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September 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.

Scratching My Head At The Quarterly Stocks Report

Sep 30, 2009
Today’s stocks report (what’s out in the country) was considered bearish to wheat and beans and positive to corn. The market opened lower across the board and by mid-session corn and beans were higher.

Early bean yields continue to come in strong while the impact of frost in the northern Corn Belt is felt to be limited in impact as of this time. So with all the beans and corn coming in why is the market not anticipating the inventory and moving lower? This is the question the bears are asking right now. 

I have to say I’ve been scratching my head as well. The only answer I’m getting is in absence of harvest the market is looking for signals from outside markets. Today the oil market was higher and the dollar was lower. This continues to give an underlying strong support to all commodities. 

Specifically, the fear of continued increase inflation due to the current administration’s aggressive spending habits is motivating private equity money to continue to be a strong buyer of things which includes corn and beans!

As of today (and you know things can change quickly) the attitude seems to be developing that everybody wants to buy corn very aggressively around the recent lows of the $3.02. Even with a potential carryover of 1.7 billion bushels and USDA already pushed demand up 350,000 million bushels the feeling is inflation is going to lift this market.  

So the battle lines are being drawn between the bull (inflation) and the bear (supply and harvest pressure). I have to suggest that all sellers remain short and wait for the end of October to early November to roll hedges forward to capture carry. As for defending upside risk exposure we still are going to be strong seller of puts. As for speculative buying we continue to suggest buying December corn below $3.05 in a scale down buying strategy. As for beans we are reluctant to set a price and we are more looking at the time of late October before buying. In regards to wheat today’s report did us no favors. We are going to hold onto hedges with no plans of speculative buying in the immediate future. In outside markets we have taken profits on natural gas positions and waiting for a correction into October. In regards to bond positions we suggest selling the March 2010 at 118 or better.

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

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 Trades Both Sides of the Market

Sep 30, 2009
Corn was very active today, trading on both sides of the market. At one time we were up over 7.5 cents and then down 2.5 cents. Concern over crop maturity and how much influence we will have on the overall crop size due to a frost which is starting to develop in the northern Corn Belt.
 
More than likely I’m hearing the same stories you are. The corn crop in the west is better than expected but early yields in the east are weaker than producers are wanting. There is some talk about test weight problems but it’s still early. One of the concerns that is starting to grow is the amount of rain in the forecast over the next few weeks. Many producers are getting uneasy that this is going to be a tough and drawn out harvest. If this concern develops several things will occur:
  1. First, getting the crop out later than expected it may be difficult to get all the fall field work that producers want to accomplish.
  2. Second, the amount of wheat plantings could be down.
  3. A slow harvest will keep the basis from crashing and the spreads from exploding.
So the good news is we may find it very difficult moving December corn below the $3.02 level. The bad news is with the potential of a crop getting bigger as the crop moves along the upside potential is extremely limited.  

Long term implication: Since the producer is very undersold in regards to this year’s crop and will be storing very aggressively it’s been my experience that the producer can not effectively sell the next year’s crop while the current crop is in the bin. If producers are not careful, they could be selling the 2009 and 2010 crop at the lower end of the price scale.


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

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 on weather concerns; soybeans in the red

Sep 28, 2009
Corn was higher on concerns about frost injury while beans, even with good Chinese purchases, were under pressure because bean harvest is coming in with better than expected yields.

The corn harvest is just getting started in parts of the southern Corn Belt. I’m hearing above expectation trends in Missouri through Nebraska. The area where corn silage cutting continues to show some real crop stress in northern Indiana and northern Ohio, looks like they are going to get hit again.

According to our weather man the frost scare is going to be really limited this week. While we are not going to be exceptionally warm over the next 10 days, we are not going to frost either. This is not going to be helpful for the really late corn and will cause some damage but overall the crop in our opinion looks to be out there and will be a bin buster.

We realize many were hoping for a bottom like in 2006. I would like to remind you of a few things. First, the general economy was in much better shape back then and demand was being pushed with solid demand both domestically and internationally. Second, farmers had a much larger percent of the crop sold.  If you ask any elevator operator around here, they will more than likely tell you that the amount of farmer sales at this time of year for the new crop is close to levels not seen in years! This leads to the observation when producers hold the inventory the market can’t really rally. Third, I am sticking to my guns, I believe we are only 31 months into an overall 50 to 60 month bottom to bottom strategy. Granted we can have price rallies but the 2008 event was such a dramatic event we could take longer than necessary in this trading cycle to recover demand and contract production.

