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December 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.

EHedger Closing Grain Commentary 12/30/10

Dec 30, 2010

Thursday we found more “profit taking” after we hit highs earlier this week.  March corn settled 8 cents lower finishing the day at $6.16. January soybeans settled the day at $13.66 which was unchanged on the day. The March Chicago wheat contract settled 14 ½ cents lower at $7.84 ¾ .  The grain markets will be open tomorrow until 12pm.

 

Today would have been the 10th day in a row corn finished higher; we were due for a setback.  Weekly exports this morning were considered bearish and are as follows:

 

Corn     756,600 MT’s     expected range: 750-1050         

Beans    948,200 MT’s     expected range: 900-1300

Wheat   438,100 MT’s     expected range: 450-650

 

 

Given the weaker than expected exports and overbought status, it wouldn’t be surprising to see more “profit taking” tomorrow.

 

As we approach the end of 2010, I want to note that many commodities have made all time highs this year and the bullish bias is holding right to end of the year. This coincides with the loose monetary policy of the US as well as an ever expanding global population and diet change.  China has obviously been the main subject as their growing demand has undoubtedly helped fuel our price rallies, most notably their increase in US soybean demand.

 

So which events had the most impact in 2010?  For one I would have to say the Russian wheat drought really kick-started this rally. This summer the market watched the Russian heat escalate into a true weather concern until wheat’s rally forced corn and beans to follow.  It wasn’t until the USDA’s October report which showed a disappointing corn yield that the markets really took off.  This summer’s hot nights and wet weather were the main factors behind the lower than expected corn yields.

 

Strong grain prices can also be attributed to increased demand from investors.  Funds held all-time record long positions in corn, wheat, and soybeans in 2010.  We also traded at all-time record open interest and volume late this year.  A lot of this has to do with the sharp increase in ETF money coming into AG markets.  This allowed many of the smaller traders to buy corn ETF’s who wouldn’t normally be market participants.

 

So where do we go in 2011?  Fundamentally these markets remain strong.  If the January reports are friendly grains, the acreage battle could keep us strong right into the March 31st planting intentions report.  We like staying well protected in case the bullish bias doesn’t hold, and we like to remain with our spring call spreads for upside potential.

 

We are still looking at getting short term put protection on for corn and beans.  Implied volatility is very high, so if you are thinking about options please call you broker to discuss strategies.

 

Markets are expected to be low volume through December 31st as many traders are on vacation.  If you are looking to add additional protection, or have any market questions, please don't hesitate to give your broker a call.

 

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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.

 

EHedger Closing Grain Commentary 12/29/10

Dec 29, 2010

Wednesday soybeans set back on "profit taking" and fresh rains forecasted for Argentina; wheat and corn were slightly higher.  March corn settled ¾ cent higher, January soybeans 9 ¾ cents lower, and March wheat 1 cent higher.
 
The US Dollar was sharply lower and was probably the main driving factor behind today's support in corn and wheat.  Today was the 9th day in a row corn settled higher and coming into today beans were on an 8 day rally as well.  It wouldn't be surprising to see more "profit taking" over the next couple of days.
 
Not much has changed this week besides a better and wetter forecast for Argentina.  Argentine weather is expected to be hot and dry but rains coming next week should provide relief.  Weekly exports are out tomorrow morning.  They are expected to be between 450-650 for wheat, 750-1050 for corn, and 900-1300 for soybeans.  It will be important to see if demand is still slow for beans going into the end of the year.  It was interesting to see beans fall so abruptly ahead of Thursday's export sales report.  Many times we see strong markets on Wednesdays as traders gear up for strong exports. Even with a very weak dollar the market broke beans 10 cents today.  This could be a sign of liquidation or expected weak exports. 

 

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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.


 
As we approach the end of 2010, I want to note that many commodities have made all time highs this year and the bullish bias is holding right to the end of the year. This coincides with the loose monetary policy of the US as well as an ever expanding global population and diet change.  China has obviously been the main subject as their growing demand has undoubtedly helped fuel our price rallies, most notably their increase in US soybean demand.
 
So which events had the most impact in 2010?  For one I would have to say the Russian wheat drought really kick-started this rally. This summer the market watched the Russian heat escalate into a true weather concern until wheat's rally forced corn and beans to follow.  It wasn't until the USDA's October report which showed a disappointing corn yield that the markets really took off.  This summer's hot nights and wet weather were the main factors behind the lower than expected corn yields.
 
