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October 2012 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 Afternoon Grain Commentary 10/31/12

Oct 31, 2012

Grains closed sharply higher with corn leading the way.  December corn closed up 14 cents at $7.55 ¾, December wheat up 7 ¾ cents at $8.64 ½, and January soybeans up 12 ¼ cents at $15.48 ¾.

It was the last day of the month and last day to set crop insurance prices.  The harvest prices are locked in at $7.51 for December corn and $15.40 for November soybeans.  Obviously these were well above the spring prices and should help those with production below their guaranteed levels.

Strength was found amid supply concerns of quality-world-wheat and lack of corn offers in South American.  Egypt’s GASC had a mid-morning announcement of the purchase of 300,000 MTs between France, Romania, and Russia.  Corn also found a technical bounce after holding its 100-day moving average.  Next resistance is seen at the 50 day which is $7.64 ½.  If that level is breached on a seasonal post-harvest rally look for the next target at the 50% retracement level of $7.77.

December Corn Chart:December Corn

The USDA reopened after its two day closure from Super Storm Sandy.  Their Weekly Crop Progress report shows corn at 91% harvested and soybeans at 87%.  Wheat’s crop condition was less than expected at 40% good-to-excellent and may provide some additional support on the overnight markets.

The funds have begun their rolls with Rogers starting yesterday, Deutsche Bank on Friday, and Goldman will start next week.  FC Stone will have their production estimates tomorrow and Informa will release theirs on Friday.  To receive a free trial of our commentary including hedge recommendations please follow the link below.

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Best Regards, 

EHedger 

866-433-4371

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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.

EHedger Afternoon Grain Commentary 10/29/12

Oct 29, 2012

Grains sold off from what appears to be liquidation while New York is shut down from the hurricane.  December corn closed ¾ of a cent lower at $7.37, November soybeans down 34 cents at $15.27 ¼, and December wheat down 5 ¾ cents at $8.58.

 

The Stock Market, Nymex floor, and equity futures at the CME were all shut down today due to Hurricane Sandy.  The economic repercussions of the storm may have been enough to force a "risk-off" trading session in other markets as we saw crude oil and grains lower while "flight-to-quality-assets" like the US Dollar and Treasuries were higher.

 

The USDA was shut down today as well but they still managed to release the Export Inspections Report at 10:00 am.  Soybeans were well above expectations again at 63.35 million bushels.  Corn was at 15.51 million and wheat was at 9.70 million.  Even though this was friendly to soybeans they still led the CBOT markets lower.  Northern Brazil is expected to get some much needed rains to help with their recent dry spell, but this isn’t a major market moving change in my opinion.  The USDA apparently wasn’t able to release the Crop Progress Report in the afternoon.  We will notify you if that comes tomorrow afternoon.

 

Safras is estimating Brazilian soy planting at 28% complete compared to the 5 year average of 24 percent.   The Argentine Ag Minister is estimating their corn acres to be 40% planted which compares to 55% at this time last year.  In fact this is their slowest planting pace at this time of year in more than 15 years.  Currently the USDA is estimating Argentine corn production at 28 MMTs which is about 3.34% of total expected world production this year.

 

As of Monday October 29th the average price of December corn in Oct has been $7.50 ¼.  The average price of November soybeans has been $15.39.  We are through 21 of the 23 business days which decide the harvest price for insurance, which basically means we can’t significantly change this price from here.  With the fall crop insurance price set and your yields basically known it is time to re-evaluate hedge levels to see how to protect downside risk going into the winter.  Please contact an EHedger broker to see how we can help you develop a strategy to finish out 2012 and look forward to the 2013 crop year.  Phone: (866) 433-4371.  Have a great week!

 

Chart: December Corn (Red-50 Day Moving Average, Blue-100 Day MA, Grey-200 Day MA)

December Corn

 

Chart: November Soybeans (Red-50 Day Moving Average, Blue-100 Day MA, Grey-200 Day MA)

November Soybeans

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Best Regards, 

EHedger 

866-433-4371

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.

EHedger Afternoon Grain Commentary 10/26/12

Oct 26, 2012

Heavy bearspreading weighed on front month grain contracts Friday.  December corn closed 4 ¼ cents lower at $7.37 ¾, November soybeans closed 2 ¾ cents lower at $15.61 ¼, and December wheat down 9 cents at $8.63 ¾.

