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Outlook Today

RSS By: Bob Utterback, Farm Journal

Bob Utterback has more than 26 years of experience and offers producers a disciplined approach to marketing.

Grain Outlook: A Tale of Two Crops

May 16, 2011

Last week’s break in the commodities was more to do with the weak tone of the outside markets than corn fundamentals. We would suggest the current concern regarding demand bearishness has crested for now and the focus is now turning back to supply or planted acres. This year it looks like it is going to be a tale of two crops. The western crop is starting off great while the eastern crop in many cases is not even in the ground. 

Looking forward I expect the western states will have to deal with the heat and drought conditions in Texas moving north while the east will be simply worried about timely rains. The current USDA estimate of 158.7, to our way of thinking is going to be close to the high end and more than likely could fade a little if any dry weather stress develops in July and August.
 
Over the next two weeks, we will be focused on how many corn acres are getting planted and how many could potentially be switched from corn to beans. I’m in the camp that the 92.2 million acres is high and will drop closer to 91 million or lower by the June Acreage report.  This would imply the bulls will have the upper hand in the market until late June. If we don’t have some really bad heat to move into the Midwest, we should see a June high. 
 
If these fundamental assumptions are accepted, more than likely one will end up with the belief that the market can be positive over the next 30 or 45 days but it can’t be explosive unless a major dry weather event is seen or crude oil starts to make new highs. Because of these basic assumptions, I have to say new crop Dec corn should find it very difficult making it back above the $6.70 level.
 
Just a side note: Many advisory services are suggesting it is the time to be watching basis bids for both old and new crop. We are hearing from farmers that the basis bids are being increased significantly. We would expect the best basis bid to be present between now and mid July. So if you have sold the cash but left open the basis I would be getting ready to lock up the basis level by early July.
 
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. 2011.
 

 

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COMMENTS (1 Comments)

steffy
Contrary to what you think the crop is not getting off to a great start in the west.Soil temps are not allowing for germination and way to much corn went in the ground in poor conditions.I've had corn in the ground for 2 weeks and it is not up yet.Lows in the 30's and highs in the 50's is not conducive to fast emerg.
1:50 PM May 17th
 

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