The grains retreated a little today after yesterday’s sharp price advance. The overall bias by many continues to be firm as traders are preparing for first-of-year strength, due to expected strong index fund realignment in commodities.
I have to tell you I’m getting a little worried that the only reason for the market going up is more money flowing into the market rather than solid supply demand reason. Granted, they can push the market up for a little while, but it’s a false rally. The really harsh weather that is moving through the Midwest is giving producers no incentive to move corn and bean inventory into the market now, but it’s going to have to move into the system for many by early March. The corn bulls are arguing that all the corn out in South and North Dakota is a large percent of the carryover, but most producers in the area suggest while it’s difficult the crop will eventually get harvested and not really be hurt in quality that much..
So all this near term bullish talk has pushed beans up sharply, along with corn slightly, below the fall highs. The question comes up will these markets take off in 2010 like they did in 2008? I suggest the odds are very low that it will occur this year, but as always one needs to suggest if we were to see a sudden drastic bullish move in the outside markets and a weather event occur at the same time, anything could happen.
So what’s a seller to do? As I suggested in the market plan that I’ve sent out to our brokerage clients, you must first decide what you want from the market in regards to profit. Once the market achieves your target prices get a floor in place, but sell the inventory in a way that you can benefit to some degree if a price event occurs.
So looking forward, I anticipate some strength between the first and the 15th of January in both corn and beans. I suggest this should be a selling window for the unpriced 2010 inventory, then weakness from into late January to early February. At this time I would suggest feed buyers and hedgers wanting to defend cash or futures sales must implement some type of call protection. Then sit back and wait to see how the April to July market unfolds in regards to planting and summer weather to indicate if the winter highs hold or prices ignite.
Summary: A range bound situation should persist for the first part of 2010, but price activity will get very active as we move into the April to May time period. Now is the time to decide when, what price and how you’re going to sell.
I encourage everyone to get their market plan written down now for the 2010 and 2011 crops. Only by knowing where you want to get to, does one have any hope of accomplishing their objectives. If you are need help, call us at (800) 832-1488 [Rowland & Laura] or at (877) 898-4324 [Bob].
Bob’s Upcoming Speaking Engagements:
Periodically go to www.utterbackmarketing.com and click on “Upcoming Seminars.”
January 2010: Orlando, FL ... New Bern, NC … Louisville, KY … Indianapolis, IN.
February 2010: Louisville, KY … Anaheim, CA.
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