 

Without much fresh fundamental news, grains followed equities lower.  Equities have been steadily falling since September over uncertainty fears with the election and fiscal cliff approaching.

 

It was surprising to see such a large increase in corn longs by the managed money on today’s Commitment of Traders report.  Using futures and options they added 26,288 contracts of corn to their net long positions now totaling 282,849.  They also increased soybean net longs by 5,252 contracts and all-wheat by 14,128.  Liquidation has slowed and we have been range-bound.  We think this could continue for corn through the end of the year.

 

Soybean’s demand pace is still unsustainable.  Are Chinese purchases stacked up front and will naturally slow as their needs are met or does the market need to see another price rally to ration further demand?  Thursday’s soybean sales were below expectations but were still well above the average per week needed to meet the current USDA demand estimate of 1.265 billion bushels.  Sales equated to 19.2 million bushels and we only need to average 7.5.  This brings us to 72.7% percent contracted for the year (new record).  When we are only looking at 130 million bushels in total carryout (4.5% of total use) we really can’t afford to raise exports.  The market is counting on a decent crop in South America and we should be very price sensitive if we run into any weather issues along the way.  So far we have seen dryness in Northern Brazil and slightly delayed plantings in Argentina due to heavy rains.  They have not been large enough issues to expect a significant change in production.

 

While soybean demand remains strong corn demand is looking poor.  This doesn’t mean I am necessarily bearish old crop corn.  Our 2012 production is only estimated at 10.706 billion and the market is merely doing its job by holding back demand to meet its limited supply.  I believe that we could stay range-bound through the end of the year unless we see a sharp rally in feed margins or another sharp rally in energy prices.

 

As of Wednesday October 25th the average price of December corn in Oct has been $7.51.  The average price of November soybeans has been $15.39 ½.  We are through 20 of the 23 business days which decide the harvest price for insurance, which basically means we can’t significantly change this price from here.  With the fall crop insurance price set and your yields basically known it is time to re-evaluate hedge levels to see how to protect downside risk going into the winter.  Please contact an EHedger broker to see how we can help you develop a strategy to finish out 2012 and look forward to the 2013 crop year.  Phone: 1-(866) HEDGER-1.  Have a great weekend!

 

Chart: December Corn (Red-50 Day Moving Average, Blue-100 Day MA, Grey-200 Day MA)

December Corn

 

Chart: November Soybeans (Red-50 Day Moving Average, Blue-100 Day MA, Grey-200 Day MA)

November Soybeans

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Best Regards, 

EHedger 

866-433-4371

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.

EHedger Afternoon Grain Commentary 10/25/12

Oct 25, 2012

Heavy bearspreading dominated the grain markets today with corn leading the way lower.  December corn closed 12 ½ cents lower at $7.42, November soybeans down 6 ½ cents at $15.64, and December wheat down 11 ¼ cents at $8.72 ¾.

 

Export sales fell short of expectations for corn and soybeans but were above the highest guess for wheat.  Even so wheat was unable to hold its early support and eventually followed corn lower on the day.

                           Estimated Range                               Actual

Corn:               150,000 – 375,000 MTs                      142,300 MTs

Soybeans:        600,000 – 900,000 MTs                      522,200 MTs

Wheat:             250,000 – 450,000 MTs                      572,000 MTs

 

At 8:00am the USDA announced another sale of 120,000 MTs of US soybeans to unknown.  This is on top of the 105,000 they announced yesterday.

 

Even though soybean sales were below expectations they were still well above the average per week needed to meet the current USDA demand estimate of 1.265 billion bushels.  Sales equated to 19.2 million bushels and we only need to average 7.5.  This brings us to 72.7% percent contracted for the year (new record).  When we are only looking at 130 million bushels in total carryout (4.5% of total use) we really can’t afford to raise exports.  The market is counting on a decent crop in South America and should be very price sensitive if we run into any weather issues along the way.  So far we have seen dryness in Northern Brazil and slightly delayed plantings in Argentina due to heavy rains.  They have not been large enough issues to expect a significant change in production.

 

While soybean demand remains strong corn demand is looking poor.  This doesn’t mean I am necessarily bearish old crop corn.  Our 2012 production is only estimated at 10.706 billion and the market is merely doing its job by holding back demand to meet its limited supply.  I believe that we could stay range-bound through the end of the year unless we see a sharp rally in feed margins or another sharp rally in energy prices.  We do have to keep in mind that it is election year and we are facing the fiscal cliff.  Ultimately in the last election year we were struck with a massive selloff in the outside markets which also brought December 2008 corn down below $3 a bushel.  Obviously this is an extreme example but it is worth noting that we can be highly affected by economic circumstances.

