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April 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.

Grain Markets Up on Weather Concerns

Apr 29, 2009

Here are the comments from our weather advisor. He’s been on the money for the last several weeks.

Bottom line: Farmers are going to be slow in getting the crop into the ground before mid-May. I would suggest the potential is building for a major high in May but it will be difficult to sell because of concern about corn pollination. If there was ever a good argument for buying in the money puts I believe this will be the case. Once we get past the July Supply/Demand report I would look to convert the puts to cash sales or short futures to reduce the time value decay cost.  You need to be looking at our web site for complete details about how we are making catch-up sales.  For information call Laura at 1-800-832-1488
 
WXRISK.COM WEDNESDAY MORNING WEATHER
Not only have the weather models not changed in the overnight but if anything the pattern looks worse over the next 10 to 14 days than it did yesterday. By worse I mean more rain systems and no break in the pattern through MAY 10 -12... if then.
 
There are no changes in the short range forecast. The Wednesday morning radar shows our new system bringing moderate to significant rain over central and eastern portions of OK TX and NEB.... and into eastern SD with a lighter amounts over southern MN and SD. There are no changes in how the model for handling the system. Low pressure will develop over eastern KS and MO by the evening and tracked through the heart of the WCB into the lower Great Lakes Thursday night. This will bring a significant rain event back into the Midwest over the next 48 hours.
 
We also still have the front which moved through the Midwest Tuesday and through the Northeast last night... now stalled in a WSW - ENE orientation from southern MO to KY into lower WVA and over the Washington, DC metro area.
 
Weather models still show a fairly strong and chilly HIGH coming out of Southwest Canada into the central and upper Plains and Midwest this weekend. Temperatures will run Below Normal over these areas but at least it will be dry for a few days.
 
However that front stalled over the Deep South is going to become a problem because a New Low-pressure will develop over western TX on Sunday then moved to the TN Valley on Monday and into the ECB on Tuesday with another significant rain event.
 
Already however the next energy racing in on the extremely powerful Pacific jet will be developing a new rain threat for the Plains by May 6 ... for the Midwest on May 7... followed by another significant system coming out of the West coast into the Plains & Midwest by May 10.
 
And the hits just keep on coming.
 
 
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.
 

Planting Begins and Markets Down on News

Apr 27, 2009

While farmers are getting ready to move to the field aggressively to catch up on field work the market has been having some interesting things hit. The big news today pushed by the 24 hour media is the swine flu. It should be noted it has nothing to do with the actual pork product. This is an air borne disease.  Nevertheless pork was down limit today and may not bottom out until mid week. The implied reaction is reduced exports, back up in supply and eventual reduced breeding due to low profit. Lower breeding gives way to reduced feed usage. This caused beans to be down over 60 cents and corn 15 cents lower on project (A). The market recovered in day trading session.
 
I have to say I believe the corn, bean and hog reactions are over doing it today but when fear strikes the market it’s difficult to stand in front of the freight train. I would not be surprised that within 10 days the corn market has a completely different profile. Granted there has been some field work done in the Midwest and even some corn planting but we are going to catch–up slowly.  I continue to believe the market is very close to fair value for this time of year. The only question is how much of a bounce are we going to see?
 
On one side of the equation there is decent usage and weather delayed plantings while on the other side you have big farmer holding and the power of the corn planting to catch up with these new hybrids. I strongly believe it’s going to be difficult to get Dec 09 corn above $4.50 but a retest of the $4.25 to $4.35 is still better than a 50/50 chance. As for the fall lows I’m still in the $3 camp so it’s critical we get some hedges in place between early June and July 4th.
 
In regards to beans, I’ve been friendly to old crop and bearish new crop. This is why I recommended buying the July/Nov bean spread. It looks like the Chinese are getting close to buying everything they want. Second, it’s still up in the air how many planted acres are going to come on board for new crop.  While I still like the spread I have to say it looks like we have lost the upside momentum of the spread. I would not want to see the spread go back below 90 if you are in the speculative recommendation.
 
