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December 2008 Archive for 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.

Grain market recovers some of the gains from last week

Dec 29, 2008
All grains and oil seeds started the market out strong on follow through strength of last week’s short week. However as we approached the later part of the day, you could sense the market was losing it’s resolve and red ink started to appear. 

I’ve been wondering if producers had forgotten about the market but I believe we are starting to see a lot of producers show up. With November 2009 beans trading close to $10 futures and December 2009 corn above $4.60, interest in getting a floor under next year’s production is starting to show up.

I have to admit to all of you out there I’ve been out of rhythm with this market for the last few days.  There are two things I have to say about this market. First, generally when the market does something in a time period you don’t expect, it’s more than likely stealing from future prices.  Bottom line: I fear 2009 could be a really messed up year in regards of seasonal trends. The fundamentals are going to be way behind the curve in explaining price action.  This implies to me the second observation. When everybody is confused, that’s the time to go back to the basics and ask yourself “what do you want from the market?”

I have to suggest that beans are long term a greater risk than corn. I simply don’t see the logic of why we need beans above $10 this fall. Equally, I understand I’m fighting an uptrend. If there was ever a time to be buying limited risk positions to get a floor in the market now would be that time. In my daily copy I’m suggesting a scale up selling program via the use of puts to get floors under the market.

The big question now is how bad has demand been hurt? How fast will it come back and finally what will producers do on crop mix decisions? All of these factors plus the annual weather concerns are shaping up to make 2009 a very nervous and unpredictable year. That’s why we are suggesting the use of options could help put a floor under the market, help you sleep at night and keep your cash flow obligation to a manageable level.

If you want to go over details or would like to read more daily recommendations regarding reownership or marketing strategies, email me at utterback@utterbackmarketing.com or laura@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. 2008.
 
 
 

Light volume during this holiday week

Dec 23, 2008
The number of contracts traded and net volume was down today, reflecting a typical slow holiday trading week. Wheat was the biggest market mover today. The reason being cited was some exports' expectation was moved from U.S. to other markets. As for corn and beans, the market tone was very quiet with limited interest. We would not be surprised to see a sideways tone to persist this week. We would however note the stronger this week is, the greater the odds we will see a sell off right before the beginning of the year.

We want to take this time to wish everybody a Merry Christmas and a Happy New Year. Since the market is only going to be open half days Wednesday and Friday we will not have any further comments for this week.  We encourage everybody to take time now to visit with family, in the end it’s one of your most valuable assets.

If you want to go over details or would like to read more daily recommendations regarding reownership or marketing strategies, email me at utterback@utterbackmarketing.com or laura@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. 2008.
 

Beans jump; corn light

Dec 22, 2008
Beans were sharply higher on rumors of increasing Chinese purchases. While beans closed higher, they faded off the early highs on concerns that most of the strength was already factored in. Continued dryness in South America was also cited as a supportive factor for beans. Near term, it appears factors are in place to support beans into the January government reports. Our focus will continue to be to encourage long term selling of a large part of 2009 in the November 2009 contract now that we are finally back above $9 and many producers can get well above $8 cash off the combine. We continue to believe acres will be up and major pressure will develop on beans into the fall.

The corn market was very lightly traded today. Since we have half trading days on Wednesday and Friday, we believe many traders are electing to be on the sidelines. Our concern is still quite high there are a lot of producers who have unpriced corn to move for early January delivery. We would not be surprised to see price weakness into the end of year to the first few days of January. It will however be difficult to get corn to break much unless wheat or beans correct. We all know that many of you want to buy a corn break for strength into the spring time. The problem is we are in the middle of the current trading range. If we could get a decent 50% correction in the December 2009 we would be very encouraged to start scale-down buying. This unfortunately implies at least a 25 cent correction. This could be very tough.

Bottom line: We want a correction to buy but expectations are low that we get the correction we want. This implies we are going to be forced to buy on upside technical breakout after the first of year. Subsequently, you are going to have to be either very short term in your holding period or buy defensively. This implies buying of futures on breakouts and then defending with puts if there is no immediate follow though.


