By: Bob Utterback
, Farm Journal
Bob Utterback has more than 26 years of experience and offers producers a disciplined approach to marketing.
Combines are running! Will we see harvest pressure?
Oct 20, 2009
Finally some sunshine in the Midwest and the combines are really starting to run. Every extra combine is being pushed into service. Tuesday’s weather and crop conditions ratings put the crop at 17% harvested which is way below the five year average of 46%. The bean harvest is at 30% way below the five year average at 72%. One has to anticipate that a big harvest number will be seen in beans this week if the rain holds off to Thursday. I would not be surprised if we were not 60% done by then. As for corn, some will be done but still way behind seasonal harvest next week.
I have to suggest the corn market is at a critical short-term technical point. Today we tested and broke the recent $3.88 high. This would imply the market is either at a double top on day 31 off the September lows and new bear move is immediately called for, or the bulls have trapped the bears again. The other perspective is it’s a consolidation before a technical breakout to the next overhead resistance. I can not stress how critical the price action early next week is to the next few week’s trend. If the market is able to gap above the $3.88 we should get a significant round of short liquidation and speculative buying to drive to the $4.09 level. Long term if we take out the $4.10 level then major short covering and speculative buying will develop.
What has to happen to make this occur? The rain must continue to hinder the corn harvest, the dollar resumes its downward slide and the stock market continues to move higher.
So should you buy it? I know it’s more fun to be a bull than a bear. I know that many of you believe I’m being bull headed by not get bullish in September, but this is October and we still have a big crop coming on board. I would however consider buying if we could get a decent 18 to 21 day correction and a move back below $3.50. If this would occur I would get more excited about buying for future inflationary gain, but buying now at 31 days up and a 83 cent rally is simply too stiff of a rally for me to want to get on the bulls band wagon. So I’m going to be content to simply sit on the sidelines and wait for my spot to be a hedger of the 2010 crop. As a speculator I’m not going to participate on the inflation bulls side, I hope he’s right and we drive prices to sharply higher levels to sell but my gut tells me we are being herded like sheep for the slaughter!
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