative or hedging strategy give us a call at 1-800-832-1488 or 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 Bear is in Control

Jul 13, 2009
The nice rains here in central Indiana are helping the crop. The only area that’s getting a little dry, if the reports from my clients can be believed, seems to be the northern Corn Belt and parts of Ohio. Overall, the crop rating tonight should be stable to down slightly.  While we will have some seasonal decline into August, I believe we are on track for a crop yield in corn around 156 bu. per acre or higher. As for beans, we all know August is the important month. There are some people in the trade talking about the rapid development of the El Nino and potential dry weather influence. Our weatherman continues to be more concerned about growing degree days and early frost. I would suggest the odds are still better than 70/30 we will meet or exceed current USDA projections.

This all implies that the bear has the upper hand right now. All he has to do is sit back and wait while the bull has to prove that crop yields are being impacted. Right now he’s losing ground fast. Overall, I would suggest selling rallies in December 2009 corn back at the $3.40 plus level and November beans above $9.20.

As for the outside markets, the talk is the government wants to support the dollar. It’s holding but for how long is my concern. The economy is simply not responding to the government stimulus; I fear a second stimulus and the associated debt. Unless the administration changes their way and accepts the best way to create jobs is to embrace and support private business one must expect limited results. Bottomline: I don’t believe the private sector is going to be excited about expansion until he knows that he can make money! Yes that’s right individuals put there money into business to make money by providing a service to their customers. Individuals do not get into business for the right to provide a job to the maximum people possible and pay their insurance!  Maybe somebody should tell the current administration the facts of business!

Right now I believe most small business owners feel like there is a bull’s eye painted on their back for higher taxes, more government regulation and higher cost to have employees. In this type of environment all they are worried about is simply surviving not growing!  In the end without private sector growth the government is not going to get tax revenue.  This will eventually lead to higher interest rates as the government and private sectors compete for dollars. My biggest fear is as we move into 2010 and beyond and tax receipts fail to meet expectations, the administration will have no choice to cut spending as interest rates increase. In this case I truly believe agriculture and defense will be the two prime areas the administration will cut.

Summary: Good weather, limited outside market influence of oil, dollar and equity markets is leading to a market that is falling on its own weight. The earliest I would anticipate a low is slightly before or after the August USDA Supply and Demand report.

If you need any help in implementing a speculative or hedging strategy give us a call at 1-800-832-1488 or 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.
 
 

“No good information” for the grain markets.

Jul 10, 2009
The July USDA Supply and Demand report held no good information for the bull! With a 153.4 bu. per acre yield, carryover for next year is going to be at least 1.55 billion bushels. Since the crop conditions report is indicating a much greater crop than last year, the potential is quite high that the August report will increase carryover potential. I know there are a lot of producers out there who think USDA is crazy right now. The acres are not out there and the crop is not as good as the trade is being made to believe. Frankly, I’m not far from your opinion. The problem is it will not be proven until we get to fall for yield and January for the final acreage figures. Between now and then you have to trade the reports and that implies the potential of carryover moving above 1.8 billion bushels which suggests we don’t have to ration demand right now. What we have to do is get carry back in the market and force producers to store product forward.

Implications: If you have forward sold inventory you are happy! If you have unsold inventory you are really having problems. My suggestion is dump the inventory on any moderate bounce and re-own around the August USDA Supply and Demand report. Looking forward the real challenge now is getting December 2010 corn next spring up to a price that is attractive to forward sell.

If you need any help in implementing a speculative or hedging strategy give us a call at 1-800-832-1488 or 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.
 

Commodities Took it on the Chin Today!

Jul 08, 2009
The entire commodity complex took it on the chin today. As for the ag markets, old crop bean contracts were the big losers. It was obvious that a lot of traders are getting out of the way before Friday’s report. I don’t see anything major that can hurt their positions, it is just that there is little new information that can squeeze the spread. With the basis market breaking on old crop beans, many cash players are suggesting that the market is now prepared to wait to new crop.

The country seems to be saying very loudly that the corn crop is no where as good as the crop conditions rating would suggest. Second, they don’t believe the crops out there. Finally, while some inventory has to moved into the market, they appear to be getting ready to sit and hold if prices move much lower.

