Bob Utterback has more than 26 years of experience and offers producers a disciplined approach to marketing.
Election week and the grain markets!
Nov 03, 2008
Well it’s finally here—election week! I don’t know about you but I will be glad when all the ads are over!
As for the influence on the market, I assume everybody’s going to be cautious. This plus a solid week of harvest should keep the market sideways-to-lower early this week. I do sense there is a lot of interest in buying corn under the market. However, if you are going to try to buy hard before the November USDA Supply and Demand report, I would suggest buying in the money lead month calls rather than buying futures.
Right now there are several players convinced that corn yields are coming and some are convinced they are going up. Obviously some body is going to be really disappointed. My suggestion is don’t set yourself up to fail.
So where do I stand? I believe the low is very close if not in, and the market is trying to confirm a trading bottom. As for upside potential, over the next six months I believe we are going to be disappointed. I would not be surprised to see a lot of choppy price action with false breakouts both up and down. The real potential for me is 2009 and out.
The big issue for me is over the next six months we still could have a major economic correction as the negative factors hit main street. Long term I believe demand will be inelastic for corn which implies limited loss of usage. At the same time I “fear” a modest reduction in acres and a big unknown about yield as producers adjust their fertilization patterns. This suggests that the potential grows big time for a major reduction in corn carryover as we move into late 2010.
Bottom line: While last summer was the multiple year grain selling time period. The potential for a multiple year feed buying play is developing. I just don’t now if it’s now or next fall. What do you think?
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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. 2008.