 

As of Wednesday October 25th the average price of December corn in Oct has been $7.51 ½.  The average price of November soybeans has been $15.38 ½.  We are through 19 of the 23 business days which decide the harvest price for insurance, which basically means we can’t significantly change this price from here.  With the fall crop insurance price set and your yields basically known it is time to re-evaluate hedge levels to see how to protect downside risk going into the winter.  Please contact an EHedger broker to see how we can help you develop a strategy to finish out 2012 and look forward to the 2013 crop year.  Phone: 1-(866) HEDGER-1.  Have a great weekend!

 

Chart: November Soybeans

November Soybeans

 

Chart: December CornDecember Corn

 

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Best Regards, 

EHedger 

866-433-4371

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.

EHedger Afternoon Grain Commentary 10/19/12

Oct 19, 2012

It was a mixed day for grains at the CBOT.  December corn closed ¾ of a cent higher at $7.61 ½, November soybeans down 11 ¼ cents at $15.34 ¼, and December wheat up 4 cents at $8.72 ½.

 

The early morning hours were strong especially for wheat after Ukraine’s ag ministry announced an export ban for mid-November.  At 8am CST the USDA announced the sale of 233,000 MTs of wheat to unknown destinations.  Clearly today’s headlines were supportive wheat and the main driving reason for today’s strength.

 

Grains weren’t able to sustain their early gains much of which can be attributed to weaker outside markets.  Today marks the 25th anniversary of the 1987 crash and the market action was rather symbolic for equities.  The Indices had the largest selloff in 4 months which gave strength to the dollar and helped crude oil drop over $2.

 

Informa released their 2013-2014 acreage estimates and were not far off from their last estimates.  They have soybean acres at 80.0 mil compared to 79.9 in September, corn at 97.5 (unchanged), wheat at 57.1 (down 0.6), and cotton at 10.0.  Soybean acres at 80 million would be a record if that is the case.

 

After the close the USDA released its monthly Cattle on Feed report.  September marketings were 88% which was below 95% last month and 90% from market estimates.  September placements were 81% far below the 85% expected and 89% last month.  "Cattle on Feed" as of October 1st was 97% which is 1% below expectations.  Lower on feed and lower placements will eventually translate to higher price levels.  This is also more evidence of feed rationing.

 

The weekly Commitment of Traders report showed slight declines in the net long positions held by the managed money.  For All-Wheat they are holding a net long position of 97,203 contracts using futures and options (a net long decrease of 1191 from last week).  For corn they are holding a net long position of 256,561 contracts a net-long decline of 3,905 since last week.  Their net long soybean position was reduced by a net 9,811 contracts leaving them net +167,096 contracts.  The funds are still holding sizeable long positions but are off their record levels.

 

Corn Technicals:

December corn closed above the 9-day moving average which is short term positive. The exponential oscillator is again at positive territory is also friendly.  Near term resistance may be found at the 50 day moving average of $7.74 ½.

December Corn

 

Soybean Technicals:

November soybeans closed above the 9-day moving average which is short term positive.  The gap from the 4th of July started to fill this week but was unable to get to the $14.78 target level.  This may be enough to slow technical liquidation for now especially since we are starting to see beans come off oversold levels.  First resistance is seen at the 100 day moving average of $15.57 ½.

November Soybeans

 

As of Friday October 19th the average price of December corn for the month has been $7.51 ¼.  The average price of November soybeans has been $15.33 ¼.  The harvest price is now 2/3rds of the way to being locked in.  To sign up for a free EHedger trial please click on the link below. Have a great week!  Have a great weekend!

www.ehedger.com/signup 

Best Regards, 

EHedger 

866-433-4371

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.

EHedger Afternoon Grain Commentary 10/18/12

Oct 18, 2012

Grains closed with double digit gains Thursday.  December corn closed 15 ¼ cents higher at $7.60 ¾, November soybeans 36 ¼ cents higher at $15.45 ½, and December wheat up 12 ¼ cents at $8.68 ½.

 

The strength from the overnight session carried right through the export sales report this morning.  Corn and soybean exports fell short of the average market guesses but topped the wheat guess.