Strong grain prices can also be attributed to increased demand from investors.  Funds held all-time record long positions in corn, wheat, and soybeans in 2010.  We also traded at all-time record open interest and volume late this year.  A lot of this has to do with the sharp increase in ETF money coming into AG markets.  This allowed many of the smaller traders to buy corn ETF's who wouldn't normally be market participants.
 
So where do we go in 2011?  Fundamentally these markets remain strong.  If the January reports are friendly grains, the acreage battle could keep us strong right into the March 31st planting intentions report.  We like staying well protected in case the bullish bias doesn't hold, and we like to remain with our spring call spreads for upside potential.
 
Technically the market continues to look strong but is getting towards overbought levels.  The next target for December corn is $5.65, and we are not far away from that.  We are still looking at getting short term put protection on for corn and beans.  Implied volatility is very high, so if you are thinking about options please call you broker to discuss strategies.
 
Markets are expected to be low volume through December 31st as many traders are on vacation.  If you are looking to add additional protection, or have any market questions, please don't hesitate to give your broker a call.

 

 

EHedger Closing Grain Commentrary 12/28/10

Dec 28, 2010

Tuesday wheat and corn were the upside leaders. Soybeans closed stronger but off their highs.  March corn settled 8 cents higher, January soybeans 2 ¾ cents higher, and March wheat 18 cents higher.
 
Well we are officially settling into new high territory for 2010 in January Soybeans, March Corn, and July Wheat.  The front months carried the most strength while the back months had trouble keeping up.  This was especially the case for beans as November 2011 finished 6 cents lower on the day.
 
Early strength had a lot to do with the US Dollar weakness.  By mid-morning the dollar came back to unchanged and helped keep corn and beans off their highs.  Corn and wheat are likely catching up to the recent bean strength we have seen.  Hot and dry weather in Argentina is still a major concern for the market and Brazilian weather remains favorable.
 
Other markets are also making new highs today.  Sugar is making fresh highs while cattle and copper are making all time highs!  This coincides with the loose monetary policy of the US as well as an ever expanding global population and diet change.  China has obviously been the main subject as their growing demand has undoubtedly helped fuel our price rallies, most notably their increase in US soybean demand.
 
So which events had the most impact in 2010?  For one I would have to say the Russian wheat drought really kick-started this rally. This summer the market watched the Russian heat escalate into a true weather concern until wheat's rally forced corn and beans to follow.  Corn and soybeans really took off after the USDA's October report showed a disappointing corn yield.This summer's hot nights and wet weather were the main factors behind the lower than expected corn yields.
 
Strong grain prices can also be attributed to increased demand from investors.  Funds held all-time record long positions in corn, wheat, and soybeans in 2010.  We also traded at all-time record open interest and volume late this year.  A lot of this has to do with the sharp increase in ETF money coming into AG markets.  This allowed many of the smaller traders to buy corn ETF's who wouldn't normally be market participants.
 
So where do we go in 2011?  Fundamentally these markets remain strong.  If the January reports are friendly grains, the acreage battle could keep us strong right into the March 31st planting intentions report.  We like staying well protected in case the bullish bias doesn't hold, and we like to remain with our spring call spreads for upside potential.
 
Technically the market continues to look strong but is getting towards overbought levels.  The next target for December corn is $5.65, and we are not far away from that.  We are still looking at getting short term put protection on for corn and beans, and after days like today it only looks cheaper to do so.  Implied volatility is very high, so if you are thinking about options please call you broker to discuss strategies.
 
Markets are expected to be low volume through December 31st as many traders are on vacation.  If you are looking to add additional protection, or have any market questions, please don't hesitate to give your broker a call.

 

Stop Guessing & Start Marketing

 

 

Free trial 1[1] 

 

Click icon above for a Free Trial of EHedger Premium Research package and watch the AMMO Demo video.

 

 

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 12/27/10

Dec 27, 2010

Monday soybeans had a very strong day after continued concerns over Argentine weather.  March corn settled 1 ¼ higher, January soybeans 24 ½ higher, and March wheat 2 ¾ cents lower.
 
