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October 2010 Archive for 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.

EHegder Closing Grain Commentary 10/28/10

Oct 28, 2010

 

 

 

 

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Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. 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 E Hedger, its affiliates, officers, directors, employees, or agents. Recipients assume the risk of reliance on and indemnify and hold E Hedger harmless for any and all losses, costs, or tax consequences incurred as a result of their use of market information.

 

 

Thursday corn and soybeans were higher with wheat again leading the way sharply higher.  The US dollar was sharply lower throughout the day and it was surprising to see modest gains in corn and soybeans with the dollar down over 900 points.  At settlement December corn was 1 ¾ higher, November beans were 1 ¼ higher, and December wheat was 15 ½ higher.

 

Weekly exports were in line with estimates for corn and wheat, but were once again strong for soybeans due to strong Chinese demand.  Soybean exports were 2.025 million metric tons, 1.37 of which was contracted to China.  November beans reacted early to the news but were unable to hold the strength and finished only slightly higher.

 

There has been recent speculation circulating the market that China will start buying US corn.  Corn has already been bullish from weak production in the US so if we see a spike in corn demand from China it would be considered very bullish. Soybean demand has been strong but much of this demand has already been projected.

 

Wheat was the upside leader again today.  The funds have been net short Chicago wheat against net long corn and soybean positions.  They are likely exiting many of these positions after the latest crop conditions report showed winter wheat at only 47% good to excellent compared to 62% this time last year.  Over the past week wheat has been at its cheapest levels compared to corn and beans for a long time so it didn’t take much for those spreads to reverse.

 

Between now and the next WASDE report (November 9th) we like staying well protected in cash sales and have our upside potential in spring call spreads.  Please call your broker if you still need to get the spring call spreads on.

 

EHegder Closing Grain Commentary 10/27/10

Oct 27, 2010

Wednesday corn and soybeans were higher with wheat again leading the way sharply higher. Just like yesterday we came into the day lower from the overnight trade but quickly found buying support in the day session.  At settlement December corn was 6 ¼ higher, November beans were 4 ¾ higher, and December wheat was 10 ¾ higher.

 

Many times this year traders bought grains on Wednesday in anticipation of a bullish export sales report on Thursday morning.  There has also been recent speculation circulating the market that China will start buying US corn.  Corn has already been bullish from weak production in the US so if we see a spike in corn demand from China it would be considered very bullish. Soybean demand has been strong but much of this demand has already been projected.  Tomorrow the estimates for weekly exports are 600,000-900,000 MT's for corn, 1,100,000 - 1,150,000 MT's for soybeans, and 600,000-800,000 MT's for wheat.

 

Wheat's strength is still mostly attributed to the fact that the funds are net short Chicago wheat against net long corn and soybean positions.  They are likely exiting many of these positions after the latest crop conditions report showed winter wheat at only 47% good to excellent compared to 62% this time last year.  Over the past week wheat has been at its cheapest levels compared to corn and beans for a long time so it didn't take much for those spreads to reverse.

 

 Crop progress shows harvest at 83 percent complete for corn which is well above the 5 year average of 49 percent at this time of year.  Soybean harvest is at 91 percent complete and is ahead of its 5 year average of 72 percent at this time of year.

 

Between now and the next WASDE report (November 9th) we like staying well protected in cash sales and have our upside potential in spring call spreads.  Please call your broker if you still need to get the spring call spreads on.

 

Get More From EHedger.

 

Our commentaries are just one part of our whole risk management service. Please go to http://www.ehedger.com/getmore.html for a free two-week trial of our full member website that gives you access to all our hedge and marketing recommendations, educational tools, market snapshots and much more.

Also learn about our acclaimed AMMO Program that helps producers optimize their marketing strategies using the premier tools and insights in the industry.

  

Get Organized. Get Ahead. Get EHedger

 

Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. 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 E Hedger, its affiliates, officers, directors, employees, or agents. Recipients assume the risk of reliance on and indemnify and hold E Hedger harmless for any and all losses, costs, or tax consequences incurred as a result of their use of market information.