 

Export Sales Report Estimates:

                                     ESTIMATED RANGE                         ACTUAL

Corn                            150,000 – 300,000 MTs                      166,700 MTs

Soybeans                     650,000 – 850,000 MTs                      525,200 MTs

Wheat                          250,000 – 400,000 MTs                      410,000 MTs

 

Despite the fact that soybean sales were below the average guess they were still well above the average needed per week to meet the USDA estimate.  At this point we need to sell 8 million bushels per week to make it to the 1.265 bill bushel estimate.  This week we did 19.2 million.  If we continue to sell at this pace it will encourage further rallies to ration demand. This is a good reason to pull marginal hedges over to the cash market especially since the market is paying a premium for November beans over the spring and summer months.  If you want upside potential please call us to go over purchasing March – July soybean calls.  The world market is relying heavily on South American production especially this year and any hiccup in weather down there will likely result in stronger prices in the US.

 

Export demand for corn continues to look dismal but basis levels remain strong. Rumors of ‘potential’ Chinese corn importing circulated today and seemed to support price action.  Producer selling is also starting to slow.

 

Corn Technicals:

December corn closed back above the 9-day moving average which is short term positive. The exponential oscillator is again at positive territory is also friendly.  Near term resistance may be found at the 50 day moving average of $7.75 ½.

December Corn

 

Soybean Technicals:

November soybeans closed back above the 9-day moving average which is short term positive.  The gap from the 4th of July started to fill this week but was unable to get to the $14.78 target level.  This may be enough to slow technical liquidation for now especially since we are starting to see beans come off oversold levels.  First resistance is seen at the 100 day moving average of $15.55 ¼.

November Soybeans

 

Friday Informa will release their 2013-2014 acreage estimates around 10:30 am.  We also have Cattle on Feed and Commitment of Traders after the close.  To discuss opening an EHedger brokerage account, please call us at 1-866-433-4371.  Our office hours are Monday through Friday 7am – 4pm.

 

www.ehedger.com/signup 

Best Regards, 

EHedger 

866-433-4371

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.

EHedger Afternoon Grain Commentary 10/10/12

Oct 10, 2012

Overall the CBOT markets closed lower with wheat as the exception.   December corn finished the day 5 ¼ cents lower at $7.36 ¾, December wheat up 5 ½ cents at $8.69 ¾, and November soybeans down 26 ¾ cents at $15.23 ¼.

This marks a new low settlement for soybeans (for the move) as the market gears up for higher production estimates on tomorrow’s WASDE report. The report will be released at 7:30 am CST.  As a reminder both the pit and electronic markets are open during this time.

On average market analysts are calling for corn production to decrease to 10.601 billion bushels (September WASDE was 10.727 billion).  They are guessing that yield will stay steady at 122.884 but the overall harvested acres will decline by over a million acres.  What I believe is especially concerning about the estimates is how wide the range is.  The lowest yield estimate is 120 and the highest is 127.  The lowest production estimate for corn is 9.960 while the highest is 11.194.  That’s a difference of 1.234 billion bushels of corn! The especially large range may translate into high volatility… obviously someone’s guess has to be rather far from reality.

The October report will be especially important this year due to the record harvest pace.  Harvest pace surpassed 50% before October 1st which will hopefully lead to a greater degree of accuracy from the USDA (at least perceived accuracy).  I have included the report estimates based on the Reuter’s survey in the chart below.  We want to stay in sustainable hedges through harvest.  To sign up for a free EHedger trial please click on the link below.

The average price for Fall Crop Insurance Re-adjustment has now set 8 of the 23 closes and is currently at $7.49 ¾ for corn and $15.43 ¾ for soybeans.

October WASDE Pre-Report Estimates:October WASDE Estimates

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Best Regards, 

EHedger 

866-433-4371

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.

EHedger Afternoon Grain Commentary 10/8/12

Oct 08, 2012

Grains were mixed for Columbus Day.  December corn closed 6 cents lower at $7.42, November soybeans ½ cent lower at $15.51, and December wheat up 3 ½ cents at $8.61.

The USDA was closed for the holiday which means all sale announcements, export inspections, and crop progress were delayed until Tuesday.  The lack of any fresh news left grains following the outsides. The US Dollar Index was higher while stocks and crude oil were lower.

