EHedger Afternoon Grain Commentary 11-16-2011
Nov 16, 2011
Grains finished the day lower reversing some of yesterday’s gains. Wheat was originally leading the support today but by the end it was the downside leader down 16 cents. December corn finished 2 ¾ cents lower and January soybeans 12 ½ cents lower.
For the first time since July we have crude oil trading back above $100 per barrel. It is interesting to point out that at this time in 2008 the 50 week average corn price was about $5.38 while the average 50 week crude price was about $106. Now the 50 week average for corn is at $6.83 while the crude oil is at $94. We also had wheat about 50 cents more expensive then as it is now (50 week average). There are many reasons for these prices but it is interesting to see where we line up comparatively.
There were more reports of feed wheat purchased by S Korea this morning. They purchased 55,000 MTs of option-origin corn and 55,000 MTs of option origin feed wheat. I still think the world wheat supply and discount to corn is going to weigh on corn prices here in the US. Beans are still well oversold to corn but demand hasn’t been all that great to warrant a strong rally. Today we found more upside resistance on that month-long trendline (see chart).
Export sales will be released tomorrow and estimates are as follows:
Corn: 250,000 – 600,000 MTs
Soybeans: 450,000 – 700,000 MTs
Wheat: 300,000 – 500,000 MTs
Cattle on Feed will be released Friday and expectations are as follows:
On Feed November 1st 104%
Placements During Oct 99%
Marketings in Oct 101%
For now we want to take advantage of this strong basis in the cash market where possible. It is not hard to believe that we ration enough corn demand that we are trading lower than these levels going into next year. If you would like a free consultation for your 2012 marketing strategy, please call us at 866-433-4371 or signup for our research using the link below.
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Chart: January Soybeans