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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 bounced early but could not hold gains

Jul 15, 2009
The market bounced today but ran into strong resistance and sold off into the close. There seems to be a growing concern amoung many producers that the crop is not out there. Obviously, I’m hearing from those who are missing the rains but overall I have to say the USDA crop conditions are leaning the right way. The crops are alot better off than we would have thought 45 days ago when it was wet and late getting in. The real problem for this crop is going to be growing degree days and how will the crop fill out.  As I’ve suggested in copy several times, I have to anticipate some type of short covering rally and some bottom picking after the August USDA Supply and Demand report.  The trades going to have a little weather premium in the market from late August to early September. If the frost does not develop and we have an Indian summer, the potential for October lows taking out the August lows is high as the excess inventory that can’t be stored on farm is flushed into the market.

This is great for the producer who has hedge protection in place, it’s great for the feed buyer who wants to get his yearly production locked up, it’s great for the producer who wants to start buying upside price insurance for 2010 and beyond sells. It’s only bad for those clients who are unsold and have to sell off the combine.

Looking ahead: My greatest concern is the crop yield is confirmed now and we push the carryover closer to 2 billion bushels. Producers end up storing some of last year’s crop and a larger precent than normal of 2009 into the spring of 2010. The market tries to rally but demand is stable at best, acres remain above 86 million since fertilizer price have moderated and producers simply don’t like changing production. The spring rally fails to excite farmers to move old crop inventory and sell new crop. The fear about El Niño prevents producers from selling $4-plus 2010 and 2011 corn. A normal spring develops.  In the end farmers take corn out of the bin cheaper than then put in and storage cost is not covered. Producers are behind on selling 2010 corn and waiting into 2011 for some type of miracle to bail them out of a very tight financial situation.

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 utterback@utterbackmarketing.com or laura@utterbackmarketing.com.
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. 2009.
 
 
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COMMENTS (3 Comments)

JOHN
Weather is not hot, hogs and cattle are being processed, gas demand is low,large crop planted, plenty of wheat to feed,Alberta crops going to feed,world demand low.
Why would the Dec corn go up?

8:01 PM Jul 15th
 
Anonymous
The corn acres are not there in S.IL, S.IN and Kentucky. I'm in the seed business and its not just our company its Dupont and Monsanto too. 30% less corn acres in those areas.
6:03 PM Jul 15th
 
 
 
 
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