Outside markets: It is our expectation that the dollar, crude oil and the equities will continue to cast a big shadow over the commodities next year. The expectation is the dollar is going to continue to drop under pressure of big government bail out spending. While this would normally be quite inflationary, currently it’s being neutralized by the continued slide in the oil market.  Currently the deflationary tone will continue to dominate the trend in the market. We don’t really expect inflationary concerns to start to really surface until we are well into the later part of 2009 and more likely well into 2010. This implies buyers need to be cautious, focused and only buy on solid technical breakouts or some other type of technical indicator. Right now the fundamentals of inflation, I believe, have the potential of wearing out a trader before the actual bullish event occurs.

If you want to go over details or would like to read more daily recommendations regarding reownership or marketing strategies, email me at utterback@utterbackmarketing.com or laura@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. 2008.
 

A weak close on Friday

Dec 19, 2008
Friday’s market action was weaker across the board for the grains. The wheat market, after an impressive up week, gave back and closed lower. This took the pressure off corn and allowed corn to lose ground as well. While beans were lower, they appeared to fight the decline. February oil has stabilized above $42, while lead month January (which is still under significant pressure) was below $34; so much for the reduction of daily production by OPEC to raise prices. It’s obvious right now that global demand is still declining at a faster pace. While it is good news for the consumer, we would caution all producers who buy product to start thinking about long-term “sit and hold” crude oil positions once a solid technical buy signal is given.
 
As we enter a short holiday week we must point out that volume could be limited. This could possibly lead to some significant volatility for grains to the downside since they are essentially over-bought at this time. Producers looking to buy for the spring and summer time period should look for a solid correction by the last week of December and into the first week of January.
 
Long-term our strategy is essentially unchanged. We are very concerned about the global economic recession. Its impact on demand is expected to be more bearish than on a reduction in supply. This is not a year to take a lot of risk. We encourage producers to focus on getting a solid floor under the November beans around $8 to $8.50 cash and December corn around the $4.25 to $4.50 cash level. Once in position, we would suggest defending against weather problems as we move into the May time period with an upside technical breakout.
 
Bottom Line: If anyone has a problem selling because of last year’s high prices, we encourage them to look at history; when have we seen back-to-back bullish years? We believe the 1972/1973 pattern is all one can point to. A more common pattern: the year after a bull market is almost always an opposite trend because usage begins to be rationed and it historically takes a long time to recover.
 
If you want to go over details or would like to read more daily recommendations regarding reownership or marketing strategies, email me at utterback@utterbackmarketing.com or laura@utterbackmarketing.com.

THE RECOMMENDATIONS AND OPINIONS CONTAINED HEREIN ARE BASED ON INFORMATION FROM SOURCES BELIEVED TO BE RELIABLE. HOWEVER, THAT INFORMATION MAY BE INCOMPLETE AND UNVERIFIED. THERE ARE NUMEROUS FACTORS THAT CAN AFFECT THE MARKETS THAT CANNOT BE FULLY ACCOUNTED FOR IN THE PREPARATION OF THIS EMAIL, AND RECOMMENDATIONS OR OPINIONS CONTAINED THEREIN. THOSE FOLLOWING THESE RECOMMENDATIONS/OPINIONS DO SO AT THEIR OWN RISK. THE FIRM AND/OR CUSTOMERS OF THE FIRM MAY TAKE A POSITION THAT MAY BE INCONSISTENT WITH THE RECOMMENDATIONS AND OPTIONS CONTAINED HEREIN. ANY RECOMMENDATION/OPINION DOES NOT CONSTITUTE AN OFFER TO BUY OR SELL OR THE SOLICITATION OF ANY OFFER TO BUY OR SELL ANY COMMODITY INTEREST. COMMODITY TRADING INVOLVES RISKS, AND YOU SHOULD FULLY UNDERSTAND THOSE RISKS BEFORE TRADING.

