Published on: 15:26PM Jun 26, 2008
The market jumped sharply today in both corn and beans. Wet weather, good export buying and an overall concern about next Monday’s USDA Acreage report where the reasons cited. I have to suggest to everyone it’s not really good for the bull to be so strong before a major report. My bias going in is it will be very difficult for this report to be bullish. Long term, the acres reduction expectation in the August USDA Supply and Demand report reflecting flood damage will eventually show up, it’s still in the future.
Remember a bull has to be fed everyday. Once we get into July the corn and bean fields will start to look solid from the road. If the Commodity Futures Trading Commission (CFTC) is forced to move forward with regulation to limit large speculators in the oil complex it could add some definite bearishness to the July time period.
It may sound like I’m reverting back to my old bearish ways but I’m not really negative to corn and beans. I want to be a solid buyer of December 2008 corn going into the last week of July if we can get a solid sell off (say some place below $7.25 in the Dec corn). As one looks forward into the December to March time period, I believe we have the potential of having carryover below 250 million bushels or lower. This is going to force demand rationing which we are not seeing at $8 corn.
In summary: If you get big long profits, you really need to take some off the table or defend by buying a put for the report. The bigger decision you really need to decide over the next three to four weeks is how you want to position yourself for the lifetime event of multiple year selling between December and March. Now is the time to be talking to your advisor at Utterback Marketing Service to decide upon process, getting your banker lined up and having all individuals on the same page.
Remember, with the high profits grain farmers are perceived as making we are not going to have the consumer, end user and government officials on our side as grain producers. If Mother Nature cooperates in 2009 and gives a good crop price, we could have a sharp correction by the fall of 2010 and you are going to be the one having to protect the bottom line.
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