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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.

EHedger Afternoon Grain Commentary 7-28-2011

Jul 28, 2011

Low corn and soybean export sales as well as weak crush numbers spurred a small selloff in grains today.  December corn ended 5 ¼ cents lower at $6.86 ¼, December wheat down 10 ¼ cents at $7.35, and November soybeans down 9 cents at $13.71 ½.

Weekly export sales came in below the estimated ranges for corn, and beans, but were decent for wheat:

Estimates for weekly exports sales are as follows:

                                  Estimated Range                     Actual

Corn:                           550,000-950,000 MTs             484,900 MTs

Soybeans:                    550,000-850,000 MTs             372,700 MTs

Wheat:                        300,000-500,000 MTs             473,800 MTs

June crushings came in at 124.318, which is below the estimated range of 124.5-125.4.

There is a big difference of opinion on crop size, and a big difference of opinion on demand size.  We won’t argue that if weather stays hot and dry in August, we can get to the yield estimates that some of these analysts are talking about.

As we all know we don’t have to have record yields everywhere in the Midwest to get to trendline.  Right now trendline for corn is sitting at 164. We have to mark down some of the bushels from the inclement weather. We are bringing our estimate down from trend by 4 bushels to 160. Analysts who are trading a 152-155 yield are predicting there will be a 10+ bushel drop from trend, and this is what is factored into today’s price. 

Crop condition ratings are almost at the 10 year average for the good-to-excellent categories.  From what we are seeing right now, it doesn’t seem likely that we are going to get a massive bushel reduction from trendline. What will happen to the price of Dec corn if we end up with a 158-161 yield? And what will happen if demand is overstated?

Right now the strongest demand we have seems to be in the futures.  We have witnessed demand destruction in the weekly ethanol numbers, as well as the livestock.  For us to remain priced where we are in the global market I believe we will have to end up seeing another sharp break in the dollar, or further weather events to lower yields.

It is a good idea to go over your hedges again to make sure your operation has adequate coverage.  If you want extra protection on bushels expected over and on top of your guaranteed production, please call your broker to go over some put strategies.

Best Regards,

EHedger

 

For a free trial of EHedger services including the morning automated phone call, daily afternoon market commentary, and/or a free consultation, please contact EHedger at 866-433-4371. You can also visit us at www.EHedger.com.

 

Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. The market information contained in this message has been obtained from sources believed to be reliable, but is not guaranteed as to its accuracy or completeness. Market information may not be consistent with current or future market positions of EHedger LLC, its affiliates, officers, directors, employees, or agents.

 

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