As for new crop beans we’ve had plenty of chances to sell beans above $9 in Nov beans. If you are holding out for $10 Nov beans I believe you are going to have to go for broke. Specifically, you are going to be forced to hold all the way to August and hope for a dry weather event. Right now, no one is willing to go that far in the future and make an absolute statement about weather. There are patterns but as you know weather seems to surprise us the most at exactly the wrong time. I encourage you to get a floor under your 2009 beans by buying an in the money put first and selling the cash second. If you are inclined to want to speculate for higher prices in beans I also encourage you to have a known risk play (specifically some type of call strategy) rather than being net long. Just like today, the ability of the beans to move hard makes it very difficult to be speculative long even though you have strong convictions of your strategy.
 
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.

It all comes down to weather!

Apr 24, 2009
Dollar weakness is the big news today. It’s down big! I would encourage you to review the on your AgWeb. Essentially, it has a solid top around the 90-cent level. The last two days' recent drop and follow through to the downside is opening up the concern that is there something wrong.

The answer is yes. The world is getting concerned that the U.S economic recovery may be slower than expected. Unemployment claims, instead of spiking lower, are still going up. The auto industry is in crisis with GM looking to go into bankruptcy and Chrysler not much further behind. Finally, the chairman of the Fed looks to be in political hot water. Talk is starting to surface he may be replaced with an individual that is much more in line with administration thinking. This has all led to big concerns about the U.S. economy and it’s speed of recovery—thus the exceptionally fast decline in the dollar.  Granted, short term it may help corn exports but long term if the dollar were to drop below 76 I believe it would be reflective of a slower and possible resumption of big concerns about the economic health of the global economy.
In regards to corn, it’s going to be all about weather for the next several weeks. To help us get a handle on this, we have joined up with Dave Tolleris to help us understand the weather patterns. He will be giving an update every Wednesday.  So far his opinion continues to be cool and wet for much of Midwest into early May. Granted we will get some field work done, but the risk are growing that much of the Midwest is going to be forced to plant around the wet spots. If this pattern continues much beyond May 20th, one would expect more beans and less corn acres. It forces me to look positive on the long July corn/short bean spread or long December corn and short November beans.

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

Grain markets mixed due to outside markets and weather

Apr 22, 2009
 The outside markets are showing some signs of stability today. T-bills have broken back to support at 122 level in the June contract and concern earlier in the week has been that the banking industry may be in worse shape than anticipated. The stress test that is coming out will indicate whether banks are in trouble but overall the banking system is not in a melt down mode. This helps ease concern that the fed would not be easing credit immediately. It however is becoming apparent that many global players are going to be forced to ease credit and potentially come up with a global stimulus plan since economic weakness prevails. Bottom line: Everybody is looking for the U.S. to come out of the slump. They want the economic game plan to work but many have grave doubts.

The dollar bounced off major overhead resistance. It's going to be very difficult getting the dollar above 88 and a correction back to the 80 level is still anticipated by late fall. This should be helpful to corn exports from the fall into the spring of 2010.

Corn: In regards to corn today it was a choppy day. It opened firm on a little spiller over positive action from yesterday’s gains but could not hold and went negative mid-day. Expectation is growing that a significant improvement in the planting completions will be seen next week. Additionally, some weather forecasters are calling for a enough good weather for a significant portion of the Ohio to Illinois area will get planted.  While there will be solid field work I tend to believe that the wet areas will not get planted until we are well into May. This makes the potential for concern about pollination pushed well into the last of June to first of July. The only play I see for December corn getting back to $4.50 now is we have to turn from cool and wet to hot and dry during pollination. Right now it’s only a hope, the weather boys will not really be able to tell us for sure until we get into the Memorial Day weekend. So for now, bulls can gain control of the corn complex and the bears are content to sit and wait knowing with all the inventory in farmers hands, it’s only a matter of time.  Bottom line: the pressure now is solidly on the bulls to prove their case, time is on the bear side.

Soybeans: The market has cooled. The uncertainty as to how much more buying China is going to accumulate still has the old crop bulls willing to hold position. Equally, the new crop bean market continues to show solid overhead resistance below the $9.35 to $9.50 level. Nobody really has interest in buying new crop and a lot of sellers are interested if we get close to $10.  Our basic bias continues to be negative to old crop and positive to new crop. This is why we like the bull spread in beans.  As for hedging we have to suggest continue purchase of at the money puts and roll up. We would refrain from selling short calls unless we get an aggressive overbought situation.

