Its report day and my opinions!
Feb 10, 2009
It’s report day! One should always be prepared for surprises and today was no different.
The big one for me was the USDA did absolutely nothing to the corn numbers and left everything unchanged. This should have been considered a bullish victory for the market. Pre-open comments were for a higher open. The surprise was the corn market has been down for most of the day and in some cases sharply lower. December corn at $4.20 is too low to really be comfortable selling but equally too high to be comfortable buying.
As I will be telling everybody at the National Farm Machinery show this week in Louisville, Ky., I want to be a modest seasonal buyer of December corn below $4.05 but equally a strong producer seller above $4.50. Please note: Delayed planting and inflationary concerns are the bullish factors for corn while the concern about carryover increasing will be the big bearish factor. My concern is as this economy continues to slip and producers hold a lot of product into summer, it could put a lot of price pressure on the downside into fall if no weather event occurs.
As for beans, the USDA reduced the crop just a little as expected to the 205 million. The big reduction was in the world stocks because of the drop in production in Argentina. It’s now estimated Argentina crop will be reduced 36.75 million metric tons or about 209.5 million bushel or our entire bean carryover. The only thing that’s keeping beans in check is global stocks, still reasonably adequate at 50 million metric tons which leaves stocks to use ratio still at adequate levels of 18%.
With the potential of domestic production acres increasing over 5 million acres, we could easily see global supplies increase in light of the current global slow down pattern in demand. My impression of beans is unchanged and we are currently in the best time period for higher prices. The only thing I see that could push prices up further is if we would have some type of dock strike down in Argentina some time this spring. Both the government and producers are being hurt by lower production and lower prices, they may seem like they are fighting with each other, but the end result is to drive up prices. I must strongly point out this is only a temporary situation. While prices in the old crop could be driven up short term, inventory still has to eventually come into the market. I can not urge strongly enough all producers should be using any type of price bounce to get old and new crop inventory priced.
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 email@example.com or firstname.lastname@example.org.
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.