EHegder Closing Grain Commentary 10/26/10

Oct 26, 2010

Tuesday corn and soybeans were slightly higher with wheat leading the way sharply higher.  Coming into the day session the overnight trade was weaker and the US dollar was sharply higher.  The market opened on its day lows and traded sharply higher by noon.  At settlement December corn was 2 ¼ higher, November beans were 1 ¼ cents higher, and December wheat was 18 cents higher.

 

Wheat’s strength can be mostly attributed to yesterday’s crop rating of winter wheat which was only 47% good to excellent compared to 62% this time last year.  The funds are net short Chicago wheat against net long corn and soybean positions.  So with a bullish Winter Wheat crop rating, it is a strong catalyst to take profits on these spreads they are in.  Over the past week wheat has been at its cheapest levels compared to corn and beans for a long time so it didn’t take much for those spreads to reverse today.

 

 Crop progress shows harvest at 83 percent complete for corn which is well above the 5 year average of 49 percent at this time of year.  Soybean harvest is at 91 percent complete and is ahead of its 5 year average of 72 percent at this time of year.

 

Grains continue to be highly affected by changes in the US dollar.  Corn remains bullish from lower than expected production, but corn demand hasn’t been much of a story lately.  For beans the opposite: world production has been strong but so has expected demand.  This goes right along with what we have been hearing from the fields: on average variable corn yields and strong bean yields throughout the belt.  We could easily see a further reduction in the national corn yield and an increase in the bean yield in the next WASDE report (November 9th). Between now and then staying well protected is important especially since the first set of moving averages are well below current levels and volatility remains high.  For upside potential please call your broker if you still need to get spring call spreads on.

 

 

 

Get More From EHedger.

 

Our commentaries are just one part of our whole risk management service. Please go to http://www.ehedger.com/getmore.html for a free two-week trial of our full member website that gives you access to all our hedge and marketing recommendations, educational tools, market snapshots and much more.

Also learn about our acclaimed AMMO Program that helps producers optimize their marketing strategies using the premier tools and insights in the industry.

 

Get Organized. Get Ahead. Get EHedger

 

Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. 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 E Hedger, its affiliates, officers, directors, employees, or agents. Recipients assume the risk of reliance on and indemnify and hold E Hedger harmless for any and all losses, costs, or tax consequences incurred as a result of their use of market information.

 

EHedger Closing Grain Commentary 10/14/10

Oct 14, 2010

Grains were mixed today with November Soybeans finishing 12 cents higher.  December corn and December wheat both finished 2 cents lower.  

 

Corn traded both sides of the market again but failed to hold its early gains. We are probably seeing more profit taking as traders sell corn and buy beans.  NOPA crush came out this morning and it showed better than estimated 124.9 mill bu crushed (expected 116.5). As a result of the extra crushing soyoil stocks were higher than expected at 2.765 mill lbs.

 

The USDA announced the sale of 280,000 MT of US soybeans to China this morning.  Tomorrow we will have export sales in the morning.  Sales have been strong since the USDA report and the market is expecting large export sales numbers.

 

Expected ranges for export sales:

Corn: 1,500-1,800

Wheat: 500-700

Soybeans: 900-1,200

 

Yesterday the EPA approved an increase in ethanol blending up to 15% for cars made after 2007.  They will not approve the E15 fuel for cars made before 2001 at lease not this year.  The real question is what they do with the blending credit and what is the practicality of having multiple blends for multiple cars?  The blending credit is expected to slowly start to decrease but over a period of time.  We expect to know more about this administration’s plans for bio-fuels from USDA secretary Tom Vilsack next week.

 

If this buying spree continues, we could see a shortage of futures similar to the 07 wheat market.  As we learned that year many producers had cash sales on at $5 – 6 and basis went from 50 cents under to 3.00 under.  We are not predicting this will happen but it is something we can try to avoid by not taking the unnecessary risk of leaving the basis open.  This also puts most risk in the elevators hands and leaves the margin up to them.  Please call your broker to discuss strategies for your particular operation.

 

With a battle for acres corn/beans/wheat/cotton could keep feeding off each other through the March planting intentions report.  Having the March/May corn call spreads in place will give us upside potential against current sales.  If you need additional protection, please call your broker for current strategies.

