Utterback: Sell Slow, Wait for Upcoming Market Opportunities

Harvest in west central Missouri ( Sonja Begemann )

Short crops have long tails, according to Bob Utterback, of Utterback marketing. He is more bullish than typical as he watches the weather market continue to provide sales opportunities for 2019 and, soon, 2020 crops.

We haven’t seen a market like this since 1993,” Utterback told U.S. Farm Report Host Tyne Morgan. “So, we don’t have a lot of history to look at.”

The weather still presents unknowns for producers.

“We won’t fully know the effects of the weather until the January crop report,” said Chip Nellinger. “It’ll be a later-than-average harvest, we don’t know what the effect of late planting is, what prevent planting is and we won’t know that until January.”

That uncertainty can work in farmers’ favor, if they take advantage of it.

“Be a slow seller of corn from this point if you haven’t gotten this year’s crop sold,” Utterback said. “Think about the 2020 crop and the high profits that could be locked in this fall. We won’t see corn below $4.20 on the down side, but we can’t go much above $4.60 until we know more—September/October.”

Demand is the big question mark for traders right now, and it was reflected in the most recent Crop Progress report.

“Demand is definitely the weak link in corn and beans both,” Nellinger said. “Fair price will ebb and flow with each crop report and market data. Right now, fair price is in the $4.30 to $4.30 range in corn and beans in the $8.90 to $9.20 range. There could be a lot of volatility in that.”

Keep a plan in mind while waiting for harvest results and potential opportunity for 2020 crop to ensure the 2019 crop is covered.

“Sell at the $4.60 levels but don’t sell above the 50% range and leave hedging money for 2020,” Utterback says. “This year is going to do more to discourage farmers from forward selling. If we get an August correction and we’re too far from the new crop, I would buy a call to insulate myself. If we get the fall bounce, you can sell 2020 crop at above production levels.”

It might seem bold, but it’s a good idea to start selling the 2020 crop early.

“You would have to have two bad weather years in a row to make selling for 2020 a bad idea,” Utterback explained.