Looking forward I’m already hearing rumbling about the crop mix decision. With good corn yields and lower fertilizer prices, the big surprise next spring for corn is there is no big change in planted acres. What happens if we see another 88 million bushel corn crop planted? How low do cash prices have to go to stimulate demand of say 750 million to 1 billion additional bushels? These are the issues we could face in 2010 rather than how high does the market have to go to ration usage or how low does it have to go to stimulate additional usage? Needless to say I want to remain short, roll forward to capture carry and look for the harvest lows to sell puts to enhance the short sales.

If you have any questions or arguments to my outlook I really like hearing from you. Remember, this is a collective effort, by working together we hopefully can improve our overall marketing performance.  Have a safe and bountiful harvest! If you have any questions about any issue that you would like discussed in our daily comments please send me an e-mail at bob@utterbackmarketing.com.
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
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 bulls rallied this week but what’s next?

Sep 25, 2009
A couple of weeks ago we were talking about the potential a frost this week!  As you know the frost did not develop and overall the crop is getting closer to harvest. There is the risk of a frost scare next week but it’s a one-day event and our weather service suggests it will only affect the most northern corn production states.  

Overall, this week has been a week where the bulls have rallied the market on concern about frost, concern about disease, concern about increased export sales. I would suggest the corn bulls have used up a lot of energy in getting prices back to the current levels. Once the pressure of harvest starts in about two to three weeks, the market is going to drop back to the old $3.02 low. The issue will be how far below that level will we go? The answer will be determined by exactly how good the crop is and how willing producers are going to store corn.

So far in the states where reports on harvest are coming in, yields have been impressive and well-above historical expectation. I believe this crop is going to get bigger and the demand side of the equation will be pressed hard to meet the USDA expectation currently be suggested. 

Continue to expect a long drawn out corn harvest. This will effectively help neutralize us from an extreme November low. I still feel very comfortable in arguing a post harvest bin closing price recovery. The issue that could plague the market after the first of the year is inventory that has to move into the market because of needed cash flow and potential poor storability of the corn crop. 

Side note: If you have zero sold for 2010, we would suggest a move back into the $3.90 level would be a decent level to get at least 25% sold. Long term I’m of the opinion that the $4.25 level is going to be tough getting above with carryover levels moving close to 2 billion bushels. Next week we are going to talk a little more about interest rate and fertilizer values.  If you have any questions about any issue that you would like discussed in our daily comments please send me an e-mail at bob@utterbackmarketing.com.
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.
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 Outlook! Corn and Beans On The Move

Sep 24, 2009
Today was the first time in a long time when corn and beans moved opposite of the dollar and oil in a decisive way. Specifically, the dollar was up over 67 points while the oil was down close to 70 cents. Normally, this would really pressure the grains, because a stronger dollar means weaker export and a lower oil value implies weaker ethanol values. While I do note this divergence today, I don’t believe it’s the start of a long-term trend.  The grain market is simply lacking any supply pressure right now to break prices. Near-term the corn market is actually tight since producers are not wanting to sell at current values but end users need inventory for ongoing operational needs. We believe in about three weeks the pressure will start on corn and it will be on going well into November. The current price bounce is about all you can expect for corn and beans and should be used for any final sales that need to be made. If you are not taking advantage of the current gains you are not going to be selling until the April/May time period of next year! 

There is some talk of a frost scare next week in the northern Corn Belt. Our weather man suggests it will only be a scare and not a really hard freeze. The event will only be a one-day pattern and will we will heat up afterwards. Granted, there will be some impact on potential yields but at this time it should be limited.  We are building a classic buy-the-rumor and sell-the-fact situation.

My long-term concern continues to be that farmers are not prepared for this year’s big crop. According to several independent sources, I get the sense that a very small percent of this year’s crop has been forward sold. The producers are building bins to store the crop. This implies to me it’s going to be a long grind and has all the potential of contributing to a multiple year cycle low in the fall of 2010. While I will be preparing for a low in the November time period and rally into spring it’s going to be less than many clients really want. I’ve gone on record as saying unless we get a surprise yield reduction or a unexpected demand event it’s going to be very difficult getting lead month corn above $3.50 from January to July next year.
Soybeans

In regards to beans, the market has lost it bullish luster we enjoyed clear most of the year.  As we are now starting to harvest some of the early beans the market continues to go to the negative side. It’s no longer pulling corn but is really being a negative feature in the market.  As we move into October, the trend will be for the beans to be pressured by harvest. I do however expect beans will bottom well before corn.  Downside targets are close to the $8.00 level.