 

 

 

 

Get More From EHedger.

 

Our commentaries are just one part of our whole risk management service. Please go to http://www.ehedger.com/getmore.html for a free two-week trial of our full member website that gives you access to all our hedge and marketing recommendations, educational tools, market snapshots and much more.

Also learn about our acclaimed AMMO Program that helps producers optimize their marketing strategies using the premier tools and insights in the industry.

 

Get Organized. Get Ahead. Get EHedger

 

Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. 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 E Hedger, its affiliates, officers, directors, employees, or agents. Recipients assume the risk of reliance on and indemnify and hold E Hedger harmless for any and all losses, costs, or tax consequences incurred as a result of their use of market information.

 

EHedger Closing Grain Commentary 10/12/10

Oct 12, 2010

·         The market made new highs for the move in corn

·         Corn traded near limit up today, beans followed sharply higher

·         USDA secretary Tom Vilsack is going to outline this administration’s plans for bio-fuels on October 21st.   Most people are expecting some sort of extension credit for the blender’s credit in 2011.

 

Grains were sharply higher again for the third day in a row.  Today was the first day the banks were back open after Columbus Day and we likely seeing short covering as well as new longs getting into the market.  The sharp rally in corn/soybeans today started about mid morning and was as high as 5.84 ¼ before settling at 5.79 (Dec Corn).

 

We are now 50 cents higher than Friday’s close in December corn.  Some strength may have been attributed to short covering from margin calls since the banks were closed yesterday.  The bulls are still in charge after Friday’s bullish USDA report.  If this buying spree continues, we could see a shortage of futures similar to the 07 wheat market.  As we learned that year many producers had cash sales on at $5 – 6 and basis went from 50 cents under to 3.00 under.  We are not predicting this will happen but it is something we can try to avoid by not taking the unnecessary risk of leaving the basis open.  This also puts most risk in the elevators hands and leaves the margin up to them.  Please call your broker to discuss strategies for your particular operation.

 

With last week’s sharp rally in corn, ethanol margins decreased 20 cents per bushel and are now negative (board margins). Blending margins decreased about 20 cents a gallon.  If energy prices stay here, corn would have to rally a $1 while ethanol would have to rally 30 cents to completely shut off the discretionary blender.

It all goes back to the corn bullishness. With a battle for acres corn/beans/wheat/cotton could keep feeding off each other through the March planting intentions report.  Having the March corn call spreads in place will give us upside potential up to $6.50 (March).  If you need additional protection, please call your broker for current strategies.

 

 

 

Get More From EHedger.

 

Our commentaries are just one part of our whole risk management service. Please go to http://www.ehedger.com/getmore.html for a free two-week trial of our full member website that gives you access to all our hedge and marketing recommendations, educational tools, market snapshots and much more.

Also learn about our acclaimed AMMO Program that helps producers optimize their marketing strategies using the premier tools and insights in the industry.

 

Get Organized. Get Ahead. Get EHedger

 

Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. 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 E Hedger, its affiliates, officers, directors, employees, or agents. Recipients assume the risk of reliance on and indemnify and hold E Hedger harmless for any and all losses, costs, or tax consequences incurred as a result of their use of market information.

 

EHedger Closing Grain Commentary 10/11/10

Oct 11, 2010

·         Corn traded limit up for most of the overnight session but came off limit for the day session.

·         Corn/Wheat/Beans/Soymeal/Soyoil will all go back to regular trading limits tomorrow.

·         USDA secretary Tom Vilsack is going to outline this administration's plans for bio-fuels on October 21st.   Most people are expecting some sort of extension credit for the blender's credit in 2011.

 

Sunday night the markets opened sharply higher in corn/beans surpassing the synthetic value from Friday's limit up close.  Corn stayed 45 cents higher (limit) for most of the night before coming off the highs just before the overnight close.  Corn settled the day session up 27 ½ cents after being unable to touch limit again in the day session.  Nov beans finished up 17 ½ and Dec wheat finished 10 cents lower.  Corn, soybeans, and wheat will all back to regular trading limits tomorrow.

