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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 global weather concerns

Feb 05, 2009
Markets bounced on continued concern regarding Argentina’s weather and positive exports. Soybeans moved up as much as 30 cents today and corn was close to 10 cents higher on lingering concerns about how much the crop will be reduced in Argentina due to dry weather. China is also getting attention as its drought extends in primary wheat production areas. It should however be noted much of this region is irrigated but still yield reduction is expected. At the same time, corn exports bounce back nicely today giving hope that while we are still well below the historical pace we will still meet USDA expectations.

Next week’s USDA Supply and Demand report is shaping up to be very interesting and potentially very volatile for all ag markets. Our expectation going in is corn carryover will be increased while global supplies of beans and wheat could contract a little. I would not be surprised to see a bearish report in corn. The issue is how negative can we take it down. I’ve been talking a lot about getting in position for a seasonal rally in corn on my internet daily comments.  I’m still of the opinion that we are nearing a time period to buy. The issue is at what price will it be safe.

The big positive is lack of farmer selling due to low price and delayed spring plantings due to cold and wet conditions. The bad news is we have plenty of grain in the bins and world demand is continuing to contract. End result: For prices to move as high as producers want to cover this year’s higher costs, a significant weather event must be confirmed.

Looking down the road to summer/fall time period, I see a lot of red flags developing. The biggest one will be lack luster consumer demand will send end users into a hand to mouth buying strategy. At the same time, a lot of old inventory will still be around and be forced to move into the marketing channels before new crop comes on board. Without some significant weather pressure, both beans and corn will have the potential for significant downside risk from mid-June to Sept. 

So for now we want to look at some strong speculative buying strategies in February but by early June we want to be aggressively short into the fall time period for corn, beans, and wheat. For details on our specific prices and strategies see our web site at www.utterbackmarketing.com.

Final comment: We are now in the crop insurance season. We realize it’s a big financial expense but taking out an 80% CRC crop insurance program on beans could really give you a solid financial reward.  By having the insurance in place and then selling the cash the potential for returns will be huge. If you have any questions about crop insurance give Rowland a call here at UMS at 1-800-832-1488.

If you want to go over details or would like to read more daily recommendations regarding reownership or marketing strategies, 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 (1 Comments)

SK
Global weather concerns:
Does anyone actually look at the weather in Argentina/Brazil? The past 5 days has seen significant rainfall in the top production regions that were not forecast by any model. Model performance has been horrendous in SA, in particular the GFS model which this market seems to love. Take a look at data sometime, instead of just going on rumors. You'll learn something.

Disclosure: I am bearish the market.


6:35 PM Feb 5th
 
 
 
 
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