The market is focused on the upcoming October Supply and Demand report this Thursday.  Last week FC Stone and Informa released their estimates which were generally considered "bearish".  This week we have the Reuters’ poll results from 28 agricultural analysts.  On average they are estimating corn production at 10.601 billion bushels (122.884 average yield).  They are estimating soybean production at 2.759 billion bushels (37.006 average yield).  There is a massive range between the high and low estimates which could result in high volatility on report day. 

The soybean demand estimates have been dramatically reduced by the USDA since May, but we haven’t seen the actual demand pace show any signs of weakness.  Virtually all of the analysts in the survey are looking for soybean production to increase, the question is will it outpace the demand?  The real demand question revolves around China and the record pace they have set for contracting US soybeans.  Have they stacked most of their 2012 bookings up front or is the actual export demand going to be well above the current USDA projections?   For Thursday we assume that any ‘reasonable’ increase in soybean production will be offset by increasing the export demand estimate.  This would give the USDA a little more demand room for the export estimates leaving the carryout mostly unchanged from September.

After seeing Informa’s estimates on Friday I figured that the average private estimate of corn production would come in higher than 10.6 billion.  Is an average yield estimate of 122.9 an adequate representation of the actual market’s expectations and current trading models?   If this is the case and everyone is stacked in one bullish direction it may set the stage for a disappointing report day for the longs.  Obviously if we see another production reduction from the USDA this will most likely result in another move higher but I would not discount Informa’s estimate.  We are now just past a quarter of the way through setting the fall crop insurance price level.  So far the average corn price for October is $7.53 and the average soybean price is $15.46.  We want to stay in sustainable hedges through harvest.  To sign up for a free EHedger trial please click on the link below. Have a great week!

December CornDecember Corn

November SoybeansNovember Soybeans

December WheatDecember Wheat

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Best Regards, 

EHedger 

866-433-4371

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.

EHedger Afternoon Grain Commentary 10/4/12

Oct 04, 2012

The CBOT markets were mixed with a strong rally in the soybeans and near unchanged for corn and wheat.

We started the day with favorable data for the oilseeds.  Export sales were above expectations for soybeans at 1.296 million MTs the majority of which was going to China.  The STATS Canada report was also very friendly showing a much smaller canola crop than expected. Total Canadian canola production is now estimated at only 13.36 mln MTs in production. The market was looking for 14.7 while the last number 6 weeks ago was 15.4!  Corn sales were 329,900 MTs (in-line with expectations) and wheat sales were 307,000 MTs (below expectations).

The US Dollar Index was sharply lower today which is usually supportive for dollar denominated assets like grains.  The FOMC minutes didn’t contain any new language to shake up the market.  Crude oil and RBOB futures were both up over 4% today but didn’t seem to provide much support for grains.

MARKET OUTLOOK: Tomorrow will be the end of the Deutsche Bank roll and we will get an updated Informa production estimate.  The big report will still come next Thursday the 11th where the USDA will revise yield and harvested acres.  Currently the market seems to be pricing in a much larger soybean crop than the most recent WASDE report.  As I have wrote in previous letters, while I believe it is likely we will see a 200 million bushel increase to supply, I don’t believe it will translate into a higher carryout.  As we saw on today’s export sales report, sales haven’t been slowing down.  We are on a record pace for export sales (percentage basis) and we have reduced the total soybean demand by 616 million bushels in the past 5 months.  I don’t find it hard to believe that we can replace 1/3rd of that lost demand with the 200 million extra bushels which we now may have. I do want to stay well hedged though I find it hard to believe that the price of soybeans can continue falling at its current rate unless bean yields are substantially higher than the current expectations.

Corn has a really bullish supply story, but is the demand going to pick up?   Last week the USDA shocked the market with an old crop corn carryout less than a billion bushels.  In response we had a limit up settlement on Friday and an overall supportive tone this week. Now that we are past the 50% harvested mark this may be a trigger point for market participants to start looking for a harvest low.  We just need to start seeing export demand pick up for any sustainable rallies.

Soybean Technicals:  The November contract finally reached its 50% retracement level and is now trading 47 ½ cents above the lows.  If the $15.04 level is breached I would expect the market to come down the next major support level which is the 4th of July gap at $14.78.  Next upside targets can be found at $15.71 ¼ and then at $16.12 ½ basis November.

November Soybeans

Corn Technicals:  Corn was unable to make it down to the critical 50% retracement level, gap fill, or 100 day moving average before its late rally last week.  We now have the MACD and exponential oscillator turning higher which may be an indicator of another rally to come. 

