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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.

Early February Market Outlook

Feb 04, 2014

The market is entering a period when winter lows should develop but too early for any price fireworks. Time is quickly approaching when China will be decisively switching from U.S. soybeans to South American soybeans. While much of this weakness is anticipated in the recent flat price decline in lead-month, there is the potential to see a little more weakness into February. You should not be surprised to see a lot of professional bull spreading of the old crop vs new crop. The November 2014 soybean contract has a lot riding on spring weather. If it’s great for corn planting, that will help to firm beans. However, it it’s cold and wet and corn plantings are delayed, it only adds to the potential misery and what an 81 million acre bean crop could potentially create this fall.

Producers who have sold corn futures as a hedge and are seeing large hedge profits, it’s time to start protection. My suggestion would be to roll the short hedges into a limited risk vertical put strategy. If a considerable amount of cash inventory has been sold now is the time to start implementing a low cost weather defense strategy. Remember, I’m not saying it’s time to get bullish, just time to start insulating profits and providing flexibility to react to the potential of a cold wet spring and hot dry summer.

For soybeans, the risk is real for the 2014 production and as producer you are going to be forced to make some difficult decisions. I would rather have a floor on 100% of beans at current prices and know I will at least break even, then position for a weather event ‘IF" it occurs.

The wheat market bounced today on deteriorating crop conditions but the problem is global fundamentals are not very supportive of any major bounce in wheat exports. In fact if the dollar were to break out to the upside, it would have very negative consequences for the wheat complex. Overall, I’m not really bearish to wheat; I just see limited reason for a rally. If something does not happen by early March I fear the bearish seasonal could potentially push July 2014 wheat below $5.

We will continue Part Two of our marketing plan on Wednesday.

If anyone feels they need to put structure into their risk management decision-making and would like to discuss marketing strategies, call Bob or Laura (1-800-832-1488). We will also try to answer questions in upcoming blogs and we welcome emails to laura@utterbackmarketing.com or utterback@utterbackmarketing.com.

THIS MATERIAL HAS BEEN PREPARED BY A SALES OR TRADING EMPLOYEE OR AGENT OF UTTERBACK MARKETING SERVICES, INC. AND IS, OR IS IN THE NATURE OF A SOLICITATION. THIS MATERIAL IS NOT A RESEARCH REPORT PREPARED BY UTTERBACK MARKETING SERVICES, INC. BY ACCEPTING THIS COMMUNICATION, YOU AGREE THAT YOU ARE AN EXPERIENCED USER OF THE FUTURES MARKETS, CAPABLE OF MAKING INDEPENDENT TRADING DECISIONS, AND AGREE THAT YOU ARE NOT, AND WILL NOT, RELY SOLELY ON THIS COMMUNICATION IN MAKING TRADING DECISIONS.

DISTRIBUTION IN SOME JURISDICTIONS MAY BE PROHIBITED OR RESTRICTED BY LAW. PERSONS IN POSSESSION OF THIS COMMUNICATION INDIRECTLY SHOULD INFORM THEMSELVES ABOUT AND OBSERVE ANY SUCH PROHIBITION OR RESTRICTIONS. TO THE EXTENT THAT YOU HAVE RECEIVED THIS COMMUNICATION INDIRECTLY AND SOLICITATIONS ARE PROHIBITED IN YOUR JURISDICTION WITHOUT REGISTRATION, THE MARKET COMMENTARY IN THIS COMMUNICATION SHOULD NOT BE CONSIDERED A SOLICITATION.

THE RISK OF LOSS IN TRADING FUTURES AND/OR OPTIONS IS SUBSTANTIAL AND EACH INVESTOR AND/OR TRADER MUST CONSIDER WHETHER THIS IS A SUITABLE INVESTMENT. PAST PERFORMANCE, WHETHER ACTUAL OR INDICATED BY SIMULATED HISTORICAL TESTS OF STRATEGIES, IS NOT INDICATIVE OF FUTURE RESULTS. TRADING ADVICE IS BASED ON INFORMATION TAKEN FROM TRADES AND STATISTICAL SERVICES AND OTHER SOURCES THAT UTTERBACK MARKETING SERVICES, INC. BELIEVES ARE RELIABLE. WE DO NOT GUARANTEE THAT SUCH INFORMATION IS ACCURATE OR COMPLETE AND IT SHOULD NOT BE RELIED UPON AS SUCH. TRADING ADVICE REFLECTS OUR GOOD FAITH JUDGMENT AT A SPECIFIC TIME AND IS SUBJECT TO CHANGE WITHOUT NOTICE. THERE IS NO GUARANTEE THAT THE ADVICE WE GIVE WILL RESULT IN PROFITABLE TRADES.

 

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