Wheat: Choppy market at best. It’s too late and too low to be a new seller even though I do believe there is downside risk into the late-July to August time period. The primary action right now is to hold onto your hedges and look to start moving to the sidelines as we near harvest. The real action is for end users. It’s time to start thinking about how aggressive you want to buy the harvest lows.  Right now you could look at some calendar call spreads. I’m not really interested in buying calls out right or long futures until we are well into the late July to early August time period. So if you’re an end user of wheat you need to be calling us now to develop your reownership game plan.

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.
 

Most of the markets were negative today

Apr 20, 2009
The market started off the week where it left off last Friday—negative.  All commodities opened off sharp today because of the strength in the dollar and big weakness in the oil market. The stock market was off over 200 points as well. It’s all suggesting there are big concerns about the global economic health and, in result, recovery is still in question. The bond and t-bill are up sharply today as well which indicates the banking industry is still a concern to markets. Bottom line: The negative tone in the outside markets overpowered the market’s concern about wet weather. 
 
Looking forward, weather outlooks are starting to suggest the Midwest will start to dry out as we get into early May. The corn crop may be a little late getting in but with good moisture conditions it will catch up quickly.  My only concern is I’ve seen years in the past where it was wet in the spring and by mid-summer you could not catch a rain. This concern will keep the market nervous until we get to mid-June. If the weather concern does not materialize by then I get very nervous about corn due to the large supply of unpriced inventory in farmers hands.
 
In regards to beans, the market broke hard today. New crop beans moved below $9 for a while before rebounding. As we have been suggesting for the last couple of weeks, the real winner has been the old crop/new crop bean spread. It appears to be gaining today and near-term I see little reason for the spread not to continue to widen closer to the $2.25 level. 
 
The near-term picture for beans will continue to be China’s desire to buy our beans since they are cheaper than domestic prices and because Argentina is still having problems between the government and producers. My big concern continues to be when will they release their inventory down south. Will it be June/July or August—right before our crop comes on board? There are also reports that China intends to slow down their stock piling of bean inventory by summer. If your trading the July/November bean spread, be careful to not over stay your welcome. I would really start looking at being on the sidelines by early June.
 
Wheat did not escape the bears’ influence today either. At one time, Chicago wheat was down more than 22 cents. With July wheat now at $5.13, we are entering a price range where it’s very difficult to be extremely negative. I’ve said for some time the most bearish I can really be is $4.80.  I believe the end user wanting to buy inventory should start developing a game plan on how they want to enter the market. I would suggest a scale down call buying campaign starting in late May and be done by late July. Once we get into August and the market starts to close back above the 20 day moving average, I would suggest moving from a long call to a straight long futures position. If you’re an end user and interested in protecting your long term wheat needs, I believe now is the time to start preparing your game plan for buying.
 
It goes without saying I’m holding onto hedges but not adding any new selling position at this time. I’m simply waiting for the harvest time period before I start scale out of hedges as the cash inventory is delivered.

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. 2009.
 

Cold in the Midwest and corn is very weak today

Apr 15, 2009
Special note: We normally don’t like to discuss personal things in our Ag Web comments but tomorrow is the birthday of one of our most important staff members, my wife, Karen Utterback. If you have been to any of our seminars or worked with any of our brokers you know she is a critical member of our team. Happy Birthday!
Well, its happy Tax Day and it's overcast and wet here in the Indiana—which represents the attitude most of us [I believe] feel about today. The trade however is looking at the next week’s weather and is suggesting some planting is going to happen. We never said that the planters were not going to move some where, it just the bulk of the Midwest is going to be very slow in getting the crop planted evenly. Our weather service that we are featuring on our internet site continues to suggest limited activity in April and much of the planting will be done after May 15th rather than before.

Nevertheless, the corn market was very weak today. It really looks like it is in a trading range with support at $4.05 and overhead resistance at $4.40. It’s going to take confirmation one way or another about planted acres before corn breaks out of this range. We would suggest the odds now are less than 40% now that we will see the December corn break above $4.50 but holding off on further selling is still recommended if you have at least 60% of your 2009 inventory sold.

As for beans, the old crop continues to pull up the bean market. We would continue to expect the July-to-November bean spread to continue to widen.  The old crop will be firm because of tight stocks and continued strong demand by China, the back end will be weak because of prospects of larger acres and bigger carryover.  We continue to encourage buying of the spread at the current 90 level but with stops at 40 cents for the potential to move above $2.

