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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 gap higher and fear is setting in

Jun 01, 2009
The corn, beans, wheat and cotton all gapped higher today and did not look back. The continued concern about delayed plantings along with the new lows in the dollar continues to push all buyers into a frenzy over concerned about inflation.

The dramatic correction in the T-bills and bonds today is saying all holders of bonds are demanding more for their money in light of the government’s action in regards to General Motors bonds. Holders see that they are no longer secure and are demanding more interest on bonds for future price defaults.

In summary “fear” is starting to become a primary factor for end users. They don’t want to get caught in last year’s price run up. There margins are already being stretched due to low economic activity. A run up in input cost could put some of them over the edge.

So what does this mean to producers? We have been suggesting in the last three weeks that we would prefer to manage risk in the form of long puts. We continue to suggest until we get a handle on planted acres and crop conditions that a limited risk strategy is the way to be going in both corn and beans.  So if you are short the futures, consider moving into a long put for the next four weeks. If you are short the cash, consider buying futures with a stop at support levels.  Bottomline: As a seller there is risk of some cash flow exposure. Let’s manage the risk and not blow out of hedges at the top of the market due to limited capital. It’s time to batten down the hatch, a big blow is upon and a good captain looks for safe harbor rather than ride out what could be a very wild ride.

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. Tomorrow we will talk a little about the bonds, gold and crude oil.
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)

Anonymous - East Centeral Indiana
Bob, where do we go with wheat pricing. Harvest is 30 days away and the market acts like we have a short crop, when we are looking at a large carry-over and a decent looking harvest ahead. On the 1st of May I nearly had the co-op spray my wheat field with Round-up and would have planted beans, but I told them to go ahead and spread urea and let's roll the dice on DC beans. Today, with the big bounce I am happy I chose to leave the wheat.
4:14 PM Jun 1st
 
 
 
 
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