 

If this buying spree continues, we could see a shortage of futures similar to the 07 wheat market.  As we learned that year many producers had cash sales on at $5 - 6 and basis went from 50 cents under to 3.00 under.  We are not predicting this will happen but it is something we can try to avoid by not taking the unnecessary risk of leaving the basis open.  This also puts most risk in the elevators hands and leaves the margin up to them.  Please call your broker to discuss strategies for your particular operation.

 

With last week's sharp rally in corn, ethanol margins decreased 20 cents per bushel and are now negative (board margins). Blending margins decreased about 20 cents a gallon.  If energy prices stay here, corn would have to rally a $1 while ethanol would have to rally 30 cents to completely shut off the discretionary blender.

It all goes back to the corn bullishness. With a battle for acres corn/beans/wheat/cotton could keep feeding off each other through the March planting intentions report.  Having the March corn call spreads in place will give us upside potential up to $6.50 (March).  If you need additional protection, please call your broker for current strategies.

 

 

 

Get More From EHedger.

 

Our commentaries are just one part of our whole risk management service. Please go to http://www.ehedger.com/getmore.html for a free two-week trial of our full member website that gives you access to all our hedge and marketing recommendations, educational tools, market snapshots and much more.

Also learn about our acclaimed AMMO Program that helps producers optimize their marketing strategies using the premier tools and insights in the industry.

 

Get Organized. Get Ahead. Get EHedger

 

Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. 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 E Hedger, its affiliates, officers, directors, employees, or agents. Recipients assume the risk of reliance on and indemnify and hold E Hedger harmless for any and all losses, costs, or tax consequences incurred as a result of their use of market information.

 

 

EHedger Closing Grain Commentary 10/7/10

Oct 07, 2010

·         Corn Stats: 37% harvested vs. 21% 5-year average.  93% mature vs. 79% 5-year average. Corn condition is unchanged from last week at 66% good to excellent vs. the 10-year average of 59%.

 

·         Soybean Stats: 37% harvested vs.  28% 5-year average.  88% dropping leaves vs. 85% 5-year average.  Soybean condition is up 1% from last week at 64% good to excellent vs.  the 10-year average of 56%.

 

·         USDA Supply and Demand report tomorrow at 7:30am.

 

·         USDA announced the sale of 822,960 MT of US Corn to Mexico for 2010-2011 delivery.

 

·         USDA also announced the sale of 110,000 MT of US soymeal to South Korea.

 

 

The grain markets were higher across the board on Thursday. December corn settled the day 9 ¾ cents higher at $4.98 ¼ after trading above $5. November soybeans settled the day 3 cents higher at $10.65. December Chicago wheat finished the day 1 higher at $6.59 ¼.

 

USDA released weekly export sales numbers this morning.  Corn exports were at 604,100 MTs which is at the low end of trade guesses.  Bean exports were on the high end of the estimates at 947,400 MTs, and wheat was above expectations at 808,400 MTs. These were a little disappointing since more demand was expected after last week’s price breaks. This could mean the end user already has feed needs covered.  Mexico came in and bought 822,960 MTs this morning which helped make up for the lower corn number.

 

The USDA Supply/Demand and Production report will be released at 7:30 am tomorrow. The corn yield is estimated to be about 159.9 with production estimated to be 12.950 billion bushels. The 2010-2011 corn carryover estimate is said to be 1.148 billion bushel. The soybean yield is estimated to be 45.0 with production estimated to be 3.491 billion bushel. The soybean carryover is estimated to be 334 million bushel. The wheat market will be looking at the 2010-2011 ending stocks figure that is estimated to be 880 million bushel.

 

In our opinion the S/D report will set the stage for what the market will have to do between now and planting. With the record open interest, record long positions that are held by the funds in both corn and beans, and the anticipation of a bullish corn report we should continue to see a large amount of volatility after we see the results of the report Friday morning. It appears very obvious that everyone is anticipating a reduction in the yield estimate for corn. The failure to see enough of a reduction in the yield estimate for corn could be catastrophic for the corn market. Conversely, should the report come back with a number closer to 155 the market could become explosive as end users scramble to get coverage.  