On Christmas day China announced an interest rate hike of 25 basis points which was expected to hold some resistance on the markets.  Corn and wheat managed to stay mixed but soybeans rallied strong throughout the day.  This is also on weaker than expected export inspections for soybeans.  The 6 - 10 day forecast is still calling for hot and dry weather in Argentina which is providing support.  For Brazil weather still remains favorable but heavy rains in the Northeastern section and dry conditions in the South are being monitored closely.
 
Export inspections were flat to weak:
 
Corn                 estimated range: 29 - 34   actual: 32.6
Beans                estimated range: 35 - 40  actual: 23.3
Wheat               estimated range: 22 - 27  actual: 17.5
 
March Corn and Soybean contracts are making new highs for 2010. Technically the market still looks strong but is getting towards overbought levels.  The Commitment of Traders report was delayed until today. It shows heavy increases in net long positions by the funds in Corn and Beans.  At the same time it shows their net short positions have only increased for Natural Gas.  Many traders are concerned that in early 2011 they will flip and start to roll out of corn and reduce their Nat Gas short positions.  If this happens it could be negative grains near term.  We are still looking at getting short term put protection on for corn and beans, and after days like today it only looks cheaper to do so.  Please call your broker if you need to get more protection on for your 2011 crops.
 
Markets are expected to be low volume through December 31st as many traders are on vacation.  Today we did see very low volume in corn and wheat, but decent size in soybeans.  If you are looking to add additional protection, or have any market questions, please don't hesitate to give your broker a call.

 

 

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Click icon above for a Free Trial of EHedger Premium Research package and watch the AMMO Demo video.

 

 

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 12/21/10

Dec 21, 2010

Tuesday grains settled mixed to higher with March corn up 2 ¾, Jan Soybeans up 11, and March wheat down 4 ½ cents.   
 
Today was another low volume day for commodities and the moves were rather erratic.  Soybeans were stronger largely due to hot and dry weather forecasted for Argentina in the next 2 weeks.  For Brazil, weather looks favorable.  Also coming around the corner is the January reports, which have been anticipated to be friendly grains.  Strength in cotton and other commodities like crude oil also helped provide support for our markets today.  Cotton was the major mover with a limit up settlement for the second day in a row.  We are making all time fresh highs in cotton, even dating back to inflation adjusted civil war levels. The livestock market has been making solid gains as well, April cattle was just under 1.10 today.  The funds are holding sizable net long positions in all of these commodities using futures/options.  In fact, the only US exchange based commodity they are net short (using Futures/Options) is Natural Gas, and this is due to our excess reserves.  This is one of many good reasons to use caution when everyone seems to be so bullish.  If the funds roll their money out of grains and into other sectors like energies, this could be short term negative.  I am not saying this is going to happen, but I would certainly recommend having some protection on going into the New Year and the January reports.   Aside from making additional cash sales, one way to get protection on would be to buy short term puts to get through the report.  March corn and soybean puts are still rather expensive, but having orders in to get puts bought the next time we see a rally may not be a bad idea.
 
Markets will be closed for Christmas Eve and reopen that following Sunday.  Between now and then we could continue to see high volatility on low volume.  Last year on December 23rd, we saw total corn volume at only 82998, a fraction of what we typically do.  If you are looking to add additional protection, or have any market questions, please don't hesitate to give your broker a call.

 

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Click icon above for a Free Trial of EHedger Premium Research package and watch the AMMO Demo video.

 

 

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 12/20/10

Dec 20, 2010

Grains start the week strong with corn up 3 cents, beans up 16 ½, and wheat up 12 ¾.
 
Overnight grains were sharply higher for wheat and soybeans as fresh buying came into the market.  Corn remained quite strong for most of the day but came off its highs before the close.  Bean's strength can be attributed to concerns of dryness in heavy soybean producing areas of Argentina.  Rains in other parts of Argentina and Brazil are expected to be favorable starting next week.  Outside markets were also favorable with energies and metals posting modest gains.  The US Dollar was stronger throughout the day but didn't seem to affect the grains to its usual capacity.
 
Export inspections were on the high end of expectations for wheat and at the low end of expectations for corn and soybeans.
 
Thursday we have option expiration for January grains.  There are a decent amount of $6 January corn options, as well as $13 January soybean options.  The market tends to gravitate towards these higher volume strikes so potentially we could see Thursday's expiration stay close to these levels.
 
