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June 2009 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.

My thoughts on the corn market

Jun 29, 2009
Tomorrow we will get a stocks report and the important acreage projection by USDA. There is a uniform opinion that acres will be down, the question is how much? One group has acres down only 500,000 or less while the other camp has acres down close to 1.5 million plus. I have to say the tone of the market is one of being defensive and preparing more for a disappointing report than a bullish report. Since this is a holiday week the normal pattern is for prices to be very active through Wednesday but then slow down on Thursday and Friday as many traders take off for the long holiday.

The weather patterns seem to be supportive to continued corn improvement. While the weekly crop conditions are expected to drop a little, overall the conditions will remain above a year ago.  Our meteorologist continues to suggest concern for growing degree days rather than excessive heat. This would suggest the crop could look really good through July and August but simply not have enough time to fill out the crop. 

Technically, the breaking of the sideways consolidation below the $4 level is not a good sign for the bulls. It will be critical that prices start to bounce quickly or a quick slide down into the $3.80 level for December corn is very likely. Right now it will take a technical close above $4.20 to get the trade excited that about higher price potential.

If you need any help in implementing a speculative or hedging strategy give us a call at 1-800-832-1488 or 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. 2009.
 
 

Weather uncertainty and Tuesday’s acreage report weigh on the market

Jun 24, 2009
We are now down to less than four trading sessions left before the next acreage report. I remember saying back in the winter seminars that we should be preparing ourselves to be taking advantage of any blow off top action to get sells into place by mid-July. Is this still a valid assumption?

As we all know the bulls “infected” me in early June and I got caught up in one more bounce rally into the acreage report. The price direction has been the opposite. The late longs have been caught in all commodities and have seen their bank accounts decline significantly. The issue now is with the sharp sell off all June long, have we removed some of the risk of the seasonal decline into August and September?

I have to say since we have sold almost 73 cents off the June high in December corn and over $1.28 in November beans we have for surely taken some of the shine off corn. The problem is we still have a very large amount of old crop corn to move to the market in August and September.

In the end I believe the major determiner of direction will be the weather, nothing really new for the grain complex, but even more important this year. All I’m hearing from farmers who have been spraying their crops is the crop looks good, just 30 days late. There are plenty of wet spots but nothing more than last year. Our weather man suggests that with the start of a powerful El Niño and low sun spot activity there is cause for concern but he’s not in the camp of an extended dry and hot time period. In fact, he’s more worried about getting enough growing degree days.

All this uncertainty about weather and the outside markets has caused many traders to lose interest in grains at this time.  We are developing a consolidation in corn and beans, a close below $4 in December corn and $9.80 in November beans must be considered very bearish after the July USDA Supply and Demand reports. Equally, if the market is able to close the gaps made last week, there will be hope for corn and beans. But frankly, if the weather is not hot and the dollar is dropping limited follow through will be seen.

In summary the market is range bound, but like a spring winding up once it breaks out of the established support or resistance, the movement will be significant and more than likely very violent. Because we are moving into late summer the burden of proof right now is on the bull, all the bear has to do is sit back and wait for harvest pressure.

If you need any help in implementing a speculative or hedging strategy give us a call at 1-800-832-1488 or 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. 2009.
 
 

Bulls are on the retreat!

Jun 22, 2009
Well the big bulls of June have now been put out to pasture and you will be hard pressed to find anybody with the nerve to buy this market. This goes to show you how the crowd can quickly turn. As you know, I got a little bullish in early June after one Friday visit to my monthly U.S. Farm Report taping where a guest speaker said corn was going to $8. Since I was heavily short, I decided to get a little defensive. As it turns out the bulls were only right for about four days and the rest of the month the market has been straight down.

So where do we go from here? I would suggest next Monday’s report will have difficulty now being a bullish surprise. Everybody is expecting at least 1.5 million reduced acres or more. The risk right now is what happens if it’s only down 500,000 acres. Second, the outside markets have turned bearish. The fear of inflation is dead for now and in fact many are starting to worry we will have a further dip in the economy. In summary, the outside markets are not supportive of bullish positions.