Wheat

The wheat market saw an unexpected price surge in Chicago wheat yesterday. I would suggest it was more about short covering than any new big demand buying program. One of the things that does concern me about wheat is the lateness of the corn and bean harvest could cause concern for producers wanting to rotate into wheat. Additionally, the low price is causing the insurance program levels to be at levels which will actively attract acres and may entice producers to look at other crops. Overall, I feel the $4.50 level could prove to be a bottom. The only issue is upside could be very limited especially if the outside markets of corn and beans come under pressure as we move into harvest. At this time I’m looking at selling deep out of money March wheat puts against my short out of money corn calls to give me a more balance risk profile.
One of the lessons I’ve learned from the 2007/2008 experience is the necessity of protecting the cost of inputs. Many clients in 2008 would not allow me to pull the trigger on multiple year sales because of their concern about higher input cost. To this end, I believe producers need to be focused on locking up long term lows in natural gas to protect fertilizer values and sell 10-year T-Notes to protect interest rates.   In my brokerage operations we have started buying natural gas in September.  Currently the position is ahead.  We like the buying of futures and selling of out-of-the-money calls.  We would encourage producers on corrections to get a multiple year fertilizer strategy started. As for the bonds, we are lightly positioned in some short T-notes and short out of money puts for about 50% of needs. We are waiting for one more strong price bounce in the bonds into the first quarter of 2010. Our thinking is the current administration realizes the economy is not growing as fast it wants. It knows there is some risk for the mid-term election in the fall of 2010. Since voters will be looking at their pocketbook it will be important that the economy is looking good by September. I would suggest for things to work right, President Obama will need to introduce a second stimulus program sometime shortly after the first of the year. At this time, I would expect the Fed to continue to keep interest rates very low.  We are watching keenly for a move to the 118 and hopefully 121 or higher levels before we con move to a 100% short position to cover intermediate to long-term interest rates.

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
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.
 
 
 

Questions you should be asking!

Sep 21, 2009
I’ve been calling brokerage clients all day saying this is the final week to be selling. It’s not that I believe a reversal is in store. In fact I would say the odds are about 80/20 that we will be significantly lower in prices over the next 45 days. It’s just I don’t want clients who are unsold calling in a panic wanting to sell corn for the last 25 to 30 cents down in late October to early November. So again, it’s time to make the hard decision. Sell it now or sit and wait until April or May and hope for a weather scare or better than expected demand to bail out prices.

Starting next week we will be asking the following questions and trying to figure out our game plan, I do encourage any comments from clients about the follow questions.
  1. When is the expected time that one should expect a low?
  2. How far will prices have to decline to result in the demand prospects the USDA have suggested?
  3. For producers who already have December corn sold, when should they roll forward to capture carry?
  4. What level of upside risk is there from the fall lows to spring highs?
  5. Should this upside risk be defended or simply accepted?
  6. Does one sell out-of-the-money puts to value enhance the 2009 or 2010 sells?
  7. What’s one position on basis risk going to be if inventory is stored?
  8. Watch the trend in the dollar, oil and the equities for strength or weakness in regards to commodities.
  9. Finally, at what value should feed buyers or clients desiring a speculatively long futures position be willing to enter the market?
  10. What indicators should be used and how much emphasis should be taken on predicting a bottom or signal a buy?
I know there are more issues but these are the top one’s I’m watching. Again, I will be talking a lot about these issues in the upcoming weeks. I look forward to your comments and issues you may be watching or that I’ve missed. Send us a message at bob@utterbackmarketing.com or laura@utterbackmarketing.com or call 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.
 

So what’s ahead for corn?

Sep 18, 2009
I was off by about four days in calling the weather scare week. I thought it should have been last week when the 10- to 15-day models showed frost but it was this week. The models showed the potential for a frost scare in the northern Corn Belt earlier this week but then effectively took the threat of a major freeze out on Thursday. We are ending the week close to where it started but the $3.02 level for December corn seems to be a level that prices don’t want to go below.
 
