The following commentary does not necessarily reflect the views of AgWeb or Farm Journal Media. The opinions expressed below are the author's own.
Bob Utterback has more than 26 years of experience and offers producers a disciplined approach to marketing.
In many ways, the USDA did many producers a favor by implying yields on the low side of expectations. Historically big crops grow so we have to assume yield will probably end up at the 170 to 171 level if no weather event is seen. So using the figures the USDA have provided us, if the corn yield is at 164.4 bushels per acre and input costs at $690.59 per acre, breakeven would be at $4.20 a bushel. In order to make 5% return on investment for this year’s corn production, one would have to have sold their production already at $4.41. The bear is here and for the time being not unless a weather event is seen in the near future, there is no reason for these markets to go higher.
Where does this leave the producer? Those who have to sell off the combine will be scrambling to find alternatives to enhance revenue. Many will say to themselves, I can handle one year of not making money but what if we are in a sideways to long-term bear market. What do you do?
Now, before harvest, is when one should be discussing marketing strategies and how to manage risk for the next several years. The bull was fun and producers loved the prices received for their production but now one has to survive the bear!
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 (765)376-4476) or (1-800-832-1488). We will also try to answer questions in upcoming blogs and we welcome emails to firstname.lastname@example.org or email@example.com.
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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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