By: Bob Utterback
, Farm Journal
Bob Utterback has more than 26 years of experience and offers producers a disciplined approach to marketing.
A Look Ahead for the Week
May 04, 2009
Outside Markets: Equities are up sharply with the Dow up over 180 points at the time of this posting. It seems the fear over the bank stress test is over now. At the same time the dollar has been down to 84.014 or 69 points. The world still does not trust the direction our government is going on spending and borrowing. I believe we will eventually break the 82 support level. The ten-year notes and bond market are both starting to show signs of stability after last week’s big selloff. I continue to be long-term very negative but have to accept that a near-term low is close and a bounce should be expected. If you are not in place with your interest rate protection program, I would look serious at June t-bills above 122 to 123 level.
Summary: The outside markets were actually very positive today and should have supported grains. If this trend continues any glitch in the weather dryer pattern could lead to decent grains and oilseeds bounce.
Corn: Well the weather patterns seem to be turning a little dryer. This was all the traders wanted to hear. Down hard on Project (A) and no real let up during the day. The crop progress report due out after the close will be watched closely. It’s really going to show a sharp contrast by states. In Nebraska and Iowa where corn is planted, producers are selling hard and in Illinois, Indiana and Ohio, little progress. While the crop’s not getting planted, it appears hope is now coming back into the market that it will get planted before Memorial Day weekend. I have to say the potential for December corn to move above $4.35 is now less than 40/60 odds. It’s going to take a crop pollination weather scare to get December corn above $4.50. Frankly, I believe you need to be getting a base under the market and be satisfied to get 40% to 50% of the gain from these price levels rather than risk corn going down to $3 this fall for a mere 20-cent upside potential.
Beans: Overnight beans started lower then exploded higher. Today we saw a gap higher open which would have been very bullish if it held into the close. The opposite happened, the market gave up gains all day long and the new crop eventually closed in the red. This is going to make the bulls a little uneasy now. They had the bears on the run and now they let them slip out of the trap. I have to admit I did not see November 2009 beans getting much above $9.50. So today’s high of $9.92 has me scratching my head a little. I however have to say I’m glad a lot of producers have elected to buy puts rather than sell futures on this recent rally. I would be encouraging you to keep your long November 2009 puts within 20 cents of the money. I know a lot of you want to sell calls to help pay for the puts. I would however wait for a clear sign the high is in place. It could take 8 to 10 days I believe to get a solid confirmation.
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 email@example.com or firstname.lastname@example.org. Tomorrow we will talk a little about the bonds, gold and crude oil.
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