So what’s ahead? Supply bears are getting very comfortable with their positions and are willing to sit back and simply wait for the inventory to flow at harvest. I’m not saying we can’t have one or more weather scare bounce the last week of September, but at this time the bull quickly is becoming all bark and no bite. Any minor rally now of 10 cents or more in corn and 50 cents in beans is a selling opportunity.
 
So the question then turns to how low will we go? I don’t like to get into the situation of predicting an exact price because this is what sticks in producers mind and they can’t adjust if things change. I have to say the price pattern is now set up for a major low some time between mid-October and pre-Thanksgiving time frame. I want to see how December corn trades when it tests the $3.02 level the next time. My fear is we could see a quick failure in prices if the level is breached and longs start to liquidate. I think producers are gearing up to store a large percent of their unpriced grain. This implies the fall lows may not be as bad as some of the numbers you are hearing but equally the level of the price recovery could be well below your expectations. Yes, I do believe the market will bounce from Thanksgiving to late December, but from what level? I feel very comfortable is saying lead month corn is not going to trade above $3.50 corn for 2010 unless a significant supply or demand event occurs that we don’t know about today! 
 
As a side note: In working with many producers, I’ve been trying to help protect the profit margin. Two areas of risk that exist on the cost side that you need to be thinking about long-term is protecting against long-term interest rate growth and fertilizer values. Currently, I’m starting a scale-down buying campaign for natural gas but would be waiting to the first of next year before I start selling bonds.
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
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 Live the Bear!

Sep 15, 2009
Today’s opening was quiet after project (A) higher move.  Then something happened, the market stopped going down and started to hit overhead stops. It was almost like a bullish tidal wave swept over the market causing stop loss orders to be filled. The market was actually lock limit up in corn!
 
Why all the excitement? Yesterday’s concern about frost for the northern Corn Belt has shifted from a minor concern to a potential building major event for yield loss.  The common numbers being thrown around the trade is about a 10% loss, early estimates would suggest a 33 million loss potential.  Or more specifically, it would stop the concern about the big crop, getting bigger! 
 
Is today’s 30-cent move in corn and 65-cents in soybeans justified the start of a new bull move like we saw in the fall of 2006 and fall of 2007? Or is it just a rally to scare out the bears and get the bulls long before harvest pressure starts?
 
I strongly believe this is a bull trap! This rally is exactly what all unpriced sellers have been waiting for. If you don’t take advantage of the rally we believe you are taking a rather big risk of putting the corn in the bin unpriced and hoping for $4 plus cash corn and $10 plus beans.
 
LONG LIVE THE BEAR! I’M SHORT AND HOPING FOR MARGIN CALLS SO I CAN SELL MORE INVENTORY AT PROFITABLE 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 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.
 

I feel the corn crop is out there!

Sep 14, 2009
Corn: I’ve been on the road for the last 30 days. I’ve seen a lot of the corn country and have spoken to several producers.  My overall impression is the corn crop is out there but it may be a little wet at harvest. You need to get your propane locked up and in position. My biggest concern is I sense there is still a lot of old crop corn still to be priced. As for the upcoming crop, I get the strong impression that a large percentage of the crop is still unsold. Producers are making plans to store which implies there is a big potential for a secondary harvest low out there in February or March. One should be preparing for less than expected basis narrowing and deferred contracts potentially falling to the nearby contracts.
In summary this is going to be a dangerous year to hold inventory in the bin unpriced and hope for better prices. I really believe the odds are better than 60/40 that corn will be put in the bin at harvest and will pulled out of the bin next July cheaper than when it was put in when all cost are included. This strongly implies that all hedges are going to be maintained and rolled rather than liquidated and holding grain in the bin unpriced.
Soybeans: I have to tell you I did not see anything that made me really bearish. Granted, I’m no expert on bean production but I know we have a lot of disease coming back into the beans. The overall height seems to be average and a lot of beans are still really green for this time of year. Overall, I see no reason for the USDA's last estimate to be exceeding and a lot of reason why it could drop a bit. So overall I’m supply neutral.  So what about demand? The big bull (China) has already suggested they are not going to buy as much as they did last year. They have accomplished their objective of building domestic stocks. Second, they are keeping their prices high domestically to motivate producers to increase production. 