Outside markets continue to dominate the grain markets

Dec 17, 2008

The U.S. dollar was down, which is fueling concern that export demand could improve next year. While in normal times I would not disagree with this observation, I believe the bulls are not given enough credit to the negative influence of the domestic and global economy. Right now I believe producers will be lucky the first half of 2009 if we can get export close to USDA expectations!

The other big news today was in the crude oil market. The expectation going into today’s trading was that we would get a 2 billion-barrels-a-day reduction by OPEX. The actual number was 2.2 million barrels. This brings daily production down 4.2 million barrels for the year. The market’s reaction was lower crude prices. This goes to show you that demand remains weaker than expectation.

The third driver in the outside markets was the equity market which was up sharply yesterday; today the market spent most of the time in the negative category. The tone of the market is positive but not explosive.

Of the three main outside market influences, the decline in the U.S. dollar has been the most cited as reason for the corn rally. Please note that, since the Dec. 5th low in March corn (at $3.05), it has now rallied more in 12 business days and that’s more than the yearly net change we saw from 2000 to 2007. Boy has the market changed!

My Bias: $4 March corn was an excellent price to sell inventory. We suggest that producers who have cash commitments for January move now rather than wait. As for beans, China continues to buy aggressively to rebuild stocks. While I expect this will hurt demand next fall, right now it’s positive. I suggest scale up selling of old crop inventory above $8.75 for any necessary January sales. The wheat market has been on fire the last couple of days because of concern about cold weather on wheat stands. While there has been some impact, it’s more than likely less than the trade talk suggests. The simple fact is wheat was oversold and due for a bounce. However I would be very cautious on getting too bullish for wheat. We have adjusted some of the low-priced hedge recommendations and are simply waiting to sell into the February to March time period. The hogs and cattle were slightly lower; but, overall, in a quiet holiday trading pattern. Our concern continues that, if any further cracks in demand are seen, we will have to see lower values.

If you want to go over details or would like to read more daily recommendations regarding reownership or marketing strategies, email me at utterback@utterbackmarketing.com or laura@utterbackmarketing.com.

THE RECOMMENDATIONS AND OPINIONS CONTAINED HEREIN ARE BASED ON INFORMATION FROM SOURCES BELIEVED TO BE RELIABLE. HOWEVER, THAT INFORMATION MAY BE INCOMPLETE AND UNVERIFIED. THERE ARE NUMEROUS FACTORS THAT CAN AFFECT THE MARKETS THAT CANNOT BE FULLY ACCOUNTED FOR IN THE PREPARATION OF THIS EMAIL, AND RECOMMENDATIONS OR OPINIONS CONTAINED THEREIN. THOSE FOLLOWING THESE RECOMMENDATIONS/OPINIONS DO SO AT THEIR OWN RISK. THE FIRM AND/OR CUSTOMERS OF THE FIRM MAY TAKE A POSITION THAT MAY BE INCONSISTENT WITH THE RECOMMENDATIONS AND OPTIONS CONTAINED HEREIN. ANY RECOMMENDATION/OPINION DOES NOT CONSTITUTE AN OFFER TO BUY OR SELL OR THE SOLICITATION OF ANY OFFER TO BUY OR SELL ANY COMMODITY INTEREST. COMMODITY TRADING INVOLVES RISKS, AND YOU SHOULD FULLY UNDERSTAND THOSE RISKS BEFORE TRADING.

Market rally continues!

Dec 15, 2008
The market rally continues, but questions start to be raised as to how much more is left.

Carryover was increased in corn to more than 1.4 billion. My concern is livestock usage is still low and will be lower in the first half of 2009. The market went lower, then Spark’s numbers triggered a very bullish rally late week.

Just think about the potential for lower acres this spring and lower carryover numbers next fall had more influence over the market than near term bigger carryover and lower demand. So I have to say that I’ve been more than a little puzzled by recent rally from an oversold $3.065 on Dec. 5 to today’s high of $3.91 or 84.5 cents in five days. 