So what’s can the bull hope for? When the crowds give up, this is usually a good time to start moving in the other direction. Second, the big one is weather. While the crop looks good, it’s still 30 days behind. Some would say we are catching up up a little, but I have to say there is still a lot of tough conditions; low sun spot activity combined with the resumption of the El Nino has many weather people calling for a shift to dry conditions. The problem is they will not say if it’s August, September or October. So right now the weather bulls have only hope rather than actual fact. This is why the market continues to slip. 

What to do? I believe it’s time to reduce exposure of speculative long positions. Look to only add to positions if the market starts taking out the previous week’s highs or closes above the down trending support line.
If you need any help in implementing a speculative or hedging strategy give us a call at 1-800-832-1488 or 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. 2009.
 

Corn market shifts its tone this week

Jun 18, 2009
The last week has been a rough one for the speculators and a great week for the hedgers. The overall tone of the market has shifted significantly from one of concern about inflation back to the individual fundamentals of the commodity. I have been talking about this risk but frankly I did not believe it would occur this early.

I have to say the bulls have been hurt badly for a while. It’s going to take time to recover their confidence. While I do believe the acreage report will be down 1.5 or more million acres, it’s going to be offset by the improving crop conditions and positive dollar pattern. This implies to me a price bounce of more than 50% of the recent week decline or 27 cents off the low or around $4.46 is just about all one should anticipate.

The eventual correction is expected to materialize between the August and September USDA Supply and Demand report with a maximum downside risk of $3.75 in December corn. I anticipate there will be significant scale down buying of feed needs and speculative needs at that time.


SUMMARY: Any speculative long positions recently place should be held for a price bounce into the Acreage report but one should be out before the July Supply/Demand report.

If you need any help in implementing a speculative or hedging strategy give us a call at 1-800-832-1488 or 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. 2009.
 

Markets in a trading range

Jun 16, 2009
Tuesday’s bounce did show up but was very limited. Positive bean exports helped lift the beans early in the session but after the last few days correction, the bounce was only technical in nature.

The corn market was even more subdued today. It traded barely into the positive range and for most of the day was very range bound.  One would have thought after a 45-cent price decline in three days, a strong price recovery would have been seen. It appears that the corn market wants to go lower one more time to blow out all the weak longs before any type of price recovery is seen.

Looking forward the tightness of the old crop beans should keep the July beans above $12. As for corn, $4 should hold but it appears limited upside potential will be seen until (1.) we see the dollar start trending lower, (2.) acres are confirmed lower and (3.) the crop conditions drop from their current 70% level good to excellent. At this time I have to say the odds are less than 40% we will get corn back to a double top formation before moving lower into fall lows. Technically, a 50% correction of the recent correction is about all one would expect.

If you need any help in implementing a speculative or hedging strategy give us a call at 1-800-832-1488 or email me at utterback@utterbackmarketing.com or laura@utterbackmarketing.com. Tomorrow we will talk a little about the bonds, gold and crude oil.

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.
 

Grains move lower on volatility and dollar strength

Jun 15, 2009
Today is one of those days of agony or ecstasy! The bulls have been taken to the woodshed in almost all commodities.  December corn is now 42½ cents off last week’s high, November beans down 68 cents and December wheat is now a full 95 cents off its recent highs. 

This all leads one to ask what’s happened? Has the crop gotten that much better? The answer is no. We still have a very important report due out the end of the month. It should show corn acres down at least two million and bean acres up 3 million. This would argue for strength in corn and weakness in beans. In reality, the corn has been actually weaker than beans.

So, why? It’s all to do with the outside markets. I believe we had a lot of new speculators coming into the market betting on the inflation play and they got caught. The margin clerk is working hard now to get accounts balanced, many of the new players are not experienced with margin calls which is leading to unusually long liquidation pressure.

Will the dollar continue to rally? I believe not, maybe a few more days but the 82 level is going to be a stone wall. At the same time the oil market appears to have it a limit at the $72 level even though Opec wants $80 plus. 

So what’s the best action? Right now, I continue to believe new crop beans are a sell above $10.50 to $11 range. Old crop beans will continue to be strong into August which will keep the bull spreads alive but frankly it’s going to get very volatile and only the financial strong should remain in the bean spreads. Guys, it’s been a good ride and the party may not be over but it’s going to be simply too erratic to predict for this old farm boy.

