By: Bob Utterback
, Farm Journal
Bob Utterback has more than 26 years of experience and offers producers a disciplined approach to marketing.
Positive bounce in the market prior to tomorrow's report
Dec 10, 2008
The corn and bean markets saw another positive price bounce, but concerns persist! After last Friday’s wash out and early week price recovery, many around the trade want to be the first to say the lows are in for many of the commodities. While I would love to embrace that assumption, I believe we need a solid retest-and-hold situation to say the worst is behind us.
I believe there is the possibility of a retest over the next three weeks. First, expect this week’s USDA Supply and Demand report will more than likely have limited supply reductions and some downward adjustments in demand. In my opinion, carryover will drift up rather than down. My second concern is dumping losing positions for tax purposes between mid-December and the end of the year. I really don’t know if there will be any dumping of contracts, but if there were ever a year for this type of event to occur, this year would be it.
The outside markets, specifically crude oil, are a concern. The talk is Saudi Arabia will announce that they will reduce production. As many in the trade have suggested, it is one thing to announce it, but it’s another to get compliance. Will the other oil countries that are strapped for cash flow comply and keep production in check or will they increase production for much needed money at the Saudi’s expense?
Finally, more job layoffs are being announced almost daily. Many worldwide economies seem to be slowing down daily. Implication: How will demand [domestically and internationally] be affected? Right now one would most likely be a little cautious on projections. I expect this tone to be present for the first quarter of 2009.
Will we see the market correct and hold between now and the end of the year? If the market does this, there should be some [technical] confidence that a low has been confirmed. As to the level of the price recovery, it’s going to be slow and limited until we confirm three things: how bad has demand been hurt, how many acres are expected to be planted, and what type of planting weather are we seeing?
I’ve been on vacation in Florida and enjoying the 60°F and 70°F days. Next week I’m back at the office, along with the cold weather and snow. Have a good day!
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