Finally, all signs indicate that the South American producers are eager to regain the market share they lost to the U.S. last year. Overall, the supply engine is gearing up and the demand engine is going on idle. This would suggest it’s only a short time before world stocks build and prices to the producer come under pressure. In fact as an advisor I’m more worried about getting some pricing done on the November 2010 contract than the 2009 contract.

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
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.
 

My Thoughts on the Supply/Demand Report!

Sep 11, 2009

These four-day weeks with reports many times seem to drag along; thank goodness it’s Friday! I’m still on the road; on the way home from meetings in Minnesota. The crops overall look very close to crops back in Indiana; they will have good crops as long as the crop gets enough time to mature. The real issue to my mind is beans--about 1/3 are turning a little, but overall they are short and spotty.
 
Today’s Supply/Demand Report: Most of the pre-estimates were right on target. While there are some in the trade who believe the corn yields will increase, I’m very comfortable with 162, but no higher than a 43 bushel bean yield.
 
The part of the report that really concerns me is the demand prospects. USDA has now done about all it can for the bull. It’s reduced the beginning corn stocks and pushed the demand to almost unbelievable levels. I really doubt the feed increase [again] in corn. I feel this concern is especially justified in light of the poor profitability status of a lot of hog, dairy and cattle producers. I don’t see them in any position to expand numbers or feed inventory to heavier weights. So the implication is USDA is using feed usage adjustment to keep corn prices from going too low and making potential risk exposure in the crop insurance too high!
 
After I saw the numbers today, I really thought the bulls finally had a chance to cause this market to bounce up. The USDA had strong demand numbers projected, the US Dollar was weaker and general comments were for higher price potential in the equity markets.  With the outside markets being overall positive, I felt the potential existed for the market to be concerned about the lateness of the crop and potential loss of 10% to 20% of the yield potential if a frost would occur in September. 
 
I’ve told producers to get ready for a bounce to make catch-up sells. The early higher calls were not correct! It opened steady and lost steam all day. In fact, I believe beans were the weaker commodity, pulling down corn and wheat.
 
The problem I see now is producers are still very upside down now in regards to pricing both old and new crop inventory. I have been hoping for a rally between now and late September on concern about frost to get some catch-up sales in place. Once we get into October and the concern about reducing the crop is over, the solid burden of proof will fall upon the bulls on a weekly basis to prove that export demand is, in fact, going to grow; we must confirm that hog and cattle herds don’t liquidate due to financial pressure by banks and we must prove that ethanol usage will stay high at current values. 
 
Bottom Line: I believe once the supply bears prove the crop is out there, the bulls are going to work really hard for any gains they get. Please note that I’m still looking for mid-October to mid-November for a low. At that time, I am looking to roll all short positions to capture carry. Start focusing on aggressive put selling to enhance short position. Finally, feed buyers and end users should be focused hard on buying corn to protect the first two quarters of 2010 needs. We again encourage any end users needing help in setting up a long-term feed buying or reownership position to give us a call now so you can be ready to move when prices and time targets are reached. Call us at 1-800-832-1488.
 
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
 
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.

Thoughts from the road, prior to the USDA Supply and Demand Report

Sep 10, 2009
Hello from the road! SunOpta invited me to speak at their field day in Hope, Minn. There was a good turn out and, as one would expect, their primary concern was the near-term price outlook.

As many of you know, I’ve given outlooks at several events during the last month and a half, with an estimated attendance of more than 2,500 people if added together. I like to ask what percentage of the corn and bean planted crops have been sold/priced. While it is not a scientific survey, I estimate about less than 25% of the crowd have 100% of their expected crops sold/prices, while over 70% of the crowd have sold less than 1/3 of their expected 2009 corn and bean crops sold. When pressed a little harder, they admit there is a significant amount of old crop corn still around this late in the season.

Implication: If there is anything I’ve learned in my years in the market it is, when the producers are holding big inventory and hoping for higher prices, normally the market fails to cooperate! I sense producers are putting up bins as fast as they can and making plans to store to next year. Why? If they sell now, they are selling below the cost of production, they believe prices are simply too low, and if they are going to take a loss, they want to postpone it as long as possible.