Some in the trade are suggesting the bottom is in and all troubles are behind us. I beg to differ. The recent five-day rally is not justified in my opinion.  A carryover of more than 1.4 billion bushels of corn should keep corn markets closer to $3 than to $4.  While just back from vacation, I’ve already heard from several clients and the attitude is uniform—they would rather produce $4 cash corn than $8 cash beans.

Conclusion: If you have cash sales to make, I would be taking advantage of this rally to move inventory. End of year price pressure is still expected.

If you want to go over details or would like to read more daily recommendations regarding reownership or marketing strategies, email me at utterback@utterbackmarketing.com or laura@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. 2008.
 

Yesterday’s report was bearish, but today’s action is bullish

Dec 12, 2008
After yesterday’s bearish report and bullish reaction there was hope the lows were in. This attitude was very short-lived. We have now essentially erased the gains seen after the report and our confidence that a bottom has been made has weakened. 

I believe the primary reason continues to be the big swings in the Dow and crude oil.  Monthly job losses are at a 26-year low and increasing every day. Talk of 10% plus unemployment is growing. The domestic auto industry is in a steep downtrend with no short-term solutions. The big issue continues to be how big of a hit does demand take?

My concern is growing that we could easily see a bearish supply/demand report as we move into February. I don’t like saying it, but the pressure we are seeing on corn and wheat could easily continue for most of the first quarter of 2009.

Suggestion: IF futures-to-arrive cash contracts have been made and anyone is still open the basis, look at locking up cash basis on a sell off in the futures market into the end of the month. If there is unpriced corn and wheat, I feel limited upside potential exists until we get some type of supply problem to develop. In the case of corn, it’s really difficult to see much upside potential until summer.

In regard to beans, the story really has not changed that much. Near-term the stocks are reasonably tight. This means beans have the best potential of a rally, in my opinion. The drawback for beans is, with high input costs and potentially tight cash flow [if bankers start to pull back], one has to anticipate significantly higher planted acres in 2009. 

The conclusion is all producers really need to pay attention to selling 2009 beans above $8 cash as soon as possible and then only defend if we get a solid technical breakout due to weather problems.

Summary: I would not be surprised to see the volatile, choppy nature of the markets continue. This will be great for the short-term trader, but difficult for long-term traders.

If you want to go over details or would like to read more daily recommendations regarding reownership or marketing strategies, email me at utterback@utterbackmarketing.com or laura@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. 2008.
 

Positive bounce in the market prior to tomorrow's report

Dec 10, 2008
The corn and bean markets saw another positive price bounce, but concerns persist! After last Friday’s wash out and early week price recovery, many around the trade want to be the first to say the lows are in for many of the commodities. While I would love to embrace that assumption, I believe we need a solid retest-and-hold situation to say the worst is behind us.  

I believe there is the possibility of a retest over the next three weeks. First, expect this week’s USDA Supply and Demand report will more than likely have limited supply reductions and some downward adjustments in demand. In my opinion, carryover will drift up rather than down. My second concern is dumping losing positions for tax purposes between mid-December and the end of the year. I really don’t know if there will be any dumping of contracts, but if there were ever a year for this type of event to occur, this year would be it.

The outside markets, specifically crude oil, are a concern. The talk is Saudi Arabia will announce that they will reduce production. As many in the trade have suggested, it is one thing to announce it, but it’s another to get compliance. Will the other oil countries that are strapped for cash flow comply and keep production in check or will they increase production for much needed money at the Saudi’s expense? 

Finally, more job layoffs are being announced almost daily. Many worldwide economies seem to be slowing down daily. Implication: How will demand [domestically and internationally] be affected? Right now one would most likely be a little cautious on projections. I expect this tone to be present for the first quarter of 2009.

Will we see the market correct and hold between now and the end of the year? If the market does this, there should be some [technical] confidence that a low has been confirmed. As to the level of the price recovery, it’s going to be slow and limited until we confirm three things: how bad has demand been hurt, how many acres are expected to be planted, and what type of planting weather are we seeing?

I’ve been on vacation in Florida and enjoying the 60°F and 70°F days. Next week I’m back at the office, along with the cold weather and snow. Have a good day!

