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EHedger Report

RSS By: Dustin Johnson

Dustin works with a wide net of large producers throughout the Midwest. His analytical market approach and objective hedge strategy development is specific to the needs of every individual.

Closing Commentary 5/26/10

May 27, 2010
Today saw buying come back into the corn market as rumors that the Chinese are looking to pick up additional import licenses caused July corn to settle 7¼ cents higher at $3.71½. In addition to these rumors, the outside markets lent support for the whole session as crude oil traded $1.50 to $2.00 higher. The outside markets continue to whip around and are causing volatility to be a very common theme in our grain markets. Weather hasn't changed much; we are still looking at favorable growing conditions for most of the region through the weekend before a rain system looks to roll through early next week. If the weather stays good through pollination, we will likely see December futures trade under $3.50 and head even lower toward harvest. If the weather turns for the worst here in the U.S. and/or in China this growing season, we should see corn prices find a bottom in the coming months. Tomorrow morning we will have export sales numbers at 7:30 a.m. The average guesses for corn sales are 1,000,000 to 1,300,000 mt. We will release this number in our morning letter. I still think we are positioned well at this time. For those producers who still need to get caught up on the hedge recommendations that we have issued, please call your broker and discuss the available plan for your operation.
 
Based on support from the higher bean oil market and stronger corn market, the July soybean contract finished the day 7½ cents higher at $9.38. As a result of the sharply higher crude oil market, bean oil saw a sharp rally. This, coupled with a good performance in the corn market, kept beans from trading back toward the trendline we have been discussing in November beans ($9.03). Based on the fundamentals that we have right now, we feel that the bean market may be susceptible to a further break from these levels if the weather continues to hold. The record South American crop continues to come on line and global stocks this fall will be 45% larger than last year. We will still have to grow a crop here in the U.S., obviously, but if we do have trendline yields, we could see much lower prices this fall. A lot can change (and usually does!), but if you are not caught up on sales, I would look for a rally back toward $9.30 to $9.50 in November soybeans to do so. The export sales guesses are between 450,000 and 650,000 mt. Census crush is also coming out tomorrow, at 7 a.m. The numbers will be posted in our morning letter. For those producers who have their hedges in place, we would continue to stay hedged. For the producers that still need to protect new crop bean sales, please give your broker a call to discuss the available strategies that we have.
 
Wheat was a follower of the higher corn and bean market for the entire session before finally finishing 1¼ cents higher in the July Chicago contract at $4.61¾. The wheat market continues to come up against bearish fundamentals, with global stocks rising and harvest pressure coming out of the south. After the grain markets closed, the euro broke sharply to the lows, and this may continue to pressure the wheat market, given the amount of wheat that is exported out of Europe. In order to be a player in the export markets, we have to be competitively priced against European wheat. Tomorrow morning's guesses for wheat export sales are between 350,000 and 450,000 mt. There are still strategies that we are implementing for wheat producers, so if you are in need of a strategy, please be sure to get in touch with your broker.



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