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November 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.

Grains Go Higher Today!

Nov 30, 2009
The corn market was weak from the opening bell. Corn inspections were at 23.75 million bushels down from last week of 23.075 million bushels and down 37% from a year ago at 38.458 million bushels. This was not a real surprise for the market but only adds to the slight negative tone. While we have seen some rains in the Midwest, harvest was decent over the weekend and good progress is anticipated to be reported after the close.

For corn, basis is starting to widen out. Essentially, the cash market is preparing for more price pressure in January to March rather than during harvest. Can the futures market look beyond this to the anticipated spring strength? Right now, it looks like it will be very difficult to get the lead month futures below the $3.50 technical support. Equally, it’s going to be difficult getting the deferred July 2011 above $3.65 until spring and we have solid confirmation of some type of planting delays. This range bound trading market may present opportunities for the trader but will more than likely prove to be frustrating for the hedge.


Beans were higher in overnight trading because of technical breakout considerations. The market did pull back a little during midsession trading but overall has the makings of a market that could breakout to the upside. Exports this week were surprisingly weak at 41.268 million bushels compared to last week of 80.494 million bushels. While this is in line with year ago levels of 40.017 million bushels, it’s not the type of exports that one wants to see if we are to have the fundamental strength to trigger an upside price breakout.  The bulls are still in control of the market. The four big positive variables are
  1. The overall U.S. crop size is going to reduce with smaller yields.
  2. China is going to continue to be a strong buyer because of strong internal demand needs.
  3. Inflationary concerns are still very high and any solid breakout in equities and oil to the upside will send investors to commodities.
  4. South America always has potential for yield stress.
I have to suggest that while I sold soybeans on Friday,  I have equally taken the position off today. I’m simply not comfortable with the chart action at this time.  As long as the January beans can stay above $10.50, the potential exists for a retest of $11. If South America has any type of significant yield stress things could get really tight on supply.

If you are interested in a detailed marketing plan outlook call us for a trial to our internet web site.  Ask for Laura at (800) 832-1488 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.
 
 

Continued Correction in Corn

Nov 25, 2009
This week we have seen option expiration, poor exports, and an outside day down on the corn chart which took out the previous 7-day low. In normal markets this would be considered very bearish.  The problem for grains was the outside markets were generally firm until Thursday.

With the Tuesday hard correction in corn, we have now seen a 26-cent price move in lead month corn. This type of price movement is making it difficult for producers and speculators alike to want to implement and maintain positions for long-term. As one producer recently told me,"I know I need to do something, I just don’t know what."
My response to such comments is we are entering a time period in 2010 when conflicting fundamentals and technical action is going to make it increasingly difficult to have a clear picture of what is going to happen. So the producer needs to fall back to “why” he’s using the market. I would suggest for sellers it’s when you want to lock up profit and transfer the price risk to the market. 
I’ve been suggesting to producers for the last few weeks that “good” profit is starting to develop for the 2010 corn and bean markets. It is my opinion that the agriculture market is not an industry that can handle “good profit” for an extensive amount of time. Either the high profits motivate more supply or the high prices motivate demand rationing or inputs costs go up. Bottomline: While the first half of 2010 looks good, the longer you go into the future the more the profit margin looks to be squeezed. This implies producers should be working hard to lock up input cost for as long in the future as possible and then focus on scale up selling to lock up profits. Since the basis levels are already starting to widen for corn and beans for 2010 this implies a futures or option strategy will have to be implemented.
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.
 

Big Moves in the Market Today!

Nov 23, 2009
All markets opened with a bang today. Gold moved up to record highs. The Dow, at one time was up over 143 points and oil was strong across the board. This extremely strong outside price move, I believe, caught the sellers off guard in grains. A lot of elevators were sellers on Friday in anticipation of a good harvest weekend.  Producers have really pushed hard and gotten a lot done. So it was logical on Friday to expect weakness on Monday. Well, with the outside market action the bulls were stampeding from the open, and pushed lead month corn to $4.03 overhead resistance and January beans to $10.48 shortly after the open. 
 
So the bulls had the upper hand initially. Then a strange thing started to happen. Basis has started to widen for old and new crop corn and beans. If you’re a bull this is not the type of action you would like to see in the cash market. I’ve been talking to producers in central Illinois who are reporting basis has widen to at least 40 cents under in many regions for first half December delivery and it’s getting wider.  
 
By mid-session the market rally in grains and oilseeds started to see some cracks and by late session we started seeing negative price action in corn and beans which I originally expected last week.  So, today the grains moved opposite the outside market because of underlying non-confirmation in the cash market, I however would not be surprised to see a recovery later this week in grains.
 
