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Tough Decisions to be Made in 2014

Published on: 08:12AM Dec 19, 2013

The bin doors have shut and many were expecting the market to begin to bounce off fall lows and for the most part the corn market has shown us that it does not have the strength to sustain a move higher and it is too early for corn to go much lower. With the market being in a sideways trading band, many are concerned with 2014 and where prices will be next year. 

The bottom line:

Demand growth will not overcome growing supply. The only option we have for higher prices is a combination of less than 92 million planted acres and yield below 158. If carryover is between 1.8 and 2.1, the Dec contract should bottom out around $4.10; if carryover goes above 2.5 billion, futures prices next fall could easily drop below $3.50. Subsequently, waiting for higher prices will only pan out this summer if there is a significant yield reduction event. If not, by the time you realize the crop is OK, it will be far too late to sell in our estimation.
 
As for soybeans, once South America’s soybeans move into the marketplace, a long-term downtrend should develop. If producers follow through with their intent to increase planted acres, the downside risk in soybeans could be significant. We still believe it is critical to get downside price protection in place. Our bias: Have a flexible strategy like being long puts rather than short cash or short futures this early in the year.
 
If anyone feels they need to put structure into their risk management program and would like to discuss marketing strategies, call Bob or Laura (1-800-832-1488). We will also try to answer questions in upcoming blogs and we welcome emails to laura@utterbackmarketing.com or utterback@utterbackmarketing.com.
 
THIS MATERIAL HAS BEEN PREPARED BY A SALES OR TRADING EMPLOYEE OR AGENT OF UTTERBACK MARKETING SERVICES, INC. AND IS, OR IS IN THE NATURE OF A SOLICITATION. THIS MATERIAL IS NOT A RESEARCH REPORT PREPARED BY UTTERBACK MARKETING SERVICES, INC. BY ACCEPTING THIS COMMUNICATION, YOU AGREE THAT YOU ARE AN EXPERIENCED USER OF THE FUTURES MARKETS, CAPABLE OF MAKING INDEPENDENT TRADING DECISIONS, AND AGREE THAT YOU ARE NOT, AND WILL NOT, RELY SOLELY ON THIS COMMUNICATION IN MAKING TRADING DECISIONS.
 
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