Even though we can see reasons for the market to be friendly in 2011, we still want to remain adequately hedged incase the unexpected happens.  For example, last year it took until the January report before grains broke, which lasted all the way into early summer.  Right now we are staying well hedged and keeping our upside in the spring call spreads.  Please contact your broker if you would like an overall analysis of your 2011 marketing year.
 
Markets will be closed for Christmas Eve and reopen that following Sunday.  Between now and then we could continue to see high volatility on low volume.  Last year on December 23rd, we saw total corn volume at only 82998, a fraction of what we typically do.  If you are looking to add additional protection, please don't hesitate to give your broker a call.

 

 

Stop Guessing & Start Marketing

 

 

Free trial 1[1] 

 

 

Click icon above for a Free Trial of EHedger Premium Research package and watch the AMMO Demo video.

 

 

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 12/17/10

Dec 17, 2010

The market closed out the week with a rally for corn, wheat, and soybeans.  Overall on the week March corn was up 22 ¼ cents, Jan soybeans were up 25 ¾ cents, and March wheat fell by 18 ¾ cents.
 
Coming in from the overnight session grains were called mixed to lower but found plenty of support after the opening bell.  Informa released their estimates of final 2010 production, as well as expected acreage for 2011.  For 2010 corn production, they are projecting 12.539 billion bu which is right in line with the USDA's estimate.  Soybean production is estimated at 3.378 billion bu, also right in line with the USDA's estimate.  For 2011, they are projecting an increase in corn acres to 90.7 million vs 88.2 last year.  They are expecting bean acres to be 77.5 million acres vs 77.7 last year.  Informa is expecting a jump in wheat acres from 53.6 million last year to 56.1 million this year.  Cotton acres are also projected to jump to 12.8 million vs 11 million in 2010.  Overall they are expecting to gain an extra 6.6 million acres in 2011.
 
The house ended up passing the Tax Bill late Thursday night and was signed by President Obama today.  This included the Ethanol and Biofuel tax credits.  Also today, Cattle on Feed came out mostly neutral for cattle but slightly friendly grains considering we will have higher feed needs.  We put 3% more on feed, and weights were skewed to below 800 lbs. The Commitment of Traders report shows the large specs increasing their net long corn positions by a sizable 23,308 contracts using futures and options.  They also increased their soybeans and wheat positions as well.
 
The bulls are looking at tight supplies and dry South American weather for support.  The battle for acres in early 2011 will be the best chance to see this rally continue.  The bears are looking at the latest USDA ending stocks report showing increases in US corn and World wheat.  Also, soybean exports came in well below expectations this week reflecting cancellations from China.  Until more is known from the January reports, it may be hard for the bulls to keep this rally going into the end of the year. 
 
Even though we can see reasons for the market to be friendly in 2011, we still want to remain adequately hedged incase the unexpected happens.  For example, last year it took until the January report before grains broke, which lasted all the way into early summer.  Right now we are staying well hedged and keeping our upside in the spring call spreads.  Please contact your broker if you would like an overall analysis of your 2011 marketing year.
 
Next week the markets will be open through December 23rd.  They will close for Christmas Eve and reopen that following Sunday.  Between now and then we could continue to see high volatility on low volume.  If you are looking to add additional protection, please don't hesitate to give your broker a call.

 

Stop Guessing & Start Marketing

 

 

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Click icon above for a Free Trial of EHedger Premium Research package and watch the AMMO Demo video.

 

 

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 12/8/10

Dec 08, 2010

Wednesday grains started the day sharply lower only to reverse during the first part of the session and trade higher.  March corn finished 12 ¾ higher, March Wheat ¾ lower, and January Soybeans 10 ½ higher.

 

The market remains choppy as traders continue to look at tight supplies and weather concerns as the support.  Outside market forces and profit taking are seen as resistance.  The ethanol subsidy extension is still unknown which may also play a major role in keeping the markets resisted in the short-run.  The funds are still the major market movers as it was estimated they bought 7,000 contracts of corn, 1,000 contracts of Wheat, and 1,500 contracts of soybeans by mid-day.  Ten cent moves have become the norm and it looks like volatility has only been increasing. 

