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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.

Tough for position traders but great for day traders!

Jun 25, 2008
The market has now adjusted from an overbought situation. Some of the bulls have taken profits on both corn and beans.  The trade is now awaiting more solid update of planted acres and yields and it is going to be disappointed with the USDA June Acreage report.  Add to this that the corn and bean crop are generally looking better from the road and it will be difficult for the market to rally in July. The only wild card now is if Congress would start to act to restrict speculative investment. 

There is growing concern that politicians are looking for somebody to blame for higher corn and fuel prices, instead of looking at themselves and our insane national energy policy. The big long speculative funds in the market are getting the blame for high prices and Congress will eventually do something due to public pressure. The answer is simple; to get prices long-term lower we have to raise prices to such a high level that usage will be rationed and investors will be motivated to find new sources of energy due to high profits.  The problem is who’s going to get elected on a strategy of short- term pain for long-term benefit

Overall, I expect price trends to continue to be a short-term high between now and early July and a sideways to choppy affair for most of July to early August.  This makes great markets for day traders but a difficult job for position traders. 

Corn will be the dominant commodity between August to early next year to rally. Bottom line: I like being long corn via short puts, long calls or long futures.  In regards to beans, my convictions are not as strong. I see the potential of larger acres being bearish but potential for yields closer to 40 bu. being bullish. When I sum it up I don’t believe we can go to $20 on current fundamentals but neither can we get below $10. This implies to me producers would be better off taking the $15 beans and lay off risk to the upside with a 4 to 5 vertical and being done with beans.
Give us a call at 1-800-832-1488 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.

The recommendations and opinions contained herein are based upon information from sources believed to be reliable. However, that information may be incomplete and unverified. There are numerous factors that can affect the markets, which cannot be fully accounted for in the preparation of these recommendations. Those following these recommendations do so at their own risk. The firm and/or customers of the firm may take a position that may not be consistent with the recommendations herein. Any recommendation does not constitute an offer to buy or sell or the solicitation of an offer to buy or sell any commodity interest. Commodity trading involves risks, and you should fully understand those risks before trading.
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COMMENTS (1 Comments)

Anonymous
thank you bob, insane energy policy is right. Glad someone in the grain business has the balls to say it. Vote for Bob
3:33 PM Jun 25th
 

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