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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 solid selling pressure

May 06, 2009
Our weather man (as seen at our web page) is suggesting that the models are changing to a drier weather pattern as we get into next week. This is a welcome relief for producers in the Midwest which have not had many days to even get the tractor in the field. As for the corn market, it continues to be very heavy with solid selling pressure any time we get a little rally started. I continue to believe it’s going to take a significant weather scare during early pollination cycle to have any chance at $4.35 to $4.50 level.  Long term if we get a yield around 153 bu. per acre we would expect to visit prices below $3.20 in lead month futures. So the strategy has to be a seller of rallies.

Beans saw a solid price bounce today. I believe most of it was technical in nature. Early estimates by some leading market research firms are expected over the next few days. The early “talk” is that bean acres are going to be increased due to the delayed corn plantings. While this could help give a little bounce to December corn, it really should put a lot of overhead selling pressure on Nov beans at the $10 level as new producers attempt to sell inventory before production. I continue to encourage all brokerage clients to implement a strategy of getting a floor under beans. At this time I favor buying puts and rolling into futures or cash positions as we get closer to the late July to early August time period.

In outside market action, overall it was a rather quiet day. The dollar was slightly lower, bonds and t-bills slightly lower and the Dow up slightly. It seems the market is willing to take a break right now and waiting for more solid evidence about the bank stress test and the effect it will have on the economy. I would also suggest the economy is showing signs of slowing the downward spiral. The issue that however is in big debate is if the economic stimulus is really having impact and exactly how fast the economy will bounce. I continue to believe the economic stimulus was all about rebuilding infrastructure.  We really need to do this but it’s “not” going to have the near term 1 to 3 year price impact that everybody wants. For this to happen solid job growth is going to have to be seen and I fear it’s really going to be limited for some time to come.

Impact on grains: I view the outside markets as neutral.  For grains to go higher it’s now all going to relate back to reduce supply which implies we need solid confirmation that reduced crop size is a reality not a fear.

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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COMMENTS (1 Comments)

Mike Taylor
As we know it today, can you still see the July/Nov. spread to get as far out as $2.00 and if it did would you expect it to come back to near even as I think it has done for the past 16 years? Mike Taylor, longlake@arkansas.net



11:28 AM May 7th
 

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