By: Bob Utterback
, Farm Journal
Bob Utterback has more than 26 years of experience and offers producers a disciplined approach to marketing.
Soybeans hold gains!
Apr 01, 2009
The late rally in corn yesterday I believe was not justified. Today the market gave back most of the gains. I still believe we have one more chance for higher price levels. It will depend upon the level of wet weather we see in the primary planting areas. My game plan is to be an aggressive seller of inventory from the third week of April into the first week of May on concerns about delayed plantings. We are encouraged all brokerage clients to look at scale up selling the $4.33 to $4.52. While expensive my preference is to buy puts now and then look to scale into short futures or short cash positions as we get closer to the fourth of July. Remember, while puts are expensive they do allow me to keep cash flow in check. I would suggest the time value decay of the December puts in the next three months could be mostly offset by the increase in volatility. This implies the risk is equal to the flat price or absolute price movement. Granted I don’t have income gaining potential of a short futures but one must realize between now and June 1 is simply trying to find a top rather than expect a major down trending market.
In regards to beans I have to suggest the planted acreage number of 76 million will be the lowest we’ll see all year for beans. I would like to add my voice to those in the trade who are suggesting its way too low. We don’t know how much is going to go up but I’m very confident it’s not going lower. Long term this places a lot of downside risk in beans. As for the near term, stocks are still tight and the old crop could be quite violent as trapped shorts run into margin calls.
I have to suggest selling the November beans in the $9 to $9.20 level. My bias because of all the uncertainty is to buy the expensive puts rather than sell cash or futures at this time. I would refrain from selling puts to cheapen the position because I feel we do have some serious downside risk once we confirm acres but equally I very reluctant to sell calls to help cheapen the puts premium because of the potential violence of beans seasonally speaking. So the safest way right now is to buy puts, roll them up and then prepare to sell option premium later this summer when the numbers are more forthcoming.
If you want to go over details or would like to read more daily recommendations regarding reownership or marketing strategies, email me at firstname.lastname@example.org or email@example.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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