A note to all producers: I’m starting to get some calls from cash-only subscribers interested in long term hedging.  Normally, I start getting these type of inquires just before the high. Most target selling prices are still better than 20 to 40 cents above the market. History suggest to me when producers start getting ready to sell above the market either one of two things happen. The market fails right below their objective or we blow through and force weak sellers out of the market before turning lower.  I strongly agree with clients that selling December 2010 above $4.40 represents clear profit, the key right now is to know how much cash flow exposure you can handle and implement a selling strategy that you can live with regardless of what the market throws at you.   If you are interested in a detailed marketing plan outlook call us for a trial to our internet web site.  Ask for Laura at (800) 832-1488 or e-mail 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 On A Break Today

Nov 17, 2009
The corn market decided to take a break today, but beans continue to move higher.  The bean complex seems to be anticipating more demand from China, while the corn market is finding no immediate demand strength to push things higher.  I believe the market is reaching levels where producers need to be serious about moving unpriced old crop beans sold off the combine, as well as  focus on 2010 bean sales now that the market is above $10.

WE ARE ACTIVELY TALKING ABOUT THIS IN OUR INTERNET COPY!
 
Outside Markets: I’m very impressed by the T-Notes and subsequent interest rates. It really looks like the Fed will allow an easy money policy for some time. I continue to stress one must watch interest rates as an indicator of how long the concern about growing inflation will continue. I suggest the ability to sell March T-Notes above 120 represents an opportunity that you do not want to pass up. The other commodity that is showing some promise is natural gas. It looks like it is approaching a double bottom in the March contract.
 
Just a peak: The speculative trade that I like, but it is still a little early to implement, is the July/November bean spread. This spread will bear some watching to see if carry gets back into it. A section of our bean copy will be devoted to a review of this spread once a week.
If you need any help in implementing a speculative or hedging strategy give us a call at (800) 832-1488 or email me at utterback@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.
 

Weekly Outlook?

Nov 13, 2009

This week we have provided our clients with several reports, one was on an analysis of storing corn vs. beans and the other was on a technical analysis of outside markets. It’s our conclusion that the market fundamentally and technically has limited reasons for storing beans. Second, one should be storing corn but selling the carry. Finally, overall the outside markets are in a bullish tone but caution is recommended due to the current overbought status of some of the contracts. We suggest the 10 year T-note contract is the commodity to watch for when interest rates are going to start rallying and subsequently concern about inflation starts to falter. We have also noted in the copy that the Natural gas contracts are at a very good level for buying. We have encouraged producers to do this in order to protect their long-term Natural gas or (nitrogen cost).  If you are interested in the complete report call (1-800-832-1488) the office for a trial subscription to our web site which has the entire reports.
 
A couple other factors I’m hearing. First I talked with one of our subscribers in Minnesota today.  He said the corn was drying down nicely from the 31% starting rates to current 18 to 20% moisture. The problem he was having now was simply getting enough propane to dry down the corn. I’m wonder how many other producers are having this same problem, is it regional? The second issue was on Wednesday and Thursday the trade was talking about diseases and mold problems. A lot of this was due to the high moisture counts. With the last two weeks of decent dry down weather I’m starting to wonder how bad the issue remains? Right now it’s on the trade radar screen, concerned but not bullish. My bigger concern is with the high moisture levels, producers are going to have difficulty getting corn down to 15% moisture levels which is needed to stop all growth of mold in the corn. Unless producers exercise superior bin management we are going have some very bad corn show up later next year. Thanks to a good friend,  I’ve been given permission to reproduce some solid suggestions about this problem. We will be posting it on our website this weekend in the free front page section. P.S. it’s simply too big for the daily copy.
 
SUMMARY: I don’t believe we are going to have a harvest flush this year but the Jan to Feb time period could be really interesting. How bearish things get will heavily depend upon what’s happening in the outside markets.
 
FINAL THOUGHT: What are you estimating your 2010 corn and beans will cost you to produce? Please send me your working numbers. I will have summary of results hopefully by next Friday if I have enough respondents. Send e-mail to bob@utterbackmarketing.com.  Have a safe harvest
 
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.
 
 

Outside Markets Driving Grains Higher

Nov 09, 2009
The outside markets are at it again. Gold is at new highs, while the U.S. dollar is getting slammed and the equity markets are on the positive side. This primal force of bullish momentum was enough to lift the corn market during last night’s trading session and extended into today’s trading session.  

December corn and November beans have bounced off what should be considered important technical support levels today. As long as December corn can remain above $3.60 and January beans above $9.50, it appears the gains could be dragged up by the outside markets even though the crop is being harvested.

