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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.

I’m a Supply Bear!

Mar 22, 2010
This week should be dominated by two primary factors—time and anticipation.

Another week has passed and little field work has been done. Rain and snow continue to fall and producers are starting to get concerned. Granted, it’s still early, but every producer knows that a lot of fall field work did not get done and time is going to be very precious this spring.

The other factor that should have some bearing on the markets is the impact of several advisory services publishing spring guesses with regard to the March prospective plantings report due at the end of the month. The numbers are from a low of 88.4 million acres to a high of 90.1 million acres. I think we will see larger planted acreage figures “IF” farmers get the opportunity to plant. It has to be noted that demand is going to grow as we move through 2010. The increase in ethanol demand and potential increase in exports to China have the potential to drive usage up to the 13.2 billion bushel to 13.3 billion bushel level.


IMPLICATIONS: I’m a supply bear, but still very concerned about this spring and summer weather potential merging with prospects of growing demand. This all implies that producers who follow our selling strategies and recommendations in April need to be defensive in upside risk exposure in June and July. I suggest focusing on developing a limited cash flow exposure position if $4.15 to $4.25 December corn is seen in April or May. Once we get closer to the late July to early August time period, roll the long put position into a short futures or cash position once we are comfortable with the yield prospects.

Again, I suggest being a strong spring seller, but with a close eye on upside risk exposure. The markets could be very volatile, which many times is a producer’s biggest frustration.

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. 2010.
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COMMENTS (37 Comments)

Anonymous
We need every corn belt farmer to be a 100% sold like Bob says and plant 120 million acres. Thus collecting on ACRE and SURE and perhaps RA insurance policies. Than sell soybeans for $20.00
10:09 AM Mar 30th
 
Anonymous
Their only option would be to increase wheat acres more than expected. Wheat already in the dumps. Thus increasing corn and bean acres to high end of expectations. Also with lower quality corn and test weights, somehow lower feed and ethanol usage. Making more ethanol out of poorer quality corn and livstock guys somehow feeding less corn even though quality isnt there. Hows that for a reverse bias bullish statement or something like that. Anybodys guess.
9:49 AM Mar 30th
 

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