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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.

Closing Grain Commentary July 7th

Jul 07, 2010

It was another wild day in the grain markets as corn, beans, and wheat all posted double digit gains. The main theme today seemed to be outside money flowing into the markets along with some unwinding of bull-spreads ahead of Friday's USDA report. This report will be issued by the USDA on Friday morning at 7:30am and will deal with Supply and Demand and wheat production. Also on Friday morning the USDA will release the weekly export sales numbers. These numbers are usually released on Thursday; however, due to the Fourth of July weekend they have been pushed back a day. We will release all of the trade estimates for both reports in tomorrow's commentary.

December corn settled 10 cents higher at $3.89 ¼. During the session we briefly traded up to the $3.90 level and ended up finishing the day just off the highs. As we have been discussing the corn complex still appears to be in a range bound trade with many producers looking to sell corn back up at the $3.90-$4.00 area. Today we issued a trade recommendation to take profits on the December $3.40 puts that we sold. If you were unable to get the order in please get in touch with your broker before tomorrow's open. Looking at the weather patterns for the next 6-10 days it appears that we will see good weather for a majority of the corn -belt and still experience no threatening patterns. As I mentioned earlier, the USDA will release a Supply and Demand report on Friday morning so it wouldn't surprise us to see more of this volatility heading into the report. If you need to catch up on cash sales or are looking for additional protection before Friday mornings report please give us a call.

Soybeans were the upside leader today as the November contract settled the day 32 ½ higher at $9.32 ½.  It appears that traders were concerned about the drop in crop ratings on last night's crop progress report. Our opinion is that the crop as a whole looks solid and we need to continue to monitor the weather as we move forward. It felt like outside money was also flowing into all three grains today and that was very prevalent in the bean market.  Going forward, we feel that producers that need to catch up on cash sales or hedge protection should be placing scaled up orders in at these to take advantage of this rally. It may go higher from here but having resting orders placed will allow the producer to take advantage of a continuing rally. Extended forecasts will always be constantly changing, in our opinion this is volatility that needs to be taken advantage of. For the producer that is worried about selling the grain in a rallying market there are call options to protect these sales. Please get in touch with your broker to discuss a strategy for your individual operation.

The wheat market had another solid performance today as the December contract for Chicago settled the day 23 ¾ cents higher at $5.59 ¼. There are stories being reported that Ukraine is experiencing dryness and this may have been a reason for some of the buying interest during today's session. In our opinion this worry may have been over-done. As I mentioned earlier weather patterns will constantly be changing and this will do nothing but add to the volatility and confusion in all three markets. The bottom line is, if a producer can sell grain at a profitable level they need to be taking advantage of this rally. For those producers that are able store wheat and sell deferred futures this has been a successful strategy. We realize that this may not be a strategy that all producers can put into place so please give us a call to discuss your individual operation.

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