Apr 24, 2014
Home| Tools| Events| Blogs| Discussions Sign UpLogin


February 2011 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.

Let’s Review the September/December Corn Spread

Feb 25, 2011

We are watching the Sep/Dec corn spread for two reasons:

(1) We believe the premium of the Sep contract is worthy of cash sellers to go after if delivered by mid–September.

(2) Speculative sell the bear spread to add to cash values. We will be looking at this alternative very carefully as we move into late April to early May.

The last time we saw spreads anywhere near the current level was in 1996 when the spread was taken clear out to 70 cents. At this time the spread is at 50 cents and that’s our near-term target to consider bear spreading.

Sep/Dec 2011 Corn Spread: We want producers to place this spread on their watch list. It’s not time yet; but, if the Sep/Dec spread can widen to 65 to 80, consider a bear spread position to add speculative value to Dec cash sales.
 
Dec 2011 corn spread
 
SOURCE: GLOBEX/CBOT  PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. 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.
 
Tomorrow I will discuss the July/Nov Soybean spread.
 
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. 2011.
 
 

Grains Down on News that Acres May Grow!

Feb 16, 2011

The weak bulls are heading for the exit as the market digests the recent news from the feed grain council meeting. The big news came from the chief economist for USDA who suggested corn acres are going to grow above 92 million and soybean acreage increase to 78 million. Both numbers are at the top end of trade estimates. Add to this the expectation that China is going to start cancelling some bean orders from U.S. and purchase from Brazil has everybody thinking a short-term top.

I have to say its actually a good thing right now for the bulls to take a break. The announcement that planted acres are going to grow takes away the risk of a big surprise in the March Prospective Planting report. My expectation is we will see a solid planting number somewhere around 92.5 million corn and 78.5 in beans. I believe both numbers are strong but lets face it the profit incentive is huge. So, as we allow the market to blow off a little steam it actually gives feed buyers and any one wanting to get into a defensive position the opportunity to buy before the spring and summer risk time period.
 
Even with these big acres, the problem for the bears is not over. Since domestic and global stocks have gotten so tight we “MUST” have a decent yield. Any concern about getting the crop planted or weather stress will cause upside price activity to be potentially extreme from May to July. This is why we continue to suggest that all cash sales should be covered by some form of call protection and if possible, a future position should be postponed until late summer.  Bottom line, remain in the market with a limited risk strategy such as long puts rather than a all or nothing approach of selling cash or selling futures. The upside potential risk is simply too large at this time if any type of yield reduction event occurs. 
 
I encourage anyone that can get to the Louisville Farm Show to come on by and attend my seminar this week. I will be speaking on Wed and Thursday. I believe my comments and recommendations will be helpful to you in this most exciting time period this spring and summer.
 
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. 2011.
 
 

Grains Mixed Today!

Feb 10, 2011

The market got a big bullish jolt from the USDA Supply/Demand report; domestic stocks were reduced to 675, which was well below trade estimates. At the same time the Argentina crop was reduced and world stocks declined across the board.

Implications: Demand will now have to be rationed through price. We believe upside potential is now open to $7.50+. We should see the carry go out of the old crop corn. If anyone has cash sales in the March, we feel you need to roll forward to the July to capture carry. Bull spreads should dominate the landscape for the near future.
 
While the old crop is going to be very strong, this rally should motivate producers to plant close to 92 million acres. I have been on the road this week in the southeast part of the U.S. and sense cotton farmers are not going to overreact by changing their corn, soybean and cotton acres. If we do not see the big jump in cotton acres, this could really allow a few more acres of corn and soybeans in the south.
 
Overall, we should start out with adequate acres. The big risk, however, is going to be all the concern about weather. Concerns are already quite high about a summer dry weather event. One has to expect the market will want to put in the maximum weather premium possible before planting to get as many acres as possible. Bob will be on the road over the next few weeks. He is looking forward to seeing a lot of producers. If you are going to the Louisville Farm Show next week, plan to attend his outlook sessions – Feb. 16 at 2:30 p.m. and/or Feb. 17 at 10 a.m.
 
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. 2011.
 
Log In or Sign Up to comment

COMMENTS

 
 
The Home Page of Agriculture
© 2014 Farm Journal, Inc. All Rights Reserved|Web site design and development by AmericanEagle.com|Site Map|Privacy Policy|Terms & Conditions