In regards to corn, I’ve told many of my brokerage clients that fall lows below $3.80 was going to be very difficult. The recent two-day 42 cent break is more than I was expecting. I imagine there are some who will say seeing last year’s June 16th high recently was time to get out but remember if you are making this assumption it actually made a new high on June 27th. While I don’t like comparing this year to last year because of obvious fundamental differences, I do like the argument we will have one more strong price bounce between the June 29th acreage report and the July USDA Supply and Demand report.

Summary: I will be recommending all speculative clients to buy December corn on project (A) below $4.30 to $4.26.

If you need any help in implementing a speculative or hedging strategy give us a call at 1-800-832-1488 or 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. 2009.
 
 
 

Grains Go Lower

Jun 12, 2009
The weakness in beans and dollar strength was simply too much for corn and wheat today. The strong Friday selloff is effectively putting anybody who bought corn in the last two weeks into a losing status. This will make the first part of next week very exciting. Margin calls will be coming and the new bulls will have to decide do they want to margin up or liquidate.

In regards to corn, short term we suggest traders who bought the corn market on the close was a valid play. For our brokerage clients, we started scaling down buying at $4.55 and got real aggressive below $4.50. We would not be surprised if December corn is not visiting the mid $4.60 level by mid week. As for moving to higher levels, it appears we are going to need confirmation that the dollar is going to break and planted acres are going to drop more than 2 million. In both cases we may have to wait until we get closer to the end of the month.

Our position is still quite positive for old crop beans into August. We still would suggest holding the bull spreads in beans that you are in. As for cash producers, our recommendation is to focus on selling new crop beans off the combine; being a slow seller of rallies but equally be very aggressive in moving inventory if the market closes below the 20-day moving average which closed around $10.43.

In regards to wheat, the increase in global supplies in this week’s report plus the nearness of harvest is simply too much for wheat to deal with. As for upside potential, it’s going to be a long, hard grind and corn and beans will need to stay firm for wheat to really gain much ground. My preference would be dump wheat and buy back on paper rather than store in the bin and hope for a strong flat price recovery.

I don’t know if many of you remember me suggesting one should be going short in the bond market back in February and April. For those who did sell the T-BILLS or Bonds, the break in the market has been impressive. I have to suggest however we are nearing a value low as we move closer to the 110 level for T-Bills. I believe the Fed is not going to allow interest rates to rise much further so some intervention is expected. My focus now is to wait for a bounce in the September T-bill back to the 118 level before resuming my short selling ways.

Hogs and cattle were eerie quiet today, almost like the eye of a hurricane. There is no wind and the sun’s out but you know the back side of the storm is always worse than the beginning. 

If you need any help in implementing a speculative or hedging strategy give us a call at 1-800-832-1488 or email me at utterback@utterbackmarketing.com or laura@utterbackmarketing.com. Tomorrow we will talk a little about the bonds, gold and crude oil.

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.
 

Old Crop Beans Take the Lead

Jun 11, 2009
The bears could not keep the corn market down for more than one day. In fact, the bean market has erased and made new contract highs. I remember a saying that if the market closes near its high on Friday, you can be bearish for Monday! Old crop beans are leading the charge, as one would expect now that we know that carryover is at 110 and more than likely tighter, which forces the market to start rationing usage until new crop comes on board. Essentially, that’s three months away. The only beans I’m worried about are the South American beans that are being held by farmers. One would think if they are going to sell they would do it by mid-August.

As for corn, the market has recovered a lot of yesterday’s losses but has not been able to make new highs. The corn market seems to want to talk about how bullish things could be, but no one is really excited about buying it at the current values. It seems we will need two more events to occur before we get that final price assault. First, we have to keep pressure on the dollar. Second, we must confirm planted acres down in the end-of-month acreage report. My suggestion is that anybody needing to sell inventory or looking to protect prices for the expected seasonal decline from July into harvest should be looking hard at pricing after the acreage report but before the July USDA Supply and Demand report.
A special note for hog producers: It does not look good. I see two troubling factors for your future. The potential for feed prices to rally from this fall to next spring is quite high. While it will not be as bad as 2008, it will seem like it. The second factor which could be even more bearish is if the swine flu (H1N1) pandemic comes back like it did in the 1919 outbreak. If we have a rash of outbreaks in the Midwest this fall, I would not be surprised to see export buyers of pork product extend their ban on U.S. pork products. So with weak demand and higher feed prices, there is only one thing we will see in the hog industry: herd liquidation. Anybody remember the fall of 1998?