Finally, wheat continues to drag lower. We see limited upside potential in wheat until we get into harvest and the bin doors shut. We are not really excited about buying wheat until we get into late August to September time period. We hope you have already forward sold a significant amount of inventory as we have suggested at our internet web site.

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.
 
 

Could we continue to see wet and cool weather throughout April?

Apr 14, 2009
Talking with our weather analyst, he is quite insistent that the cool and wet conditions are going to be with us for most of April and well into May unlike other weather outlooks that are starting to surface. He also believes there will be better than 60% odds that a significant portion of the Corn Belt will not get corn planted until late May. Many producers are suggesting that if they are not planted by May 15th [especially in Missouri] they will go to beans. This all suggest things could get very volatile as we move into May. While we are suggesting the May to July time period could be very volatile and hard to be a net seller, we are still strongly urging clients to sell because once the corn goes into the ground,we believe December 2009 corn will attempt $3 by fall. 

As for soybeans, the old crop beans are lifting the new crop beans. Concerns about the size of the South American crop continue to surface but I really think that’s a very thin reason to explain today’s strong price rally. I would continue to suggest the potential of a “V” bottom in the global economy is really reducing. It’s going to take more time than the politicians want—which is going to hurt their potential to do all then things they want. Concern over demand, I believe, will be the battle this fall but for now it’s the tight old crop stocks and the bad weather. Granted, eventually, delayed corn plantings will result in increased bean acres but most believe this will not happen until mid-May. The speculative strategy of choice seems to be buying the old crop and selling the new crop. I would suggest this would be an excellent way to be long the beans right now.

If we can help you with your 2009 or 2010 hedging program [using cash and futures], please 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.
 
 
 

Why is December corn down?

Apr 13, 2009
Today was one of those wet, soggy overcast days in central Indiana where you wake up, look out and really want to simple roll over and stay in the warm bed!  The crops are not getting planted in the Midwest just like our weather firm has been suggesting. The weather pattern is expected to keep planters at bay for most of April and early May and along with strong exports today, one would have thought the market would be surging higher.

So why is December corn down, off the $4.351/2 high of last week to today’s low of $4.141/2 or 21 cents which means for every 100,000 bushels of unpriced corn a lost value of $21,000 and the crops are not even in the ground!  What gives?

Well I’m kind of scratching my head just like you. My only answer lies in the outside markets. The Fed last week said the economy was going to continue to decline for next six months with unemployment going up. The stock market shook off this bearish news last week and moved higher. Today is different, at one point the Dow was off over 100 points but midday it recovered, and the bond market surged back. It would suggest concern is growing that another economic stimulus is going to be necessary or the fed is going to continue to keep interest rates historically low. In a nut shell it seems the market is saying for grains demand is a bigger concern.  Essentially, the vote seems to suggest unless we have an actual confirmation of acreage shift from corn to beans the market is not interested in moving higher.

This would imply we are going to have to look at the calendar very carefully for trend direction in both the corn and beans.  While I’m not getting my rally now as expected it does suggest if the wet conditions continue into the second week of May the market could dramatically shift direction and intensity for corn and beans.

Because of this uncertainty I continue to strongly support any sales that are being implemented during this time for corn and beans be done in the form of long puts rather than cash or futures. My intent will be to roll the puts into futures or cash sales as we get into the late June to early May. 

Bottom line: I want to get a floor in place on the pre-planting highs because of my long term concern about the negative economy and big producer cash holding position. I will move from a defensive selling posture to an aggressive position as we move into the late June to early July pollination weather scare time period.

If we can help you with your 2009 or 2010 hedging program [using cash and futures], please 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 and the implication of the USDA Supply and Demand report!

Apr 09, 2009
Today’s report had a surprise for me when the USDA increased feed usage by 50 million when hog herds have been reduced, poultry starts and feedlots are blood red. Go figure, maybe we will see 450-lb. hogs again, but the real answer is USDA overestimated last year’s crop and they need to make the numbers balance out.

There were no other great demand surprises in the report. The implication for me is it’s now all about weather. How fast do we get the spring crops in and will producers adjust their corn bean planting mix? 

