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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.

Grains Bounce on Buying Interest and Outside Markets

Jul 30, 2009
Unexpected strong buying interest by the Chinese, strong crude oil bounce, break in the dollar, rally in the Dow and end of the month position squaring all led to a very strong price event today. I have to say the corn market is rallying only because of the outside markets and will be unable to extend the rally much unless we see solid strength in the outside markets today. July 2010 at $3.75 is starting to reach target prices where I want to sell unpriced grain that’s going to be stored into next year. 

I continue to suggest the bulls are using up a lot of energy right now. Since 1970 the March corn contract has rallied up into August and September on weather scare only seven times and then subsequently fell into March.  In fact from a historical pattern the strategy of storing corn unpriced and hoping for a rally has only worked 11 out of the last 38 years.   So I’m saying right now the odds are better than 75% from a historical prospective that prices are not going to rally. Additionally, if you review the data in the last 38 years, we never saw three back-to-back bullish trending years from the fall lows to next spring. Not since 2007 and 2008 has it been so strong, I truely believe the fundamentals are not exceptional enough on the demand or supply side to argue for a sharp trending year.

Bottom line: Storing corn in the bin unpriced and hoping for a flat price rally historically has less than 1 in 3 chance of paying off. Second, after two bullish years like 2007 and 2008 historically, the market never rallied to make storage pay.  These are the historical facts. If you are going to store unpriced, we would rather you dump the corn and buy futures rather than store in the bin unpriced, having all the storage and risk.

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 (13 Comments)

Anonymous
I think between the two comments corn would have to be $4.00. $3.00 corn doesnt cut it for producers. But lts just make sure ethanol and exports survive before farmers???
9:51 AM Aug 2nd
 
Anonymous
That was my point. But what would b your fair price for corn where farmers will make a profit, ethanol, and cattle producers if you could fix the price, meaning no price fluctuations. It seems were at a fine line where this could actually happen.
11:46 PM Aug 1st
 
 
 
 
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