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.
Heavy Bullspreading Leaves Markets Mixed
Jun 05, 2013
Old crop corn and soybeans settled higher while the new crop contracts had double digit losses. Ethanol production was strong today and the tightness of old crop soybeans continues to provide underlying support to the July and August contracts. Informa lowered their wheat production estimate to 1.494 billion from 1.529.
We continue to get market reminders of the tightness and positions of old crop soybeans. The sharp moves in the July – November spread could be from certain market players caught short. When July – Nov hit the high on May 23rd it was on rumors of Chinese crushers caught on some un-priced basis contracts. Today we didn’t hear much for rumors and it may be the market is running the shorts in without a large supply available for delivery. Take a look at the July – November soybean spread in the chart below:
July – November Soybeans
December corn is back to the 50 day moving average. If this level is breached overnight, the next downside target is the gap fill of 5.36 ¾ (see chart below).
December 2013 Corn
The next major report will be the WASDE on Wednesday June 12th at 11:00am. We expect corn option volatility to remain above 30 between now and then. Soybean volatility is near 24 percent which is well above the 50 day moving average of 20.21. Generally I would say these levels are relatively high which means options are a little pricey. If you need to buy price protection we can look to offset these premiums using collar strategies and other forms of short options *note these can be marginable. For now we want to stay well hedged going into the summer timeframe. For complete hedge recommendations please sign up using the link provided.
Corn is now at 91% planted compared to 95% on average at this time. Soybeans are 57% planted compared to 74% on average. Corn’s crop condition is 63% good-excellent and 74% emerged.
Premier full service commodity brokerage offering risk management services for the agricultural sector as well as professional traders.
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. You may not place an order to buy or sell commodity futures contract by e-mail. 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. EHedger LLC will not disclose anyone's position due to their confidential and proprietary nature. Recipients assume the risk of reliance on and indemnify and hold EHedger LLC harmless for any and all losses, costs, or tax consequences incurred as a result of their use of market information. The contents of this e-mail message and any attachments are intended solely for EHedger LLC's customers and brokers. This communication is intended to be and to remain confidential. Any duplication or distribution without the express written consent of EHedger LLC and this disclaimer is prohibited. If you are not an intended recipient of this message or if this message has been addressed to you in error, immediately alert the sender by reply e-mail and delete this message, its attachments, and any related messages from your computer and destroy any hard copies. If you are not an intended recipient or this message has been addressed to you in error, you are prohibited from delivering, distributing, disclosing, printing, copying, or relying on this message and/or any attachments. Opinions are solely those of the author and subject to change at any time, and are not a solicitation or recommendation to buy or sell commodity futures or commodity options. Past performance is not indicative of future results.