Apr 19, 2014
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February 2014 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.

Soybeans Down on the Close Today on Profit Taking

Feb 27, 2014

For the month of February, the November Soybean contract has seen an 18-day uptrend or a 51-cent move in the market. Many of us would have to say today’s close surprised us and will be wondering if it is a trend reversal or not. I still believe there are many factors driving soybeans such as weather in South America, the fact that many producers in Argentina have realized there may be more opportunities in the future to sell their soybeans if they store instead of selling off the combine, and the fact that we are coming into March and at these levels some producers may want to switch to beans.

Today the market broke through resistance at $11.74 and went as high as $11.82 clearing showing strength but in the last 15 minutes of trade, the market was back at $11.682 where it opened on the day. End of the month profit-taking and squaring off positions left the November soybean contract at $11.555 when it settled.

Now one must decide if November soybeans could have one more bounce prior to the March Prospective Planting Report or have we already bought 2 to 3 million acres at these levels? With the USDA projecting the on farm price of $9.75 at harvest, I would suggest decisions need to be made as to what price and when to sell soybeans.

November 2014 Soybeans

SOURCE: UMS Past performance is not necessarily indicative of future results. Although very 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.
 

If anyone feels they need to put structure into their risk management decision-making and would like to discuss marketing strategies, call Bob or Laura (1-800-832-1488). We will also try to answer questions in upcoming blogs and we welcome emails to laura@utterbackmarketing.com or utterback@utterbackmarketing.com.

 

THIS MATERIAL HAS BEEN PREPARED BY A SALES OR TRADING EMPLOYEE OR AGENT OF UTTERBACK MARKETING SERVICES, INC. AND IS, OR IS IN THE NATURE OF A SOLICITATION. THIS MATERIAL IS NOT A RESEARCH REPORT PREPARED BY UTTERBACK MARKETING SERVICES, INC. BY ACCEPTING THIS COMMUNICATION, YOU AGREE THAT YOU ARE AN EXPERIENCED USER OF THE FUTURES MARKETS, CAPABLE OF MAKING INDEPENDENT TRADING DECISIONS, AND AGREE THAT YOU ARE NOT, AND WILL NOT, RELY SOLELY ON THIS COMMUNICATION IN MAKING TRADING DECISIONS.

DISTRIBUTION IN SOME JURISDICTIONS MAY BE PROHIBITED OR RESTRICTED BY LAW. PERSONS IN POSSESSION OF THIS COMMUNICATION INDIRECTLY SHOULD INFORM THEMSELVES ABOUT AND OBSERVE ANY SUCH PROHIBITION OR RESTRICTIONS. TO THE EXTENT THAT YOU HAVE RECEIVED THIS COMMUNICATION INDIRECTLY AND SOLICITATIONS ARE PROHIBITED IN YOUR JURISDICTION WITHOUT REGISTRATION, THE MARKET COMMENTARY IN THIS COMMUNICATION SHOULD NOT BE CONSIDERED A SOLICITATION.

THE RISK OF LOSS IN TRADING FUTURES AND/OR OPTIONS IS SUBSTANTIAL AND EACH INVESTOR AND/OR TRADER MUST CONSIDER WHETHER THIS IS A SUITABLE INVESTMENT. PAST PERFORMANCE, WHETHER ACTUAL OR INDICATED BY SIMULATED HISTORICAL TESTS OF STRATEGIES, IS NOT INDICATIVE OF FUTURE RESULTS. TRADING ADVICE IS BASED ON INFORMATION TAKEN FROM TRADES AND STATISTICAL SERVICES AND OTHER SOURCES THAT UTTERBACK MARKETING SERVICES, INC. BELIEVES ARE RELIABLE. WE DO NOT GUARANTEE THAT SUCH INFORMATION IS ACCURATE OR COMPLETE AND IT SHOULD NOT BE RELIED UPON AS SUCH. TRADING ADVICE REFLECTS OUR GOOD FAITH JUDGMENT AT A SPECIFIC TIME AND IS SUBJECT TO CHANGE WITHOUT NOTICE. THERE IS NO GUARANTEE THAT THE ADVICE WE GIVE WILL RESULT IN PROFITABLE TRADES.


 

Expect Tight Trading Range for Corn

Feb 13, 2014

Corn

We expect the corn market will give some weight to The Ag Forum’s [USDA conference] expectations about the 2014 crop. The tone seems to be that, while acres will be reduced, carryover will still be burdensome but not excessive. This should allow some upside price strength in the new crop "IF" any type of spring delayed planting occurs. However we are very concerned that the USDA has overestimated exports for next year, in that, China’s imports are really high already. This means other buyers will have to step up to the plate.