If you need any help in implementing a speculative or hedging strategy, give us a call at 1-800-832-1488 or email me at utterback@utterbackmarketing.com or laura@utterbackmarketing.com. Tomorrow we will talk a little about the bonds, gold and crude oil.

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.
 
 
 

Reaction After the Report

Jun 11, 2009
I know you’ve heard it before, but today was one of those classic report days. We got a bullish report. Bean carryover at 110 was right at trade expectations. The projected 2009 corn carryover was reduced to 1.09 million at trade expectation. The market opened higher. After the first hour of trade, the market started losing steam and then the correction started. It’s the saying I’ve heard since starting in the business: bullish report/bearish reaction.

The problem now is the trade has had time to adjust to the assumption of tight old crop beans and potentially bullish new crop corn fundamentals. I would suggest that while painful for recent bulls, today’s correction is not however an end to the bull trend for corn and beans. We still have the potential of lots of excitement in June and July. I believe the developments in the dollar, energy values and weather will hold the key to how explosive price could be.

The next big report is the acreage report due out the end of the month. The trade expectation will be for increased bean acres and reduced corn acres. This would set up the potential for the July USDA Supply and Demand report reducing carryover well below 1 billion bushels. The implication is that sometime between now and next July corn is going to have to ration usage. The extent of the ration is what’s going to be the big debate.

So what do I expect? I would not be surprised if speculators wait to the end of the week (say, a three-day correction)  before they start to buy for the rally in corn into the end of the month. My suggestion is to buy December corn but with a limited risk. As for the bean market, my focus would be to sell rallies in the November beans. Finally, for wheat it’s not pretty. The stocks are increasing and harvest is right around the corner. I would focus on selling wheat off the combine and then reown on paper.

In summary: One has to expect that bulls will be looking to buy new crop corn while the bears will be looking for sell rallies in new crop beans. I would not be surprised to see many traders sell wheat and buy corn additionally for the next few weeks. Finally, as one concerned grain producer asked me, what happens to the livestock market, especially the hog market? With the potential increasing that corn costs are going to stay high for most of the 2009 season and fear quite high about swine flu, the potential is quite high that another strong round of herd liquidation will develop this fall to early winter when we confirm the phasing out of more inventory.

If you need any help in implementing a speculative or hedging strategy give us a call at 1-800-832-1488 or 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. 2009.

A Broken Record in the Grains

Jun 09, 2009
I know it sounds like a broken record, but the outside markets continue to dominate the trend of the underlying commodities. Today the dollar opened higher and the oil market was lower. This set the stage for weakness in the grain complex.

Please note we will have a USDA Supply and Demand report out on Wednesday. The bias going in is old crop beans carryover will be reduced below 110 million bushels. Traders are looking to continue to position themselves in the old crop/new crop spreads. Historical analysis suggests this could continue well into July and even early August. As for the old crop beans, we believe there is a bull’s-eye painted on it and it’s only a matter of time before bigger acres and weaker demand bring prices down. We strongly suggest all clients have an extremely large percentage of their 2009 inventory protected in the form of long puts.

As for corn, the market was down a little harder than I would have thought possible until we heard that China is going to export some corn. This could keep pressure on the market short-term. However, we believe that the odds are better than 50/50 we will see one more strong price surge into the end of the month on expectations of lower corn acres in the end-of-month acreage report.

Summary: If the dollar has made a near-term bottom and the energy markets have made a near-term top, the bullish influence on commodities could be cresting for now. This implies the market will return to its focus on the specific fundamentals of each commodity. It is my judgment that a mid-July to September selloff in both new crop corn and beans should be anticipated. We will be looking to aggressively sell a strong price bounce into the end of the month in the form of long puts in corn but strong cash sales in beans. If you are interested in more details, give us a call at 1-800-832-1488 for more electronic subscriptions or brokerage services.

If you need any help in implementing a speculative or hedging strategy give us a call at 1-800-832-1488 or email me at utterback@utterbackmarketing.com or laura@utterbackmarketing.com. Tomorrow we will talk a little about the bonds, gold and crude oil.
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.
 