 

Traders are gearing up for Friday's report and we have the estimates as follows:

 

For corn they are expected to drop the ending stocks from November's estimate of 827 million bu to the average analyst estimate of 806.  The range is between 672-877.

 

Soybean ending stocks are expected to drop from November's 185 million bu estimate to the average estimate of 160.  The range is between 98-198.

 

Wheat ending stocks are expected to drop from 848 million bu in November to 839.  The range is between 764-938.

 

They are not expected to change South America's numbers in this report.

 

I hate to sound like a broken record but the quality issue remains at the front of the minds of the trading community and may continue to provide strength for the wheat market.  We could see more volatility in December as traders wrap up for year-end.  In January we will find out how many wheat acres were planted, and that will help us figure out how many acres corn and soybeans will have to "buy". We like to have our sales in the cash market with basis locked in and have spring call spreads for upside potential (see hedge recommendations.)  If you are looking to add additional protection, please don't hesitate to give your broker a call.

 

 

Stop Guessing & Start Marketing

 

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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.

 

EHedger Closing Grain Commentary 12/7/10

Dec 07, 2010

Tuesday grains looked like they were going to have a strong day but quickly came off their highs to close lower. March corn finished 6 ¼ lower, March Wheat 8 ¼ lower, and January Soybeans 3 lower.

 

Most of the bearishness was linked to the US dollar rally mid-morning and the break in other commodities like Gold and Crude Oil after making fresh highs.  Originally these markets were called higher this morning after the market was bullishly surprised that President Obama would support the Bush tax cuts.  Towards mid-session it became clear this alone wasn't enough to keep outside markets supported and most still want to know if the rest of the democrats will go along. 

 

Corn is also on its heels since there is still no definitive answer on renewing the ethanol subsidies. Open interest has been declining for 10 straight trading sessions which means the liquidation phase may not yet be over.  Our thoughts are we could see liquidation extend towards the middle of December as traders close out positions for year end. 

 

Wheat has been the upside leader but managed to break the hardest today.  This is likely due to profit taking and position squaring.  I hate to sound like a broken record but the quality issue remains at the front of the minds' of the trading community and may continue to provide strength for the wheat market.

 

Going forward we could see more volatility in December as we come to the end of the year.  In January we will find out how many wheat acres were planted, and that will help us figure out how many acres corn and soybeans will have to "buy". We like to have our sales in the cash market with basis locked in and have spring call spreads for upside potential (see hedge recommendations.)  If you are looking to add additional protection, please don't hesitate to give your broker a call.

 

 

 

Stop Guessing & Start Marketing

Free trial 1[1]

 

 

 

Click icon above for a Free Trial of EHedger Premium Research package and a Free AMMO Risk Assessment of your Farm

 

 

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 12-3-10

Dec 04, 2010

Friday grains continued their high volatility trade and finished sharply higher.  March corn finished 18 cents higher, Jan soybeans 20 ½ cents higher, and March wheat 30 ½ cents higher.

 

The Stats Canada report showed an increase for both wheat and canola from what the market was expecting.  This was slightly bearish but was overshadowed with outside market strength.  Crude oil was hitting new highs for the move today, the US dollar was sharply lower, and March cotton was once again limit-up.

 

The funds were heavy buyers of corn, soybeans, and wheat.  Australia's wheat quality concerns continue to make the wheat market the upside leader.  There could be legitimate shortages of high quality wheat around the world.  Since a lot of this will go to feed, the expectation is the US will have to make up for the shortfall. Minneapolis and Kansas City wheat will likely be the first to rally on quality concerns, and Chicago wheat will try to follow.  This is also something that could keep corn tempered if more and more wheat continues to get fed.

 

Over the past 3 weeks our markets have been in a liquidation stage.  On November 10th, 2010 we had a record combined volume day as well as a record combined open interest for corn, wheat, and soybeans (combined.)  Since then volume has been average and open interest has been declining sharply.  Also during this timeframe was a large change of ownership between the Index Funds, Large Specs, and Commercials.  Establishing new long positions is a really healthy correction now that ownership is in new hands.  We could see the liquidation phase extend out into the second week of December, but from the middle of December going into the middle of January we could see more buying interest as we get through the January reports.

 

If liquidation is done and more money starts pouring back in, it is going to be hard for this market to stay down given the fundamentals.  The dryness concerns in Argentina, all the fundamentals that are still in place which took us to the original highs, and the acreage battle; the market has plenty of reasons to be optimistic.

