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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.

Outside Markets Driving Grains Higher

Nov 09, 2009
The outside markets are at it again. Gold is at new highs, while the U.S. dollar is getting slammed and the equity markets are on the positive side. This primal force of bullish momentum was enough to lift the corn market during last night’s trading session and extended into today’s trading session.  

December corn and November beans have bounced off what should be considered important technical support levels today. As long as December corn can remain above $3.60 and January beans above $9.50, it appears the gains could be dragged up by the outside markets even though the crop is being harvested.

We have a monthly supply/demand report this week. Since harvest has been really delayed, there should not be much harvest data in the report. This would suggest there should be no major adjustments on the supply side. One could be expect a bullish adjustment on the demand side because of the general negative tone of the U.S. dollar and potentially expanded exports.

Overall, I suggest producers to be sellers of beans off the combine anytime soybeans can get above $10. I still believe in storing corn because of decent carry incentives. Please remember that, once the market achieves the desired selling target price for the 2010 corn crop, one should focus on keeping hedges in the weakest month. Right now I suggest focusing on selling the July 2010 corn contract above $4.50 and the November 2010 soybeans contract above $10.25.

As for selling increments, I suggest at least a sale of expected corn and sale of ½ of expected soybeans if targets are reached. Also note I am very concerned about first of the year weakness that could possibly develop in all commodities. Try to avoid any type or pricing for corn, soybeans and wheat between January and March if at all possible.
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
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 (25 Comments)

Food
Dairy Farmer - No, we do not have a price floor that ensures a break even. Throught government loans, we are sort of gauranteed a price, but it is pretty low. The ACRE program is supposed to be more of a revenue protection program, but as it is new, no one really knows how it will work. (I say no one, but I'm sure there are at least a few out there that are smarter than me that do) I used to recieve "direct payments" that were designed to help me out, but this year input costs were outrageously high, and although I am not in danger of a huge loss, I'm sure that those cash renting, or making payments on land, wil be fairly tight. My Breakeven on corn is close to 2.80/bu., but if I had the added expense of cash rent, that would be closer to 3.90/bu.. Not much margin for error. You are right to be lookig for a reason you are being squeezed, so are we. What I see, is that our suppliers saw a runup in grain prices, and took full advantage to run up our fertilizer and chemical costs. I also believe that the paper markets are distorting the cash market. It will correct, but I believe it will take a while. I understand that you all are also facing some tough times as the few who buy your milk are playing games with you. It's tough now, but I'm sure that prices will correct, and when they do, you can expect massive amounts of squealing from the public, and our legislators to react unfavorably..
12:33 AM Nov 17th
 
Dairy Farmer
No one has answered me, so I will take it that you are guaranteed breakeven.
2:08 PM Nov 14th
 

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