 

In our opinion we feel well hedged and positioned as we approach the report. If you need to catch up on the current hedge recommendations or would like to get any additional coverage on please get in touch with your broker.

 

usda pre

 

Get More From EHedger.

 

Our commentaries are just one part of our whole risk management service. Please go to http://www.ehedger.com/getmore.html for a free two-week trial of our full member website that gives you access to all our hedge and marketing recommendations, educational tools, market snapshots and much more.

Also learn about our acclaimed AMMO Program that helps producers optimize their marketing strategies using the premier tools and insights in the industry.

 

Get Organized. Get Ahead. Get EHedger

 

Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. 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 E Hedger, its affiliates, officers, directors, employees, or agents. Recipients assume the risk of reliance on and indemnify and hold E Hedger harmless for any and all losses, costs, or tax consequences incurred as a result of their use of market information.

 

EHedger Closing Grain Commentary 10/4/10

Oct 04, 2010

 

·         Trading limits will go back to 30 cents for corn tomorrow. 

 

·         Corn Stats: 37% harvested vs. 21% 5-year average.  93% mature vs. 79% 5-year average. Corn condition is unchanged from last week at 66% good to excellent vs. the 10-year average of 59%.

 

·         Soybean Stats: 37% harvested vs.  28% 5-year average.  88% dropping leaves vs. 85% 5-year average.  Soybean condition is up 1% from last week at 64% good to excellent vs.  the 10-year average of 56%.

 

·         Grain inspections were at the low end of estimates for corn, low end for soybeans, and high end for wheat.  The Stats Canada estimates are located in the chart below.

 

Corn traded as much as 10-lower today before finishing 5 ¾ higher. Soybeans and wheat both finished lower on the day. Last week’s USDA announcement has many “longs” nervous as we head into the USDA report on Friday. Volume and open interest have been strong. Yields continue to be well above average in soybeans and average to well below in corn. Informa released their 2010 yield estimates for corn to be ultimately 158.7 bpa for corn and 44.7 bpa for soybeans.  FC Stone is estimating 159.2 bpa for corn and 45.8 bpa for soybeans.  We expect that national corn yield will come down but it will need to be fewer than 160 to be considered “friendly”.  A yield below 158 could take us back to the highs. We expect the national soybean yield to rise sharply and would not be surprised to see a 47 or higher yield when everything is said and done. 

 

As we start the new quarter money is flowing out of ags and into metals/energy.  This was the opposite at the start of last quarter as money flowed out of metals/energy into ags.  Both corn and beans had “KEY” reversals on the weekly charts.  This is a very bearish formation and could trigger liquidation by the traditional funds.  We still have to get through the USDA Supply and Demand report, so expect a lot of volatility in October. With the 300 million bushel surprise on the Stocks Report, the corn market will need a bullish report next week to keep prices from sliding further.  The large trader/traditional funds are holding record long positions and another bearish surprise could trigger a massive sell-off.  So now that we are on a 60 cent break in corn, and with open interest coming off the highs, I expect us to find good support in the 4.40 – 4.50 area for December Futures, at least before we see the USDA Report.

 

Currently our recommendation stands that we are at 100% sold in 2010 corn and soybeans with upside potential in option strategies in-case we get any surprises on the report.  We are also 50% sold or protected in 2011 corn/soybeans with upside potential in the corn.  We recommend staying at these levels.

 

For those producers looking to catch up on the current recommendations, or if you would like additional coverage as we continue to progress through harvest, please get in touch with your broker.

 

StatsCan10 4 10

 

Get More From EHedger.

 

Our commentaries are just one part of our whole risk management service. Please go to http://www.ehedger.com/getmore.html for a free two-week trial of our full member website that gives you access to all our hedge and marketing recommendations, educational tools, market snapshots and much more.

Also learn about our acclaimed AMMO Program that helps producers optimize their marketing strategies using the premier tools and insights in the industry.

 

Get Organized. Get Ahead. Get EHedger

 

Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. 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 E Hedger, its affiliates, officers, directors, employees, or agents. Recipients assume the risk of reliance on and indemnify and hold E Hedger harmless for any and all losses, costs, or tax consequences incurred as a result of their use of market information.

 

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