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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.

Grain Market is all About Supply!

Jul 20, 2010
Today’s sharp price break is the bad part of weather markets.  We have seen the December corn price retract back to the technical support of $3.92 to $3.96, which is about a third of the $3.45 to $4.10 price move. If the market is going to go higher, one should not expect much more than a three-day break. 

Its now all about supply. How many acres have we lost due to too much rain? Second, will the good areas offset the bad areas? Crops around me are looking good so it’s may be difficult to be objective but overall I’m growing more confident we will not drop yield below the 161 bu. level like the bulls are arguing but neither will we go above 166 bu. level like the bears are suggesting. This suggests ending carryover in the 1.2 billion to 1.35 billion range. It’s adequate but could become tighter if demand exceeds expectation. 

Bottom line: If the bulls can’t push their advantage in the next 5 to 10 days, I believe they will take a break and we will see a seasonal decline into September. As for downside risk, it’s currently very difficult for me to argue a low below $3.45 in December corn but equally very difficult to argue much above $4.20. Long term I still believe the December 2011 contract must attract at least 3 million to 4 million more corn acres. Some will come from wheat but a lot may come from beans. To do this December 2011 contracts should have a strong price move up in the March to May time period into the $4.50-plus level.         

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 (29 Comments)

Anonymous
its all about iowa and always has been the rest of us can drown or die of thirst and trade doesnt care. thats just how it is.
10:44 AM Jul 26th
 
Anonymous
Have to agree with a lot of comments. And especially the one where, when does a guy stop throwing money at crop.
8:54 AM Jul 26th
 
 
 
 
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