By: Bob Utterback
, Farm Journal
Bob Utterback has more than 26 years of experience and offers producers a disciplined approach to marketing.
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 firstname.lastname@example.org or email@example.com. Tomorrow we will talk a little about the bonds, gold and crude oil.
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