We still expect lead month futures will find it difficult getting back above $4.70 by early June, but it will be just as difficult getting below $4.20. To breakout to either side of this price range the market will need decisive decisions about planted acres and crop prospects. Even with this rather timid upside price potential, we strongly urge everyone to exercise good risk management strategies [by using only limited cash flow risk positions between April and June]. This implies being long [buying] in-the-money puts and resist selling cash or futures until we get closer to July.
 

Soybeans

The soybean market was surprised by a neutral to bearish February supply/demand report, but has been able to claw the March and May futures back above $13. We still feel this is just about the limit to the upside of the old crop market. Attention will soon start to turn to South America’s big harvest and the possibility of a big U.S. soybean crop.

We still expect the old crop soybeans will stay rather firm which will help the bull spreads and sell deep-out-of-the-money puts that are used to pay for the Nov options.

We still see limited reason for speculative ownership of soybeans unless there are some strong opinions about adverse weather conditions affecting yields. Unfortunately, the soybean market will first have to deal with spring weather. If it is cold and corn plantings are delayed in any way, it only makes the potential increase in soybean acres only more negative.

BOTTOM LINE: Continue to bull spread the soybeans and strive to get a limited downside risk strategy in place for the expected 2014 soybean crop.
 

Wheat

The wheat market got a little too bearish in January on big wheat supplies in India and Canada. The bounce we have seen recently is more of a technical reaction to an oversold condition plus a little concern about winter injury kill in the western states. While we would love to tell everyone that it is clear sailing well above $6.25 [in July wheat]; frankly it does not look good. If anyone has a large amount of inventory to sell, sell it on every 5-cent bounce and plan to have close to 75% of expected 2014 inventory sold by the end of March.

2014 WHEAT STRATEGY: Start selling in 10% increments based on time. Since the market is oversold, the first 10% will be done via a short Dec 2014 call at the lowest price one would like to be short wheat.


If anyone feels they need to put structure into their risk management decision-making and would like to discuss marketing strategies, call Bob or Laura (1-800-832-1488). We will also try to answer questions in upcoming blogs and we welcome emails to laura@utterbackmarketing.com or utterback@utterbackmarketing.com.
 

THIS MATERIAL HAS BEEN PREPARED BY A SALES OR TRADING EMPLOYEE OR AGENT OF UTTERBACK MARKETING SERVICES, INC. AND IS, OR IS IN THE NATURE OF A SOLICITATION. THIS MATERIAL IS NOT A RESEARCH REPORT PREPARED BY UTTERBACK MARKETING SERVICES, INC. BY ACCEPTING THIS COMMUNICATION, YOU AGREE THAT YOU ARE AN EXPERIENCED USER OF THE FUTURES MARKETS, CAPABLE OF MAKING INDEPENDENT TRADING DECISIONS, AND AGREE THAT YOU ARE NOT, AND WILL NOT, RELY SOLELY ON THIS COMMUNICATION IN MAKING TRADING DECISIONS.

DISTRIBUTION IN SOME JURISDICTIONS MAY BE PROHIBITED OR RESTRICTED BY LAW. PERSONS IN POSSESSION OF THIS COMMUNICATION INDIRECTLY SHOULD INFORM THEMSELVES ABOUT AND OBSERVE ANY SUCH PROHIBITION OR RESTRICTIONS. TO THE EXTENT THAT YOU HAVE RECEIVED THIS COMMUNICATION INDIRECTLY AND SOLICITATIONS ARE PROHIBITED IN YOUR JURISDICTION WITHOUT REGISTRATION, THE MARKET COMMENTARY IN THIS COMMUNICATION SHOULD NOT BE CONSIDERED A SOLICITATION.

THE RISK OF LOSS IN TRADING FUTURES AND/OR OPTIONS IS SUBSTANTIAL AND EACH INVESTOR AND/OR TRADER MUST CONSIDER WHETHER THIS IS A SUITABLE INVESTMENT. PAST PERFORMANCE, WHETHER ACTUAL OR INDICATED BY SIMULATED HISTORICAL TESTS OF STRATEGIES, IS NOT INDICATIVE OF FUTURE RESULTS. TRADING ADVICE IS BASED ON INFORMATION TAKEN FROM TRADES AND STATISTICAL SERVICES AND OTHER SOURCES THAT UTTERBACK MARKETING SERVICES, INC. BELIEVES ARE RELIABLE. WE DO NOT GUARANTEE THAT SUCH INFORMATION IS ACCURATE OR COMPLETE AND IT SHOULD NOT BE RELIED UPON AS SUCH. TRADING ADVICE REFLECTS OUR GOOD FAITH JUDGMENT AT A SPECIFIC TIME AND IS SUBJECT TO CHANGE WITHOUT NOTICE. THERE IS NO GUARANTEE THAT THE ADVICE WE GIVE WILL RESULT IN PROFITABLE TRADES.

