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RSS By: Bob Utterback, Farm Journal

Bob Utterback has more than 26 years of experience and offers producers a disciplined approach to marketing.

Commodity markets fall on rising U.S. Dollar!

May 17, 2010
The commodity market in general is falling on pressure coming from the rising dollar and overall concern about the European financial crisis.  Couple this with the concern that China is actively trying to slow down it’s economy so inventories don’t build up as it waits for the U.S and European situation to sort itself out, you have a lot of economic uncertainty in the market. The final factor that’s continuing to have impact on the markets is corn farmers still have a lot of old crop corn to move, along with a crop out in the field that’s starting to germinate. Granted there are some real production issues with parts of the Corn Belt such as Missouri which is exceptionally wet and poor stands, plus some of the replant due to frost in the northern Corn Belt.  The situation however on the supply side is we are starting the crop off very good. The big concern on everyone’s mind right now is when we get into summer, will the rain simply stop and burn up the crop?
As for the technical situation: The  market has been trading in a very established trading band since February. We have a very defined overhead resistance coming in December 2010 corn at the $3.95, $4.05 and $4.12 level. One would have to anticipate some level of short covering if the market were ever to close above these levels after Memorial Day. Equally, the market is nearing very good support at the $3.65 to $3.75 level.  
So what does it all mean?  All the bulls’ expectation for exploding demand is being tempered and the potential of producing another big crop is improving daily as the crop gets planted and off to a good start. Granted, we still have the seasonal summer concerns to worry about but once we get past the next 45 days we could be slowly declining into a negative return level for most corn producers.
Bottom line: We are actively very sold on 2010 and will be recommending a defensive position for 2011. Once 2011 moves below $4 we are essentially out of the hedging market.
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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COMMENTS (5 Comments)

Anonymous
Last year , late crop because it was wet, but it was warm. This year , crop put in on time but cold and now wet. Same end result, late harvest but we were alot farther a long as far as crop development.
5:01 PM May 19th
 
Anonymous
Cool spring here (So Cal)first corn crop stunted almost finished sliking, yield will be lower than usual. Will plant next crop in mid-July.
9:26 AM May 18th
 
 
 
 
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