So the name of the game right now is to sit and wait. Wait to see if we get a bearish report and bullish reaction. Wait to see if yield can be hurt by an August weather event. Wait to see if demand can rebound.

Summary: The burden is still on the bull to prove his point. I feel a 10% price bounce to work off the oversold condition is possible but overall the seasonally pattern strongly favors sideways to lower price action at least into the August USDA Supply and Demand report time period.

Hold short positions and don’t be in a hurry to start accumulating major long positions until we get closer to the first of August.

If you need any help in implementing a speculative or hedging strategy give us a call at 1-800-832-1488 or 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.
 

Long liquidation pressure in the grains

Jul 06, 2009
Today’s break is a continuation of the heavy selling and long liquidation pressure that we saw last week.  The crop conditions rating is expected to show a very solid looking crop. Weekend rains I believe may show the crop is actually improving. Even if your crop is being hurt, you have to accept overall the market has little immediate weather concern. Right now the only thing the corn market has to hope for is some dry weather igniting the bean market and eventually pulling up corn. The problem is this potential is still towards the end of the month into August. Right now I have to say the bear is in full control. Farmers have a lot of old crop corn that needs to come to the market. The crop is getting better. The outside markets are turning bearish. 

So the issue is how far does the market have to go before it has overdone the down side?  At this time the bears have until mid-August before any worries about early frost appear. The next two weeks could be very negative. Right now I would recommend a net short position. Don’t try to buy it just yet, wait for a technical bounce.  As we get closer to the end of the week we could see a bounce but overall the $3.20 level is the next target and more than likely a lot of people will be talking about the $3 to $3.10 level.

My suggestion: If you are short, enjoy the ride but don’t press your bet. If you have been long, I hope you got out. Take a break and get ready to come back hard in late July to early August. If you are still long you have a tough decision to make. Either you hold for another 50-cent risk and scale down which it will be more than likely be next year before you recover or get out and lick your wounds and prepared to come back in strong at lower levels.

If you need any help in implementing a speculative or hedging strategy give us a call at 1-800-832-1488 or 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 Acreage Debate Goes On

Jul 02, 2009
The debate will go on for some time if this week’s acreage report is correct. As of now I believe one has no choice but to accept the fact that corn acres are greater than anticipated. Granted they could dip a little but not enough to really affect the final out come.  As for beans, I’m still in the camp of a few more acres will be found that were not reflected as of June 30th.

So what do we expect next? First next week’s crop rating should show very little decline in the quality of the crop. In fact we could see near record levels as the rain and moderate temperatures in the Midwest have helped to improve crop development.

The next factor after that will be the July 10th USDA Supply and Demand report. One now has to anticipate that carryover will be increased significantly and talk of a 1.8-billion-bushel corn and 250-million-bushel bean carryover will be seen.

The final straw will be the old crop corn inventory that’s going to be forced into the system before new crop inventory sets in. Just how far do we have to go down in corn to absorb a 1.8 billion to 2.0 billion bushel corn carryover? This will be the debate!

Granted right now we have the influence of the weaker dollar and stronger crude oil prices which could take off some of the bear’s advantage but the tone seems to be clear. Sell any two to three day rally or any 10 cent or better price bounces for most of July and early August.  In a nut shell it more than likely will not be safe to be long corn until we are past the August USDA Supply and Demand report.

As for beans, yesterday showed us they can rally but how much more? While we did get some help for new crop beans in reduced acres I still would argue more acres are coming. This all suggests November beans above $10 is more of a sale than a buy. I’m in the process of sending out a special alert on the bear spread in new crop. I want to argue that carry is going to come back into the inverted carrying charge market that presently exists. If you are interested, contact our office for the special alert (800) 843-1488.

Finally, we invite all clients to enjoy the 4th of July weekend. We are having a big party here in New Richmond all day Saturday. In fact we are having a big fly over by the some jets in the morning, talent contests all afternoon, and a great fireworks display in the evening. If you are in the area come on over.  If not celebrate with your friends the freedom we have, dare we take it for granted is when we may quickly lose it!

If you need any help in implementing a speculative or hedging strategy give us a call at 1-800-832-1488 or 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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