We have a monthly supply/demand report this week. Since harvest has been really delayed, there should not be much harvest data in the report. This would suggest there should be no major adjustments on the supply side. One could be expect a bullish adjustment on the demand side because of the general negative tone of the U.S. dollar and potentially expanded exports.

Overall, I suggest producers to be sellers of beans off the combine anytime soybeans can get above $10. I still believe in storing corn because of decent carry incentives. Please remember that, once the market achieves the desired selling target price for the 2010 corn crop, one should focus on keeping hedges in the weakest month. Right now I suggest focusing on selling the July 2010 corn contract above $4.50 and the November 2010 soybeans contract above $10.25.

As for selling increments, I suggest at least a sale of expected corn and sale of ½ of expected soybeans if targets are reached. Also note I am very concerned about first of the year weakness that could possibly develop in all commodities. Try to avoid any type or pricing for corn, soybeans and wheat between January and March if at all possible.
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
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.
 
 

Big Price Moves in Soybeans

Nov 04, 2009
The soybean market is not for the faint of heart. Granted there are good opportunities for the short-term day trader if following a very focused time count. The problem is its hard work and just when you feel a pattern is emerging the market can throw you a curve ball. Right now aggressive management of cash flow risk is critical. We would strongly encourage small positions with big reserves to back up position. This is not a time period to be a cowboy and go for the big moves. 

As for the producer with no carry in the beans, anybody placing harvested beans in the bin is betting on an absolute flat price rally with no significant storage or basis gain. So you are putting up 100% of the equity which is significantly more expensive than selling the cash and putting on a very ridge long position.

As producers, I know your attention right now is on getting the crop out of the field. However you must realize this could also be a great time to be making decisions about the 2010 crop. Granted the Chinese are going to continue to buy our beans until the South American crop comes in but after that they are going to be looking hard down south. With acres up, it all comes down to what type of production season they have in producing beans. If its good, beans are going to trend lower and if it’s bad, the market could explode. I know the thought of $12 plus beans is exciting but I don’t believe, as a producer in this time period of significant uncertainty about the health of the U.S. and the global economy, one should take all the risk. Instead the basic concept of being open on the cash but putting a $2 floor under the market and obligating a sell if the market rally above $12 is still preferred. If the market does go from $10 to $12, a gain in the cash of $2 is made minus basis adjustment.

As for those speculators out there who always like being long beans I would challenge you with this thought. If you want to be a bull to beans because of inflation why not go directly to the commodities that will be bullish like gold and crude oil, rather than buy beans? Be a bean hedger and speculate on inflation in outside commodities.
Special note: I’m will be on the road this week traveling down to Sarasota to set up my winter office.  I will try reflecting on what I’m seeing in my Wednesday copy. If you have any questions that you would like address just give us a call at (800) 832-1488.

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

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.
 
 

Big Price Swings in the Grains

Nov 03, 2009
Rather big price swings for this time of year are starting to wear on everybody. While the supply fundamentals of corn and beans are important, we are now becoming quite aware that the influence of the outside trading funds is dominating the market.

The fear that last Thursday and Friday’s up and down price action is going to become the norm for the market, is driving many producers to throw up their hands and say "Forget the market. It’s too unpredictable!" I can’t say I don’t agree with this prospective, but I’ve also learned over the years when the market is frustrating, it’s normally the time to give it some strong consideration. Bottom line: When it’s easy to be a seller, I get scared but when it’s hard to be a seller it gets my attention to ask, "What am I missing?" 
In last week’s special release regarding the March 1975 corn contract (the last year of a freeze and extremely poor harvest conditions) I came away with three conclusions. Once the crop gets in the bin, the bull is in trouble, I would suggest once harvest goes above 60% one should become aggressive about selling. Second, as long as the current trading prices are above the 21-day and 50-day moving averages, one should be in a limited short futures exposure such as a long put or a vertical put. If and when the market closes below the 21-day and 50-day moving averages one needs to be net short the market. Third, the high moisture levels of the harvesting corn plus disease is going to make it difficult storing the crop long term. This leads me to the conclusion that forced cash sales will have to come back into the market in January to February. This will lead to a wider than normal basis and the spreads should increase as the nearby falls to the deferred.
Special note: I’m will be on the road this week traveling down to Sarasota to set up my winter office.  I will try reflecting on what I’m seeing in my Wednesday copy. If you have any questions that you would like address just give us a call at (800) 832-1488.
If you need any help in implementing a speculative or hedging strategy give us a call at (800) 832-1488 or email me at utterback@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.
 
 
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