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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.

EHedger Closing Grain Commentary 2/3/10

Feb 03, 2010
Market Settlement Change Low High 
March corn 353    -12    352.75 368.25
March wheat 469    -18 1/4 468.25 494.75
March soybeans 908    -17 1/2 908 934
March soymeal 268.90 -4.70 268 276.9
March soyoil 36.90 -0.57 36.72 37.53
Apr live cattle 90.1 0.225 89.15 90.10
Apr lean hogs 67.075 0.23 66.65 67.3


The grain markets closed sharply lower today.  Yesterday’s positive session did not see follow through buying as corn, beans, and wheat finished with double digit losses and right on the lows of the day.  Crude oil turned from higher to lower, as the dollar traded over 300 points higher to $79.50.  We are near 6-month highs in the US dollar.  The dollar rally and grain selloff looks to be the outcome of growth concern in China.  A slowdown in the Chinese economy will be negative to all commodities.  Yet, the largest bearish fundamentals continue to be the negative numbers from last month’s supply/demand report.  The abundant supply along with the excess available spring acres continues to pressure the market after any strength, as seen yesterday. 

 

Demand for corn and wheat should start to increase as prices are currently on a large break and nearing contract lows.  An increase in demand for beans will still be difficult to achieve with a steady South American harvest just around the corner.  Meanwhile, the EPA finalized some regulations for their renewable fuel program.  There were no major changes.  A report can be found at http://www.epa.gov/otaq/renewablefuels/index.htm  To add to the negativity we will have to watch open interest in the grain markets.  A large amount of longs have been added since last year and with the downward movement many “trend following” funds may start changing their position.

 

Tuesday the 9th is the next USDA crop production and supply/demand report.  Although no major changes are predicted the USDA could easily throw in more surprises.  Analyst estimates will be out later this week.  Otherwise, the next major report and trend changing data will come forward in March with the updated USDA numbers and prospective planting. 

 

As always, please call us for a chat about your specific situation.

 

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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.

 


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COMMENTS (7 Comments)

Anonymous
to 4:17...absolutely agree!
1:59 PM Feb 5th
 
Anonymous
You take out an estimated 650 million bushels still out in the field and we have a tight ending stocks number. A lot of corn was docked way too much at elevators. To take a test weight analysis on corn when it is wet is not real true. It should be dried first than test weight. It isnt fair to take some ten or twenty cent discount on weight before corn is dry and final product sits in front of you. And than a standard shrink thrown in besides. Also it seems protein in spring wheat generally is higher when crop is dry. Another interesting note on spring wheat protein, no test plots showed a significant drop in protein as compaared to what producers are gettting. Just some tidbits. Also get a kick out of when I haul a load to elevator it all goes by weight. If I have 30,000 pounds on truck and my test weight is 55 my volume of bushels hasnt changed. Than we get to divide by what the benchmark is 60 pounds and come up with less bushels in truck. If its 55 pound wheat lets divide weight by 55 pounds to come up with volumetric bushels. Krazy observations...
11:10 PM Feb 4th
 
 
 
 
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