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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.

The bulls are having steak tonight!

Aug 21, 2008

The bulls will be eating steak and drinking Champaign tonight!  The rallies today were impressive across the board. Gold has now moved above $800, Crude oil bounced off the 112 level and attacking 120, and the dollar was sharply weaker across the board. All of the outside factors are supportive to commodities.
 
In regards to corn it was strong from the opening bell and moved higher leaving many wanting to be buyers in its dust. The corn market is now approaching technical overhead resistance level that should be very strong. If you look at the chart below there are several chart points which indicate massive overhead resistance at $6.30 to $6.50 price range. If we take these levels out I would have to believe it would be solid confirmation that the crop yield has been significantly impacted. I would suggest producers need to be in a “put format” right now. That means limited cash flow risk and I would generally suggest no more than a 50% hedge position. If you short futures roll into puts, if your short cash, put some form of vertical call strategy in place. 
 
 
SOURCE: CBOT PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. 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.
 
The Nov. 08 bean chart shows the market moving back above previous uptrending support which is very positive. The next really important hurdle will now be between $14.25 and $14.60. If this level is closed above with good volume one has to expect a complete 100% retracement back to the old highs.
 
 
SOURCE: CBOT PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. 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.
 
What’s pushing the market so much?  Well it’s the crop conditions. With the head and lack of rain the crop is dropping in overall quality. The question is how much? Right now the trade is attempting to factor in all the bullish potential of the market. It’s essentially trying to ration usage a little now in case the crop is actually lower than anticipated. The risk I see developing is if a frost event does not occur we could have most of the bullish expectation in this market by the first week of September. So new buying at this late time schedule has to be very cautious. I like in the money calls or long futures and short deep out of money calls.
 
It should be note worthy that wheat market is now in a very bullish profile.   Strong exports are pushing wheat higher right now. In fact we sold a good chunk of wheat to IRAN.  This is motivating a solid price breakout. 
 
The July 09 wheat chart has broken above the uptrending support line. As a producer of wheat you should not allow the market to move back below the $9.20 level before starting on a floor on positions and you should be 100% protected if the market starts to close below $8.50. As for overhead resistance we should have a lot of problems around $10.20 to $10.35.  I have to suggest the wheat rally right before planting time is the best thing we can see to encourage increased plantings. 
 
 
SOURCE: CBOT PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. 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.
 
Of all the commodities right now wheat is my highest watch list for getting a floor on positions. If your cash flow is tight, you are going to be forced to buy puts. If your banker understands margin calls now is the time to start scale up selling to lock up a good 2009 price and if prices move significantly higher lock up a great profit for 2010. Remember, there is a lot of land in many parts of the world that could easily come back into production in wheat. Over $10 wheat, I have to be believe, will encourage such acreage growth.
 
If you want to go over details or would like to read more daily recommendations regarding reownership or marketing strategies, email me at utterback@utterbackmarketing.com or laura@utterbackmarketing.com.

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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. 2008.
 
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