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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.

Market tried to rally and failed!

Aug 25, 2009
The markets tried to rally but failed miserably as the increasing crop conditions and limited immediate risk of frost weighed on the markets. So where are we going from here? Is a major rally in store like 2007 and 2008 where we saw an average of 55% rise in prices from the fall to spring and rescued all the producers who stored the corn in the bin unpriced? I know corn and beans are a little behind and there is going to be some frost damage on some of the corn and beans but I really feel the risk is quite high we will eventually see a final corn yield above 160 bu. per acre and a bean yield above 42 bu. per acre. The only question is how much higher?
 
What this means is we are going to have a mountain of inventory this fall. Carry will increase in the market as the nearby contracts drop to the deferred especially for corn. As for beans I’m not completely convinced the spreads will be as dramatic. I would not be surprised to see the market stay in an inverted (no carry) pattern between the 2009 crop and the 2010 crop for most of next year.
 
Market Implications.  We have the supply, now will we get the demand growth necessary to keep domestic and global supplies from building?  We have been spoiled by the growth in ethanol and China usage from 2001 to 2008. What happens if the domestic and global economy has a second low in 2010 due to low private sector demand?  If supply is up and demand is lagging it set will the stage for a protected period of price weakness that I believe most producers are not mentally prepared to handle. 
 
Conclusion: Continue to be a strong seller of 2009 corn on any 10- to 20-cent rally and sell 2010 November beans on any 30- to 50-cent rally. Deadline is the mid-September USDA Supply and Demand report.
 
All clients and subscribers are urged to look at their e-mail accounts and website. We have sent out a special article on upcoming fundamentals for beans and its impact on the 2010 price prospects. Please read and get back to us immediately. If you are not a client or subscriber please email laura@utterbackmarketing.com for a free trial

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

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 (17 Comments)

Anonymous
We still have alot of old crop to move. Exports were below 1.0 for sales this A.M.
Prices need to be low to move this crop.
9:50 AM Aug 27th
 
Anonymous
We are already predicted I believe to be 2 billion bushels ahead of last year, correct me if I am wrong. So 1.2 billion loss still puts ahead of last year.
3:16 PM Aug 26th
 
 
 
 
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