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October 2010 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.

Dollar Down . . . Grains Up

Oct 26, 2010

It’s the same old theme. The dollar is down and grains are up. The pattern seems to be too simple but its the dominate force right now. The holders of the dollar don’t like what’s happening with our economy and the government trends towards inflation. They know they are better off holding “things” rather than paper. Subsequently, I see no slow down in exports and demand will be the last thing rationed not the first. 

As for the supply side of the equation, harvest is essentially done. The bid doors are going to  shut and limited product movement is expected until after the first of the year. Basis levels should improve rather quickly and even present some excellent. This means as producers you need to keep your eyes open to the potential of some good basis improvement bids going into the end of December that you will not be getting in Jan to March time period when producers normally move cash inventory for needed payments.
 
As to upside price potential I really believe most of the bullishness of this year’s supply reduction will be factored into the markets before the January reports. So producers need to be getting prepared, we are putting the finishing touches on our selling article. It’s will be free to brokerage clients but a $75 cost for non-clients, call 1-800-832-1488 for details.
 
While corn export and ethanol demand is showing no signs of weakness the hog sector is going to show big drops really soon. The current hog slaughter is way above normal and I would suggest indicating strong culling of gilts. Bottom line: By Thanksgiving, we should have most of the big slaughter worked into the market and setting the stage for stronger prices as we move into 2011. I suggest hog producers who are short to consider puts over short futures or cash contracts. Second, for speculators you may want to consider selling second half of 2011 out of money puts on oversold conditions.
 

 
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. 2010.
 

Bulls Simply Taking a Break

Oct 18, 2010

I was on the U.S. Farm Report this weekend with Gregg Hunt. If you did not see it, you may want to check it out online (Oct. 16-17 episode). Bottom line, all end users who do not have next year’s inventory locked up need to have something done as soon as possible. 

We view today’s selloff as a time period when the bulls are simply taking a break. The real fireworks are just around the corner when contracts in the December corn will have to be rolled to the March to avoid delivery. Talk is already there suggesting potentially in excess of a million contracts held by the trading funds may have to be rolled forward. A lot of supply uncertainty still has to be resolved in the first part of January and questions still exist regarding how high prices have to go up to ration ethanol and exports. We would suggest end users need to be buying December corn at the current price range.
 
In regards to soybeans, we still believe yields are going to improve eventually but this will be offset by strong export demand as we have been seeing in the weekly numbers. This means all eyes will be on South America. There are still some dry areas but its still very early. If things don’t change by Thanksgiving bean prices could be very strong next year. We would encourage all meal users to not fight the trend, get inventory locked up.
 
In summary as discussed on this week’s U.S. Farm Report the potential for explosive markets exist for the first part of 2011. This is going to put a lot of responsibility on the producer to have a well thought out selling campaign for 2011 and beyond. We are putting the finishing touches to our comprehensive selling review, it’s free to clients but a $75 for all non-clients. Just call at 1-800-832-1488 for details.
 
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. 2010.
 

 

Our Views on the October Supply/Demand Report

Oct 08, 2010

Today is one of those days [years from now] when you will look back and remember history changing. The USDA did not drag their feet on reducing yields, they dropped corn to 155.8 and surprising lower bean yields to 44.4. The tone of the market is short crops get smaller and the January report will adjust the stocks levels we saw last week. 

The market tone is very confident now, we will see lead month corn above $5 all the way to October of next year when new crop corn comes on board. The big question everybody is now asking is how high does the market have to go to ration usage. All eyes will be on how exports react next week and ethanol production statistics. If there is only a modest drop confidence will be extremely high that lead month futures in corn will have to test the $6 level and wheat will have to move up to $12. The wheat complex has the weakest fundamentals to rally but will be pulled up.  Just keep it in the back in your mind, wheat should be the first commodity to break its downtrend support.
 
The reaction is also going to be immediate on the livestock complex. With corn and meal prices taking off, all talk of expansion of herd stock is going to come to a screeching halt. The only issue I don’t know is how much feed coverage got done on the Friday or Monday price dips. I believe there was a lot of talking going on but limited action. We will see. If the end users got covered then prices could actually go higher than expected to ration usage.
 
You all know my mantra “love the bear”. However right now, I am in hibernation waiting for the bullish storm to blow itself out.
 
If you have sold cash and want to reown I like selling puts or buying vertical calls. If short futures I like converting to a long put or buying call protection for what could be 9 months of fireworks.
 
As for new selling on our internet copy comments today we put out an alert to pull all short orders for now.  We want to see if Dec 2011 corn can test $5.50 and Nov 2011 beans can test $12 before we start a limited cash flow risk buying campaign.
 
If you have any questions or would like to read more of my 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. 2010.
 
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