By: Bob Utterback
, Farm Journal
Bob Utterback has more than 26 years of experience and offers producers a disciplined approach to marketing.
Market rally continues!
Dec 15, 2008
The market rally continues, but questions start to be raised as to how much more is left.
Carryover was increased in corn to more than 1.4 billion. My concern is livestock usage is still low and will be lower in the first half of 2009. The market went lower, then Spark’s numbers triggered a very bullish rally late week.
Just think about the potential for lower acres this spring and lower carryover numbers next fall had more influence over the market than near term bigger carryover and lower demand. So I have to say that I’ve been more than a little puzzled by recent rally from an oversold $3.065 on Dec. 5 to today’s high of $3.91 or 84.5 cents in five days.
Some in the trade are suggesting the bottom is in and all troubles are behind us. I beg to differ. The recent five-day rally is not justified in my opinion. A carryover of more than 1.4 billion bushels of corn should keep corn markets closer to $3 than to $4. While just back from vacation, I’ve already heard from several clients and the attitude is uniform—they would rather produce $4 cash corn than $8 cash beans.
Conclusion: If you have cash sales to make, I would be taking advantage of this rally to move inventory. End of year price pressure is still expected.
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