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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.

Outside market concerns and weather are driving the grain market

Jan 20, 2009

Regardless of your politics, one has to be proud of the smooth transition of presidential power from George W. Bush to Barack Obama. We wish the new president wisdom in trying to reign in a serious of major problems he faces. In the end, it’s going to be all about jobs. Jobs need to be at the private sector rather than the public sector. This begs the question how do we motivate private individuals and companies to take risk and employ more people when, if successful, you are only going to have to pay more taxes and handle more paperwork? So again we hope the new administration can help improve the economy so all individuals can improve their economic condition and in general get rid of all the fear I sense around the country.

The commodity that has recently surprised us the most has been corn. We just did not see the magnitude of the rally Friday and on project (a) last night.  Last week we posted a low of $3.60 on 1/15, rallied hard on Friday and early last night we posted a high of $4.07 or a 47 cent rally in two trading sessions in January!  As we said this was all short covering and some limited speculative buying because of the weather concerns with the Argentina crop and potential dock strikes. Once this short covering rally ended, the corn market had no buyers; the commercials and feed buyers were not interested. Outside market influences were negative. Crude oil was down, gold was down and the dollar was up which for the last several months would have implied very bearish price action. We have also picked up that several leading analyst around the country suggest ethanol demand is going to be significantly lowered. In fact many 2009 projections are now being lowered from the 4.2 billion level down to 3.8 billion. So in summary there are a ton of reasons for the corn market to break into February and we see only one reason for the rally, weather. If we start to see some rains, prices could get really weak fast. That’s why we continue to suggest if you need cash flow and want to sell corn focus on getting it done on this unexpected strength in March corn above $4.

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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