December Corn

We want to stay in sustainable hedges through harvest.  To sign up for a free EHedger trial please click on the link below.

www.ehedger.com/signup 

Best Regards, 

EHedger 

866-433-4371

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.

EHedger Afternoon Grain Commentary 10/3/12

Oct 03, 2012

The CBOT grains closed near unchanged after a day of wide swings.  November soybeans came down to post new lows for the move at $15.04 before settling 1 ¼ cents higher at $15.31 ¾.  December corn closed 1 ½ cents lower at $7.56 ¾.  December wheat closed 1 ½ cents higher at $8.73.

FC Stone’s production estimates were surprisingly higher than expected yesterday afternoon which contributed to the overnight weakness.  As soybeans surpassed some major technical goals we started to see more buying interest come into the market.  For now the $15.00 level has held but if tested again there is a major gap in November soybeans down at $14.78 which would be the next downside target.

The fact that we have the export sales report tomorrow may have been a reasonable cause for the longs to step back into the market.  Our export sales pace has been very aggressive most notably to China.  Tomorrow they are expecting soybean sales to be between 700,000 – 900,000 MTs.  The USDA announced the sale of 21,000 MTs of soyoil to China this morning.

The EIA report was a little bearish for corn showing a production decline of 23,000 bbl/day to 785,000. The ethanol stocks were also down by 0.5 and are now at 18.8 mln bbl.  Ethanol’s profit margin is estimated to be negative (Iowa Prices) for the 9th week in row wit this week at $0.601 per bushel. Corn had a hard time sustaining its intra-day strength as crude oil fell by over $4 a barrel.  For tomorrow the market is estimating weekly corn export sales to be between 200,000 – 400,000 MTs.

MARKET OUTLOOK: The expectation for higher soybean acres, higher yield, and typical harvest pressure continues to weigh on prices.  Yield reports seem to be coming in better than expected but overall have been hard to quantify.  What the USDA writes down for their October 11th estimate is any ones guess.  But let’s assume that the USDA does increase available bushels by 200 million (increased old crop stocks, increased acres, increased national average yield).  Over the past 5 months we have cut 616 million bushels off the original 2012/13 demand estimates.  With the buying pace China has set we could easily replace 1/3rd of that lost demand with those extra 200 million bushels.  Though I want to stay hedged, I find it hard to believe that the price of soybeans can continue falling at its current rate unless bean yields are substantially higher than the current expectations.  Soybeans are now 41% harvested and the good-excellent rating was left unchanged from last week.

Corn has a really bullish supply story, but is the demand going to pick up?   Last week the USDA shocked the market with an old crop corn carryout less than a billion bushels.  In response we had a limit up settlement on Friday and an overall supportive tone this week.  Corn is now 54% harvested and the good-excellent crop rating went up 1% to 25%.  Now that we are past the 50% harvested mark this may be a trigger point for market participants to start looking for a harvest low.  We just need to start seeing export demand pick up for any sustainable rallies.  Last week we had a dismal 400 MTs… total!  We need to watch the Thursday sales reports for direction as well as the next WASDE report which will be released on October 11th.

Soybean Technicals:  The November contract finally reached its 50% retracement level today before finding heavy market bids to drive the price back to positive territory.  As I mentioned previously, the next major support could be found at the 4th of July gap at $14.78.  Next upside resistance can be found at $15.71 ¼ and then at $16.12 ½ basis November. 

November Soybeans

Corn Technicals:  Corn was unable to make it down to the critical 50% retracement level, gap fill, or 100 day moving average before its late rally last week.  We now have the MACD and exponential oscillator turning higher which may be an indicator of another rally to come.

December Corn

We want to stay in sustainable hedges through harvest.  To sign up for a free EHedger trial please click on the link below.  Have a great week!

www.ehedger.com/signup 

Best Regards, 

EHedger 

866-433-4371

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.

EHedger Afternoon Grain Commentary 10/2/12

Oct 02, 2012

December corn was once again the lone contract to finish higher while beans and wheat had double digit losses.  December corn closed 1 ½ cents higher at $7.58 ¼, November soybeans down 29 ¾ cents at $15.30 ½, and December wheat 12 ¾ cents lower at $8.71 ½.