 

Early February Market Outlook

Feb 04, 2014

The market is entering a period when winter lows should develop but too early for any price fireworks. Time is quickly approaching when China will be decisively switching from U.S. soybeans to South American soybeans. While much of this weakness is anticipated in the recent flat price decline in lead-month, there is the potential to see a little more weakness into February. You should not be surprised to see a lot of professional bull spreading of the old crop vs new crop. The November 2014 soybean contract has a lot riding on spring weather. If it’s great for corn planting, that will help to firm beans. However, it it’s cold and wet and corn plantings are delayed, it only adds to the potential misery and what an 81 million acre bean crop could potentially create this fall.

Producers who have sold corn futures as a hedge and are seeing large hedge profits, it’s time to start protection. My suggestion would be to roll the short hedges into a limited risk vertical put strategy. If a considerable amount of cash inventory has been sold now is the time to start implementing a low cost weather defense strategy. Remember, I’m not saying it’s time to get bullish, just time to start insulating profits and providing flexibility to react to the potential of a cold wet spring and hot dry summer.

For soybeans, the risk is real for the 2014 production and as producer you are going to be forced to make some difficult decisions. I would rather have a floor on 100% of beans at current prices and know I will at least break even, then position for a weather event ‘IF" it occurs.

The wheat market bounced today on deteriorating crop conditions but the problem is global fundamentals are not very supportive of any major bounce in wheat exports. In fact if the dollar were to break out to the upside, it would have very negative consequences for the wheat complex. Overall, I’m not really bearish to wheat; I just see limited reason for a rally. If something does not happen by early March I fear the bearish seasonal could potentially push July 2014 wheat below $5.

We will continue Part Two of our marketing plan on Wednesday.

If anyone feels they need to put structure into their risk management decision-making and would like to discuss marketing strategies, call Bob or Laura (1-800-832-1488). We will also try to answer questions in upcoming blogs and we welcome emails to laura@utterbackmarketing.com or utterback@utterbackmarketing.com.

THIS MATERIAL HAS BEEN PREPARED BY A SALES OR TRADING EMPLOYEE OR AGENT OF UTTERBACK MARKETING SERVICES, INC. AND IS, OR IS IN THE NATURE OF A SOLICITATION. THIS MATERIAL IS NOT A RESEARCH REPORT PREPARED BY UTTERBACK MARKETING SERVICES, INC. BY ACCEPTING THIS COMMUNICATION, YOU AGREE THAT YOU ARE AN EXPERIENCED USER OF THE FUTURES MARKETS, CAPABLE OF MAKING INDEPENDENT TRADING DECISIONS, AND AGREE THAT YOU ARE NOT, AND WILL NOT, RELY SOLELY ON THIS COMMUNICATION IN MAKING TRADING DECISIONS.

DISTRIBUTION IN SOME JURISDICTIONS MAY BE PROHIBITED OR RESTRICTED BY LAW. PERSONS IN POSSESSION OF THIS COMMUNICATION INDIRECTLY SHOULD INFORM THEMSELVES ABOUT AND OBSERVE ANY SUCH PROHIBITION OR RESTRICTIONS. TO THE EXTENT THAT YOU HAVE RECEIVED THIS COMMUNICATION INDIRECTLY AND SOLICITATIONS ARE PROHIBITED IN YOUR JURISDICTION WITHOUT REGISTRATION, THE MARKET COMMENTARY IN THIS COMMUNICATION SHOULD NOT BE CONSIDERED A SOLICITATION.

THE RISK OF LOSS IN TRADING FUTURES AND/OR OPTIONS IS SUBSTANTIAL AND EACH INVESTOR AND/OR TRADER MUST CONSIDER WHETHER THIS IS A SUITABLE INVESTMENT. PAST PERFORMANCE, WHETHER ACTUAL OR INDICATED BY SIMULATED HISTORICAL TESTS OF STRATEGIES, IS NOT INDICATIVE OF FUTURE RESULTS. TRADING ADVICE IS BASED ON INFORMATION TAKEN FROM TRADES AND STATISTICAL SERVICES AND OTHER SOURCES THAT UTTERBACK MARKETING SERVICES, INC. BELIEVES ARE RELIABLE. WE DO NOT GUARANTEE THAT SUCH INFORMATION IS ACCURATE OR COMPLETE AND IT SHOULD NOT BE RELIED UPON AS SUCH. TRADING ADVICE REFLECTS OUR GOOD FAITH JUDGMENT AT A SPECIFIC TIME AND IS SUBJECT TO CHANGE WITHOUT NOTICE. THERE IS NO GUARANTEE THAT THE ADVICE WE GIVE WILL RESULT IN PROFITABLE TRADES.

 

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