 

Energy is another thing to watch out for. All the things are in the working for a 2008 style market except $100+ crude oil.  Today crude oil made new highs for the move.  This is the highest price front-month crude has seen since the liquidation phase in October 2008.  This is obviously friendly corn.

 

As we have mentioned before, in December the markets are susceptible to volatile market swings as traders wrap up for the year.  We have witnessed this over the first days of trading this month.  December 10th will be the next USDA production report.  This is the last major report before the end of the year.  In January we will get an influx of data that should provide plenty of direction for the 2011 marketing year.  Right now we are comfortable with the cash sales and hedges that we have in place. If you are looking to add additional protection, please don't hesitate to give your broker a call.


 

 

We are currently launching the newest addition of the AMMO Program. This program will allow producers to manage their complete farm operation including production costs, cash sales, hedge positions, and insurance coverage. All of the producer's information will then be used to compile a profitability matrix so that the farmer has a clear cut picture of where their farm stands. Please give us a call to learn more about the AMMO Program.

 

 

 

 

 

 

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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.

 

EHedger Closing Grain Commentary 12/2/10

Dec 02, 2010

Thursday grains sold off late to finish lower in corn and beans and higher in wheat.  March corn finished 10 ¾ cents lower, Jan soybeans 3 ¼ cents lower, and March wheat 9 ½ cents higher.

 

The corn market lost half of what it made yesterday after being steady to unchanged for most of the day.  I have included an intra-day chart of corn to illustrate just how quickly the markets can change. 

 

Weekly exports were friendly for soybeans and as expected for corn and wheat.  The actual numbers are below:

 

1,341,600 MT’s soybeans

758,100 MT’s corn

663,300 MT’s wheat

 

The Stats Canada report will be out tomorrow morning at 7 am, we will have the results in the EHedger morning letter. Today’s outside market strength would normally be seen as favorable for grains but the late selloff was probably attributed to more liquidation.

 

Wet weather continues to be of concern in Australia and kept wheat as the upside leader today.  It was reported that as much as 33% to 40% of the Australian wheat crop could be used as feed. There could be legitimate shortages of high quality wheat around the world.  Canada has the most feed wheat they have seen since 2004.  With the rains in Australia, their quality is declining rapidly and they are usually higher quality wheat.  Since a lot of this will go to feed, the expectation is the US will have to make up for the shortfall. Minneapolis and Kansas City wheat will likely be the first to rally on quality concerns, and Chicago wheat will try to follow.  This is also something that could keep corn tempered if more and more wheat continues to get fed.

 

Over the past 3 weeks our markets have been in a liquidation stage.  From the highs we broke into December option expiration and into first notice, all with open interest declining roughly 9-10%.  Also during this timeframe was large change of ownership between the Index Funds, Large Specs, and Commercials.  Establishing new long positions is a really healthy correction now that ownership is in new hands.  We could see the liquidation phase extend out into the second week of December, but from the middle of December going into the middle of January we could see more buying interest as we get through the January reports.

 

If liquidation is done and more money starts pouring back in, it is going to be hard for this market to stay down given the fundamentals.  The dryness concerns in Argentina, all the fundamentals that are still in place which took us to the original highs, and the acreage battle; the market has plenty of reasons to be optimistic.

 

Energy is another thing to watch out for. All the things are in the working for a 2008 style market except $100+ crude oil.  Energy prices have been heading higher led by RBOB, which hit 7 month highs today.  This is obviously friendly corn if this trend continues.

 

Last but not least: will the ethanol blender’s credit and import tariff be renewed?  There is a group of senators who are trying to abolish both the credit and import tariff all together.  From what it looks like they will end up decreasing the blenders credit down to 30 cents for 2 years to try to slowly relieve the ethanol industry from these government subsidies over a period of time, rather than abruptly.  At least this will anger the fewest amount of people.  This should be viewed as long term friendly for corn, currently we are on pace to crush 5 billion bu. which is well over the 4.8 bill the government had written down for this year.  Without the subsidies it could drop to 4.5 to 4.6.

