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Grain markets up on potential weather concerns!

Published on: 15:27PM Apr 02, 2009
Today was the first official day of spring follies! Yes that’s right, concern about getting the crop planted is now moving to the head of the class. Because of the cool and wet temps, concern is growing that crops will not be planted early. This could result in significant uncertainty as to yield. 

Essentially, the market is saying we need to put some more weather premium into the market. The net result is the market is starting to put sellers under pressure of margin call. Fundamentally, I still believe there are 7 million to 8 million acres unaccounted for that could end up in corn and beans. I’m still believe corn acres will eventually end up above 85 million and beans closer to 80 million if we give producers a chance to get the crops in place.

However, for now the market seems prepared to break above overhead resistance levels. In regards to corn, those levels will be $4.50 and then $4.75. If the market closes above these levels, watch out of for the bulls to try to run all the bears out of the market. In regards to November beans, we are right at the overhead resistance level. If it moves much higher there is the potential to move up to the $10.48 level. Frankly, I don’t believe there is a lot of reason for this type of move but as I’ve learned over the years the market does not need to be logical all the time, this is a time of emotion and fear.  

In summary: I would prefer to be buying puts rather than selling cash or futures until mid-June. As for selling calls be cautious and have a plan for defending if we get clear technical breakouts.

Outside markets: Please note that I still want to be a seller of bonds on a rally to 125 in June. I hoped to get something out of the G-20 meeting but it does not look like it’s going to happen. The other commodity I’m watching closely is buying gasoline in the December contract on a price correction. I’m still of the opinion the energy markets are currently overbought and one should wait for more corrections before starting a long term accumulation position. I will talk about lumber, cotton and silver tomorrow.

If you want to go over details or would like to read more recommendations regarding reownership or marketing strategies, email me at utterback@utterbackmarketing.com or laura@utterbackmarketing.com.
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