Grains recover after yesterday’s correction

Jun 04, 2009
I sort of hoped yesterday’s correction would extend a little further before next week’s USDA Supply and Demand report. The market, however, had other ideas. The market opened firm from project (a) price recovery and then hit the gas in mid-session. Beans were the leading commodity, with old crop beans being the dominant player, up almost 43 cents. Corn and wheat quickly followed the lead of beans and moved up nicely today.

As I’ve been discussing with several of our brokerage clients over the last few days, the big price swings in grains I would suggest are more to do with outside markets than with the current fundamentals of grains and oilseeds. Fear is growing that the dollar will continue to decline and inflation is going to take off. This is triggering many investors on a global basis to look at the commodities as a very attractive way to participate. The dollar was weak today and the oils were stronger.

My bias is even if we are going to see a lower dollar in next year and higher energy values, we are due for a break. The charts are set up for a excellent double top formation to be made in June. I’m arguing that the dollar will start to stabilize for a few months and the oil will crest. Since the outside markets will not be pushing the grains and oilseeds the individual commodity fundamentals will again be the primary focus of the markets direction. My suggestion continues to be strong upside price potential exists for the month of June but as we move into early July the normal seasonal pattern will take over. So for now, all sellers are recommended to keep positions in limited cash flow exposure. We are in no real hurry to sell anything right now until we get into late June to early July.

If you need any help in implementing a speculative or hedging strategy give us a call at 1-800-832-1488 or 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. 2009.
 
 
 

Soybeans take a break today

Jun 03, 2009
The bean market, after going above $12.26, has decided to take a break. The bull spreads have come under assault as both the public and funds appear to be rolling their long positions from the July contract to the November contract.  We continue to believe that the real price squeeze is still in front of us for the old crop beans. If we see confirmation that old crop supplies are below 100 million bushels in the June USDA Supply and Demand report, it will be a matter of how the cash markets are going to respond. Will the end users get worried and cover, or hold off for new crop? Will the longs try to squeeze the short out? The word is out on the old crop, so it’s no surprise, now the question is will anybody be willing to buy? I said on the show “U.S. Farm Report” that the old crop beans could do about anything it wants from mid-June to late August. Any problems with crops will be magnified.
 
End result: While $10.75 Nov beans, I believe, is a fantastic price, market volatility between now and November could be huge. I know you don’t like spending the money but the best way to sell inventory right now is in the form of an at-the-money November put. Granted it cost a lot but you get about 50% of what ever upside potential that may develop.

If you need any help in implementing a speculative or hedging strategy give us a call at 1-800-832-1488 or email me at utterback@utterbackmarketing.com or laura@utterbackmarketing.com. Tomorrow we will talk a little about the bonds, gold and crude oil.
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.

Grains gap higher and fear is setting in

Jun 01, 2009
The corn, beans, wheat and cotton all gapped higher today and did not look back. The continued concern about delayed plantings along with the new lows in the dollar continues to push all buyers into a frenzy over concerned about inflation.

The dramatic correction in the T-bills and bonds today is saying all holders of bonds are demanding more for their money in light of the government’s action in regards to General Motors bonds. Holders see that they are no longer secure and are demanding more interest on bonds for future price defaults.

In summary “fear” is starting to become a primary factor for end users. They don’t want to get caught in last year’s price run up. There margins are already being stretched due to low economic activity. A run up in input cost could put some of them over the edge.

So what does this mean to producers? We have been suggesting in the last three weeks that we would prefer to manage risk in the form of long puts. We continue to suggest until we get a handle on planted acres and crop conditions that a limited risk strategy is the way to be going in both corn and beans.  So if you are short the futures, consider moving into a long put for the next four weeks. If you are short the cash, consider buying futures with a stop at support levels.  Bottomline: As a seller there is risk of some cash flow exposure. Let’s manage the risk and not blow out of hedges at the top of the market due to limited capital. It’s time to batten down the hatch, a big blow is upon and a good captain looks for safe harbor rather than ride out what could be a very wild ride.

If you need any help in implementing a speculative or hedging strategy give us a call at 1-800-832-1488 or email me at utterback@utterbackmarketing.com or laura@utterbackmarketing.com. Tomorrow we will talk a little about the bonds, gold and crude oil.
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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