Markets Down on Global Fears
Dec 17, 2009
The log jam finally broke today and the bulls decided it’s the holiday season. Their attitude is: "Let’s take a break and get ready for next year." This has lead to a lot of long profit taking, along with some producer selling, to put solid pressure on corn and beans. It should be noted that the Dow has been down more than 100 points and the U.S. Dollar is also rallying, which are fueling concern by the bulls that profits need to be taken.
I believe there is still a very strong bias under the market to buy weakness. As we have mentioned in the last few weeks, there is concern that many index funds will be realigning their funds to include more corn and beans. All I can say is I’m aware of the situation. How big of an affect will it be? I don’t know, but one needs to be aware.
Should producers who have old crop corn and beans sell? Old crop beans are the biggest risk right now, in my opinion. Once we know that the South American crop is assured and the Chinese turn their buying attention to South America, I think we are going to see very limited bean interest. This, coupled with the potential of several million more acres going to beans this year, should concern all producers holding old crop beans.
I suggested dumping them when the market got to more than $10, which we have seen for weeks now. I know the basis is wide, but with limited carry incentive in beans, any basis gain should be offset by storage cost. Close your eyes, get it done and focus on selling the expected 2010 crop. If you feel you must be long, focus on buying the vertical calls in soybean.
Special note: We are working on a marketing plan worksheet for 2010. We hope to be introducing it to all our clients by the end of the year. If you are interested, give us a call at (800) 832-1488 or (877) 898-4324.
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.