 

Something else to consider is the susceptibility of volatile market swings during the holiday season as traders wrap up for the year.  December 10th will be the next USDA production report.  This is the last major report before the end of the year.  In January we will get an influx of data that should provide plenty of direction for the 2011 marketing year.  Right now we are comfortable with the cash sales and hedges that we have in place. If you are looking to add additional protection, please don't hesitate to give your broker a call.

 

We are currently launching the newest addition of the AMMO Program. This program will allow producers to manage their complete farm operation including production costs, cash sales, hedge positions, and insurance coverage. All of the producer's information will then be used to compile a profitability matrix so that the farmer has a clear cut picture of where their farm stands. Please give us a call to learn more about the AMMO Program.

 

Intraday Corn

 

 

Stop Guessing & Start Marketing

Free trial 1[1]

 

 

Click icon above for a Free Trial of EHedger Premium Research package and a Free AMMO Risk Assessment of your Farm

 

 

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 12-1-10

Dec 01, 2010

Everyone back in the pool!

 

Wednesday grains were sharply higher as beginning of the month buying comes into the market.  March corn settled 22 ¼ cents higher, January soybeans 40 cents higher, and March wheat was 49 ½ cents higher.

 

Funds were heavy buyers today in almost every market.  The Dow Jones was up 250 points, the US Dollar fell over 500, and crude oil rallied over $2.50.  Even though the outside markets had a large influence, the fundamentals have also been improving.  Dryness concerns in South America have beans on edge.  Wet weather concerns in Australia had the wheat market as the upside leader today.  There could be legitimate shortages of high quality wheat around the world.  Canada has the most feed wheat they have seen since 2004.  With the rains in Aulstralia, their quality is declining rapidly and they are usually higher quality wheat.  Since a lot of this will go to feed, the expectation is the US will have to make up for the shortfall. Minneapolis and Kansas City wheat will likely be the first to rally on quality concerns, and Chicago wheat will try to follow.  This is also something that could keep corn tempered if more and more wheat continues to get fed.

 

Over the past 3 weeks our markets have been in a liquidation stage.  From the highs we broke into December option expiration and into first notice, all with open interest declining roughly 9-10%.  Also during this timeframe was large change of ownership between the Index Funds, Large Specs, and Commercials.  Establishing new long positions is a really healthy correction now that ownership is in new hands.  We could see the liquidation phase extend out into the second week of December, but from the middle of December going into the middle of January we could see more buying interest as we get through the January reports. 

 

If liquidation is done and more money starts pouring back in, it is going to be hard for this market to stay down given the fundamentals.  The dryness concerns in Argentina, all the fundamentals that are still in place which took us to the original highs, and the acreage battle; the market has plenty of reasons to be optimistic.

 

Energy is another thing to watch out for.  All the things are in the working for a 2008 style market except $100+ crude oil.  Energy prices have been heading higher led by RBOB, which hit 7 month highs today.  This is obviously friendly corn if this trend continues. 

 

Last but not least: will the ethanol blender's credit and import tariff be renewed?  There is a group of senators who are trying to abolish both the credit and import tariff all together.  From what it looks like they will end up decreasing the blenders credit down to 30 cents for 2 years to try to slowly relieve the ethanol industry from these government subsidies over a period of time, rather than abruptly.  At least this will anger the fewest amount of people.  This should be viewed as long term friendly for corn, currently we are on pace to crush 5 billion bu. which is well over the 4.8 bill the government had written down for this year.  Without the subsidies it could drop to 4.5 to 4.6.

 

Something else to consider is the susceptibility of volatile market swings during the holiday season as traders wrap up for the year.  December 10th will be the next USDA production report.  This is the last major report before the end of the year.  In January we will get an influx of data that should provide plenty of direction for the 2011 marketing year.  Right now we are comfortable with the cash sales and hedges that we have in place. If you are looking to add additional protection, please don't hesitate to give your broker a call.

 

We are currently launching the newest addition of the AMMO Program. This program will allow producers to manage their complete farm operation including production costs, cash sales, hedge positions, and insurance coverage. All of the producer's information will then be used to compile a profitability matrix so that the farmer has a clear cut picture of where their farm stands. Please give us a call to learn more about the AMMO Program.

 

 

 

 

Stop Guessing & Start Marketing

 

 Free trial 1[1]

    

Click icon above for a Free Trial of EHedger Premium Research package and a Free AMMO Risk Assessment of your Farm

 

 

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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