Sep 20, 2014
Home| Tools| Events| Blogs| Discussions Sign UpLogin


Outlook Today

RSS By: Bob Utterback, Farm Journal

Bob Utterback has more than 26 years of experience and offers producers a disciplined approach to marketing.

Producers need to diversify!

Aug 31, 2009
I would suggest the future is going to force producers to be more focused on controlling risk than ever. This implies that not only do producers have to worry about getting the crop planted and harvested but they are also going to have to manage things such as interest rate exposure, fuel cost exposure, fertilizer exposure and price risk of commodities.   

While most producers are currently focused on if it’s going to frost or not I would challenge producers that you need to start diversifying your hedging program. Sell bonds on rallies to protect against long term interest rate exposure. Second, start looking aggressively at buying natural gas to protect your nitrogen exposure in anhydrous ammonia.  We believe we are in a unique time period to start looking at protecting this risk exposure.  We will be very soon adding a review of the T-year notes and natural gas to our Web site to advise of the development of a hedge position in these two commodities.

At this time we are looking at preparing ourselves to be ready to sell the T-notes on any strong price bounce over the next few months if the Fed is forced to lower interest rates on the concern of a double bottom in the economy in the first half of 2010. As for natural gas we are watching very carefully the triple bottom that’s in place. We like the strategy of scale-down buying at current levels but clients must be prepared for some margin risk exposure. To reduce exposure, sell out of money calls against the long position could be recommended for the first position. We would only move to a maximum position if and when the market closes above the long term averages. 

Again, the producer of the future has to strive to manage risk by managing the profit margin. Producers need to focus on not only the selling of product but on the protection of inputs as much as possible.
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.
 
 
Log In or Sign Up to comment

COMMENTS (17 Comments)

Anonymous
With the informa report today 2.60-2.80 corn very possible carryover too large. 3.20 did not hold Sold my long at a loss. Corn is in a deep bear market.

2:19 PM Sep 3rd
 
Anonymous
You had the chance to lock in profitable levels for 2 years! Now your screwed! Ask the hog guy how it feels to wait for profitable margins.
11:46 AM Sep 3rd
 
 
 
 
The Home Page of Agriculture
© 2014 Farm Journal, Inc. All Rights Reserved|Web site design and development by AmericanEagle.com|Site Map|Privacy Policy|Terms & Conditions