Implication: One should expect a rather high degree of market anxiety to remain until we get into pollination on the marketing plan. This means a basic defensive selling posture should be maintained until we get into the last of June to early July.

Here is an outline of my game plan for my producers that I help manage bushels over.
1. I intend to focus on liquidating all short puts sold to insulate the long puts or short futures by the first two weeks of May or if the put premiums get below 15% of the level they were actually sold at.

2. In regards to anyone who sold puts, look to stay within 20 cents of the market. While this could imply several roll ups, I really don’t believe we have much more than one more solid rollup. Right now most clients should be in the $4.20 STRIKE PRICE. My intent will be to roll up some place around the $4.45 to $4.52 on an overbought situation. My preference is to take advantage of the last of April to first of May price bounce.

3. In regards to selling calls to help finance the purchase of the long puts I’ve not been really excited about this strategy because of the seasonal risk of increasing implied volatility as we move into the April to June time period. My suggestion is we should wait at least to the first of June and preferably mid-June before we start scale up selling the December 2009 $6 or higher calls to help pay for long puts.

4. We alert all clients to not fall asleep on selling of the December 2010 corn in (short futures) the next few months. We have a little interest at $4.50 but would get very motivated to be a scale up seller from $4.70 to $5.05 level.  Again the time period is the first of May and the last of June.


SUMMARY: We suggest there is going to be two highs, the pre-planting spring high and the pollination high. Our bias is to sell the first via a long put strategy and hope for higher price action. The alternative strategy is to wait for the summer high where your 100% right or wrong. If the market does not rally your fall back plan would be to store and hope for a rebound rally.  We would not be surprised to see a 75 to $1.25 break from the spring/summer high to the fall low.

If we can help you with your 2009 or 2010 hedging program [using cash and futures], please 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.
 
 

Snow in the Midwest!

Apr 06, 2009
It is cold out there today. Snow appears to be in many areas of the Midwest. Field work is essentially at a stand still. Frankly, I’m a little surprised that corn was not a little stronger today. Maybe the fear of delayed planting is still a little too early and the preparation for this week’s supply and demand report is a little more important. Because of the stocks adjustment last month, we should see a little reduction in the corn carryover this month. I would not be surprised to see trading the report for a day or so and then revert back to weather as the prime driver of the market.

Right now my bias continues to be that corn acres will exceed 85 million acres planted before we are done. I have to suggest the market should be under it’s greatest upside risk in the next three weeks with the last week of April and the first week of May being the best time for a spring-weather-scare-high. I’ve been saying for weeks that $4.52 should stop this market, but I have to accept the reality that, if plantings are delayed into the last week of April to the first week of May, December corn could move up to the major overhead resistance level of $4.75. Remember, as long as the corn is in the bag for most of the central Midwest corn production region, the market has upside potential. 

ALERT: I also want to make sure all producers are watching the 2010 corn. It’s above $4.50 and, if the market does spike up over the next three weeks, there is potential for $4.75 to $5. I encourage producers to selective sell futures at that time.

If we can help you with your 2009 or 2010 hedging program [using cash and futures], please give us a call at 1-800-832-1488.
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. 2009.
 

Weekly outlook!

Apr 03, 2009

Well the G-20 meeting is over. The talk has been that they would move in unison with the U.S. administration and attempt to stimulate the global financial system by selling bonds. The alterative strategy is that they are making plans for the IMF to sell 402 tons of gold to help out the poor countries but not actively seeking to float more bail out programs like the U.S. This in effect failed to force the 10 year notes to the 125 level and the U.S. bonds above 130 as we had wanted to be an active seller.
 
End Result: It appears foreign players are content right now to allow the U.S and China to do all the heavy lifting on uprighting the global economy. Granted we may come out of the recession by the end of 2009 but there are serious issues to how fast we can recovery if the world economy is still struggling. Additionally, I have big concerns that the U.S. consumer love affair with spending and debt has come to a screech halt. I would suggest the American consumer confidence has been hurt for all the government spending is simply replacing the lost consumer spending.  
 
Implication: I still believe we have made a major high for bonds but I want to only participate in long term speculative program of protecting long term interest rates at 124 for or better in the June T-Bills or  130 or better in the June bonds.
 