So where are we in regards to the rally that everyone is hoping for? I’ve been working under the assumption since early August that, if the late nature of the crop is a concern, we would have to have a solid frost in the market sometime in September. Now that we are almost into the second week of September, the time is quickly ticking down for the weather bulls. In fact, I believe this week is a critical week for the 10- to 15-day range weather forecast to start indicating some solid risk of frost. If you have been reading our weather updates, you will note there was some risk last Friday, but only a low probability. While there will be some cool nights during the last week of September, right now it does not look as if it will frost. More than likely we are going to squeeze by with most of the crop. Granted, there are some fields that could be hurt by a late October frost date but overall not enough to drastically lower the big crop that going to be confirmed in this week supply demand report for corn and beans,.

Implication: Time is about up, use any bounce over the next 10 days or so to get any old crop and new crop corn that you need to price between now and next March sold. I continue to believe the downside risk between now and mid-November is more than 40 cents on the downside for corn and $1.00 for beans while the upside for corn is less than 15 cents for corn and 50 cents for beans.
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
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.
 
 
 

An update on the Weather!

Sep 10, 2009
We’ve had a lot of response to our weather bulletin, therefore I am posting today’s update for your review.
WXRISK.COM
   ****   WEATHER   BULLETIN   ***   SEPT.   9    
The national morning radar shows a thunderstorm cluster which developed overnight across eastern and southeastern Kansas is now moving into southwest Missouri and northeast Oklahoma. There are a few additioanl scattered showers over far southeastern Kentucky and southwest Virgina.

There are no significant changes in the forecast and the medium-range or in the 6 to 10 day. All weather  models continued to develop a large upper Low which drops in from Canada into the Plains Sept. 11 to Sept. 14. The interaction between this large Upper Low... it's surface reflection... and the large High over eastern Canada will bring in significant moisture from the Gulf of Mexico into the Delta. Then it will move northward into various portions of the eastern Plains and the Western Corn Belt, which will result in significant showers and thunderstorms developing over these areas.

There is some model uncertainty as to whether or not the significant rains will reach the Eastern Corn Belt Sept. 15.
Over in the eastern Pacific and  the West Coast, a strong piece of energy in the jet stream will develop a new trough Sept. 16 and 17, which will move into the Pacific Northwest and Western Canada Sept. 17 and 18.  The European model uses this new surge of energy to develop a significant cold High over central Canada which track southeast across the northern Great Lakes and then through Maine by Sept. 20.  

If, IF, this High track were to  drop  far enough to the South it could bring a frost to the Great Lakes area.... and would definitely bring one to eastern Ontario and northern New England. But the model does not show that at this particular time. In fact the European weather model in the 11- to 15-day forecast actually shows a significant warm-up because the energy from the Pacific drives into the Plains and Midwest which insures the cold air stays north of the U.S. and Canada border.
The 0z GFS and 0z CMC are significantly different. They also have a pretty cold high a day can that's close to coming into the CONUS... but these two are the models do in fact drive is cold air mass into the US with the day 15 0z GFS showing a serious cold air outbreak / Frost threat Sept. 22 to 24. The GFS ensemble is very supportive of this colder pattern and shows a pretty significant trough over the Midwest and East Coast after Sept. 22.
Clearly the long-range models in the 11 to 15 day forecast and their respective ensembles are diametrically opposed in their solutions which should lead you to exercise a good deal of caution with regard to whether or not one of these solutions is going to verify. At this point we simply don't know. The MJO which is now about to enter PHASE 5... and it seems that the MJO will reach phase 6 which could help bring about the colder scenario.
DT
WxRisk.com
804 307 8070
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
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.
 

Market Recap and Weather update!