If you want to go over details or would like to read more daily recommendations regarding reownership or marketing strategies, email me at utterback@utterbackmarketing.com or laura@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. 2008.
 

Ag commodities still follow outside markets

Dec 05, 2008
The pattern of the ag commodities following the lead of the equity market and oil continued today in a downward trend. The market broke hard today into new low ground across the board. We consider today’s activity a general long liquidation day with margin call losses as the dominate reason for the decline. It will be interesting to observe next week exactly how long the funds remain in the ag sector. I’m concerned this liquidation could continue to the end of the month. Granted, the market is getting down to some very attractive long term values, but right now there is nothing saying we are close to the bottom other than it’s been going down so long, that the bulls have been killed and the bears are no longer comfortable selling the market. So right now all I can suggest is everyone take a big step back, catch your breath and let the market volatility settle down a little before coming back into the market.

If you want to go over details or would like to read more daily recommendations regarding reownership or marketing strategies, email me at utterback@utterbackmarketing.com or laura@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. 2008.
 

Was today give up day for the longs?

Dec 04, 2008
Traders hate to see days like today. It’s give up day for the longs. Several have been trying to (lightly) buy this market. I believe today’s ability to easily break to new lows has triggered stop loss orders. One of the rules you learn in the market is when you’re wrong, keep the loss manageable so you can come back another day. Going for broke can wipe out the bank account.

Several things are forcing us to recommend moving to the sidelines right now. First, the export pace for corn and beans continues to slip suggesting lower prices are not stimulating demand. The trade is getting more concerned about domestic usage as well.

As we have implied for some time now, the outside markets continue to decline—specifically, crude oil. It was down over 6% from yesterday’s close which continues to forecast declining world demand. While I assume today’s break is the result of several hedge funds reducing their long positions, there is still a lot to go.

And this could be a year-end tax situation. Will we see a lot of longs blow out of positions this month rather than take losses into next year?

All of these factors lead us to the conclusion to reduce our long bias as we move into the end of the year.  We suggest taking a short break right now from the long side until the end of the month.

If you want to go over details or would like to read more daily recommendations regarding reownership or marketing strategies, email me at utterback@utterbackmarketing.com or laura@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. 2008.
 

Fear of a "global recession" turning into a "global depression"

Dec 02, 2008
I believe we are now in the final month of one of the most violent years on record for the commodities. I know a lot of those with unpriced grain want a sharp price recovery. I don’t want to cast a negative shadow over the holiday season, but I have to say we must be realistic. The market is at these lows for a reason--the fear of a “global recession” turning into a “global depression!” In my opinion it will take more time than many unpriced producers want to see.

(1) As I’ve suggested for several weeks now, a change in the bear trend for equities, energy, gold and a bull trend in the U.S. dollar must be reversed before any sustained rally in the ag commodities can be maintained. The earliest I would expect this to be technically confirmed would be late January to early February.

(2) In regard to the grains and oilseeds, I believe we must see solid confirmation of domestic usage and export demand not dropping. Essentially, it’s important that we prove to the trade that a global demand contraction is not going to occur. I would suggest this confirmation will take place in February or March.

(3) Supply. We are going to be talking a lot about crop mix and the amount of planted acres for next year. Right now my bias is less corn and more bean acres. While this would generally be favorable long-term to corn and bearish to beans, it will not be enough of a reason for corn to rally. I believe these factors will only come into play next spring, and then they will only lead to strength if we can combine them with some sort of weather concern.

So where does this leave us? I’m concerned that we have the potential of end of year weakness. It will be more about cleaning up the books before the end of the year. If the corn and bean markets remain at the bottom of the trading range and anything happens in the outside markets, we could see one final panic break to the downside. This implies, if you have been trying to bottom pick the market, you really need to keep an eye on risk management to the downside during this time period.

Bottom Line: We need to first find and confirm the bottom before we talk about how far the market can recover.

If you want to go over details or would like to read more daily recommendations regarding reownership or marketing strategies, email me at utterback@utterbackmarketing.com or laura@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. 2008.
 
 
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