As for the corn and bean markets: After yesterday’s strong run up, the market decided to take a break. In reading the comments from other analysts today there seems to be a growing sentiment that corn and beans acres will grow, the issue is how much? This puts a lot of pressure on the weather. Most weather outlooks suggest things will be very messy until the third week of April. Still early but will put a lot of producers under pressure. Right now I believe time is more important that price. Dec corn could move into the $4.50 to $4.75 level if cold and rain remains all the way into the end of the month. However, I know the ability of the producers, if given a solid two week window we can have most of the crop in the ground. So I continue to encourage producers to actively look at buying puts if we do see a price event. I would discourage selling calls until July and selling puts at this late date is no longer recommended. As for selling futures I would suggest margin risk still suggest to me one would not want to use this too to establish floor positions until we get into the late June time period.
 
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. 2009.
 

Grain markets up on potential weather concerns!

Apr 02, 2009
Today was the first official day of spring follies! Yes that’s right, concern about getting the crop planted is now moving to the head of the class. Because of the cool and wet temps, concern is growing that crops will not be planted early. This could result in significant uncertainty as to yield. 

Essentially, the market is saying we need to put some more weather premium into the market. The net result is the market is starting to put sellers under pressure of margin call. Fundamentally, I still believe there are 7 million to 8 million acres unaccounted for that could end up in corn and beans. I’m still believe corn acres will eventually end up above 85 million and beans closer to 80 million if we give producers a chance to get the crops in place.

However, for now the market seems prepared to break above overhead resistance levels. In regards to corn, those levels will be $4.50 and then $4.75. If the market closes above these levels, watch out of for the bulls to try to run all the bears out of the market. In regards to November beans, we are right at the overhead resistance level. If it moves much higher there is the potential to move up to the $10.48 level. Frankly, I don’t believe there is a lot of reason for this type of move but as I’ve learned over the years the market does not need to be logical all the time, this is a time of emotion and fear.  

In summary: I would prefer to be buying puts rather than selling cash or futures until mid-June. As for selling calls be cautious and have a plan for defending if we get clear technical breakouts.

Outside markets: Please note that I still want to be a seller of bonds on a rally to 125 in June. I hoped to get something out of the G-20 meeting but it does not look like it’s going to happen. The other commodity I’m watching closely is buying gasoline in the December contract on a price correction. I’m still of the opinion the energy markets are currently overbought and one should wait for more corrections before starting a long term accumulation position. I will talk about lumber, cotton and silver tomorrow.

If you want to go over details or would like to read more 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. 2009.
 
 

Soybeans hold gains!

Apr 01, 2009
The late rally in corn yesterday I believe was not justified. Today the market gave back most of the gains. I still believe we have one more chance for higher price levels. It will depend upon the level of wet weather we see in the primary planting areas. My game plan is to be an aggressive seller of inventory from the third week of April into the first week of May on concerns about delayed plantings. We are encouraged all brokerage clients to look at scale up selling the $4.33 to $4.52. While expensive my preference is to buy puts now and then look to scale into short futures or short cash positions as we get closer to the fourth of July. Remember, while puts are expensive they do allow me to keep cash flow in check. I would suggest the time value decay of the December puts in the next three months could be mostly offset by the increase in volatility. This implies the risk is equal to the flat price or absolute price movement. Granted I don’t have income gaining potential of a short futures but one must realize between now and June 1 is simply trying to find a top rather than expect a major down trending market.

In regards to beans I have to suggest the planted acreage number of 76 million will be the lowest we’ll see all year for beans. I would like to add my voice to those in the trade who are suggesting its way too low. We don’t know how much is going to go up but I’m very confident it’s not going lower. Long term this places a lot of downside risk in beans. As for the near term, stocks are still tight and the old crop could be quite violent as trapped shorts run into margin calls.

I have to suggest selling the November beans in the $9 to $9.20 level. My bias because of all the uncertainty is to buy the expensive puts rather than sell cash or futures at this time. I would refrain from selling puts to cheapen the position because I feel we do have some serious downside risk once we confirm acres but equally I very reluctant to sell calls to help cheapen the puts premium because of the potential violence of beans seasonally speaking. So the safest way right now is to buy puts, roll them up and then prepare to sell option premium later this summer when the numbers are more forthcoming.

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. 2009.
 
 
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