Sep 08, 2009
All clients should have received our e-mail yesterday about the potential September frost alert. I talked with the advisor today and he’s reduced the potential down to about 20%. I stressed to him the importance of getting this one right. He will have an update on Monday evening before project (A).
This is the weather rally all the upriced sellers have been waiting for. For their sake I hope it shows up. I was on the road all week doing field days and working at the Farm Progress show.  The observation I’ve come away with is the producers are way behind on selling this crop. I would not be surprised if more than 70% of an average production is still unsold. This is going to force a lot of producers to sell inventory off the combine if USDA yields are seen. I have to say the producer does not believe it’s going to happen. At this time I fear he’s preparing himself to store the corn in the bin unpriced and hoping for a demand event like 2007 and 2008 to bail him out of trouble. 
Strategy wise, I have in my brokerage accounts rolled down deep in the money corn and bean puts to take some profit off the table but still hold position. As for speculative interest I bought a little corn here below $3.12 to $3.09 level for a shot at some weather fear spikes next week. One should be very aware that if we don’t get freeze in September it’s going to be a very long winter for those producers who are unpriced!
WXRISK.COM
   ****   WEATHER   BULLETIN   ***   SEPT. 5     1235 PM EDT  
This bulletin is being issued because of the threat of a potential significant frost around the middle of September ... and the new information from the 12z Friday operational GFS model which is now just finished its run.
The model continues to bring in a pretty chilly air mass but does a little sooner, followed by a  second  COLDER  air mass  Sept. 17, 18 and 19 .
First the 12z  Friday  GFS  brings down a fairly cold High across Manitoba and the Great Lakes Sept. 14 and 15. We do not see a  massive plunge of very cold air but the model does bring down some cold air—air which is cold enough, according to the model—to produce a moderate frost over the Western Corn Belt and Eastern Corn Belt regions on the morning of Sept. 14 and/or Sept. 15.
Most of the cold air associated with this large autumn HIGH stays up across the Great Lakes and Ontario then moves into New England.   If we take this run verbatim... then we would see a more serious frost over the Great Lakes into Eastern Ontario agricultural areas and into much of the Northeast on the morning of Sept. 15 and 16.
Of even more significance is that the model develops a second large deep trough over the Midwest and the Northeast Sept. 17-20... which develops a surface Low over the Great Lakes that jumps to the Northeast coast... sort of like a late autumn winter type of system. This trough pulls down a new surge of very cold air into the heart of the Midwest Sept. 17, 18 and 19 which eventually moves down into Tennessee, Arkansas and Virginia Sept. 18 to 19.
DT
WxRisk.com
804 307 8070
 
Obviously the next question is do I think this is correct? My view on this hasn't changed but the fact of the models now showing to colder outbreaks as opposed to one is leading me to have some increase in confidence that something is going to happen around in the middle of the month. It may be that what we are looking at here is a "frost scare" and not an actual frost but that is assuming that the weather models were overreacting here.
If you need any help in implementing a speculative or hedging strategy give us a call at (800) 832-1488 or email me at utterback@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.
 

Are You Upside Down on Selling?

Sep 03, 2009
I just got back from the Farm Journal Corn College event and speaking at the Farm Progress show.  In both cases I observed producers who are more worried about the crop being out there than the trade. Many were wondering why the market was not going up on concern about frost and the lateness of the crop. After talking with them a little more you found out why—they have sold very little of this 2009 crop.

While it’s not a scientific study, I get the strong impression that producers are really upside down on this year’s crop. They have high cost above current cash values even with the bigger potential yields. They did little selling in the 2008 highs for 2009 and have been waiting for a weather event all year to bail them out. Now that we are down at these low levels, they are going to put the crop in the bin and hope for a 2007 or 2008 demand event to bail out of the unsold storage decision. 

In the 28 years I’ve been in the market, I don’t quite remember when producers were so uniformly on one side of the boat coming into the fall. They don’t have enough storage space for the crop, they are not sold and the crops not going to be a crop that stores well for a long time.

What’s this all mean? Eventually, producers are going to have to bite the bullet and price the crop. I believe they are going to wait as long as possible. I would suggest this is a mistake. I would be actively looking for opportunities to sell inventory on any price bounce in the December 2009 corn back to $3.30. The only way this is going to happen is if we do get a frost scare in the month of September and beans take off.

As for corn producers who did sell the crop: You have some management decisions coming up.  Do you simply liquidate the hedge or roll?  I would suggest, if no frost scare of significance develops until the second week of October we are going to have price pressure clear to Thanksgiving. I would focus on rolling the December cash contracts and hedges forward to the July 2010 in this time period. As for long puts, it’s more difficult for me. In fact the cost of time value versus the carry incentive could be almost a scratch.  Therefore, I would suggest you liquidate your puts and simply sell the cash and be done with the 2009 crop.

Outside markets: We would like to start alerting clients that we anticipate a secondary high within the first quarter of 2010 in the bond market. This will be the last really good chance to lock in long term rates on the bonds. It’s time to start talking to your advisor at UMS about how to protect interest rates. Additionally, we are watching the natural gas contract for a low so we can lock up and protect long term upside risk in nitrogen cost exposure. You are going to hear me talk a lot about controlling input cost upside long term risk exposure. If we can control our interest cost and fertilizer cost exposure, it will go a long way to helping us sell corn because we have a better handle on the profit margin.

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
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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