Consider Storing & Delivering in March, especially wheat & only Beans surprised anyone this week.
Sep 19, 2010
Look at your storage costs if you think you may have unhedged product at the end of harvest. At this moment, March contracts in all three products are above both December (November for beans) and December 2011. If the cost of storage is less than 15¢ differential in beans, maybe you do better to store a couple of bushels. The differential in corn is about 12¢ but in wheat it is close to 30¢. I’m suggesting selling March contracts with the intent of delivering product to close the contract. Actually, I’m suggesting that each grower consider that strategy, see if it makes financial sense.
Beans surprised both the commercials and the funds. Funds increased longs at an increased rate from the prior six weeks. Commercials sold most of those contracts to the funds, and the small specs continued to reduce their shorts. It was "Friday Surprise" week, as all the price increase and most of the volume came on Friday.
Corn jumped up on Friday and had gains earlier in the week, but surprised neither the commercials nor the funds. Although the funds have not actually started selling (net selling – individual funds may be doing some selling), they sure look like they are getting ready. The commercials look as if they are ready to buy back their shorts, soon as the funds are ready to sell. We shall see.
Wheat surprised no one and everyone by going nowhere. December was up 2½¢ on the week. Commercials got marginally shorter & Funds got marginally longer.