The November soybean contract is now 70 ½ cents lower for the week.  The expectation for higher soybean acres, higher yield, and typical harvest pressure continues to weigh on prices.  Yield reports seem to be coming in better than expected but overall have been hard to quantify.  What the USDA writes down for their October 11th estimate is any ones guess.  But let’s assume that the USDA does increase available bushels by 200 million (increased old crop stocks, increased acres, increased national average yield).  Over the past 5 months we have cut 616 million bushels off the original 2012/13 demand estimates.  With the buying pace China has set we could easily replace 1/3rd of that lost demand with those extra 200 million bushels.  Though I want to stay hedged, I find it hard to believe that the price of soybeans can continue falling at its current rate unless bean yields are substantially higher than the current expectations.  Soybeans are now 41% harvested and the good-excellent rating was left unchanged from last week.

After the market closed FC Stone released their production estimates.  They raised their bean estimate to 2.849 billion bushels which is 215 million more than the most recent USDA estimate in September.  They raised the national average bean yield to 38.2 bpa.  The firm is estimating total corn production at 10.824 billion bushels (97 million more than Sept USDA est) and have average yield pegged at 123.9 bpa.

Corn has a really bullish supply story, but is the demand going to pick up?   Last week the USDA shocked the market with an old crop corn carryout less than a billion bushels.  In response we had a limit up settlement and an overall supportive tone this week.  Corn is now 54% harvested and the good-excellent crop rating went up 1% to 25%.  Now that we are past the 50% harvested mark this may be a trigger point for market participants to start looking for a harvest low.  We just need to start seeing export demand pick up for any sustainable rallies.  Last week we had a dismal 400 MTs… total!  We need to watch the Thursday sales reports for direction as well as the next WASDE report which will be released on October 11th.

Soybean Technicals:  The November contract found support today at its 100-day moving average of $15.26 ¾ (blue line on chart).  The next targets to find support below this level would be the 50% retracement level at $15.17 and then at the 4th of July gap fill which is $14.78. Keep in mind we are approaching oversold levels.

November Soybeans

Corn Technicals:  Corn was unable to make it down to the critical 50% retracement level, gap fill, or 100 day moving average before its late rally last week.  We now have the MACD and exponential oscillator turning higher which may be an indicator of another rally to come.

December Corn

We want to stay in sustainable hedges through harvest.  To sign up for a free EHedger trial please click on the link below.  Have a great week!

 

www.ehedger.com/signup 

Best Regards, 

 

EHedger 

866-433-4371

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.

EHedger Afternoon Grain Commentary 10/1/12

Oct 01, 2012

Soybeans closed sharply lower to start the week, month, and 4th quarter.  The November contract settled 40 ¾ cents lower at $15.60 ¼.  Wheat also had double digit loss with the December contract closing 18 ¼ cents lower at $8.84 ¼.  December and March corn were the lone contracts to finish green closing a ½ cent higher at $7.56 ¾ and $7.60 (respectively).

Interior soybean basis levels fell sharply today which contributed to the selloff.  Harvest is progressing and cash beans are making their way to market. The market consensus seems to be that we will raise the national average yield as well as harvested acres.  Given the fact that we just had a stocks report show an additional 39 million bushels in old crop beans also isn’t helping the bulls.  But let’s assume that the USDA does increase available bushels by 200 million.  Over the past 5 months we have cut 616 million bushels off the original 2012/13 demand estimates.  With the buying pace China has set we could easily replace 1/3rd of that lost demand with that extra 200 million bushels.  Though I want to stay hedged, I don’t believe that the price of soybeans can continue falling at its current rate unless bean yields are substantially higher than the current expectations.  Soybeans are now 41% harvested and the good-excellent rating was left unchanged from last week.  This is a faster harvest pace than the market was estimating.

Corn has a really bullish supply story, but is the demand going to pick up?   Last week the USDA shocked the market with an old crop corn carryout less than a billion bushels.  In response we had a limit up settlement and strength coming into today’s session.  Corn is now 54% harvested and the good-excellent crop rating went up 1% to 25%.  Now that we are past the 50% harvested mark this may be a trigger point for market participants to start looking for a harvest low.  We just need to start seeing export demand pick up for any sustainable rallies.  Last week we had a dismal 400 MTs… total!  Today we saw an option origin purchase of 100,000 MTs to Mexico.  We need to watch the Thursday sales reports for direction as well as the next WASDE report which will be released on October 11th.

We want to stay in sustainable hedges through harvest.  To sign up for a free EHedger trial please click on the link below.  Have a great week!

USDA Report

www.ehedger.com/signup 

Best Regards, 

 

EHedger 

866-433-4371

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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