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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 Grains Commentary 9/17/09

Sep 17, 2009
 
SETTLEMENTS 9/17
         
 
Dec 09 Corn
328
- 8 ¼
Nov 09 Beans
951 ½  
+ 1
Dec 09 Wheat
461 ¾ 
- 5 ½
Dec 09 KC Wheat
474 ¼
- 5 ¾ 
Dec 09 Min Wheat
500 ½   
+ ¾  
Dec 09 Meal
293.2
- 0.8
Dec 09 Oil
34.86
+ 0.08
 
 
 
 
 
 
 
 
 
 




         Corn, and wheat closed lower while beans managed to work their way back and close higher on the day. This morning’s export sales came in a bit over the estimates for corn and as expected for beans and wheat. Early this week the market saw a strong rally after the forecast put a chance for threatening temps in the Midwest late next week. However, the latest weather models have taken the threatening temps late next week out of the forecast. In addition, the forecast does not see any cold weather threats during the 11-16 day forecast.

            Obviously, there is still time for a freeze to hurt the crop and it is very difficult to estimate what the final yields are going to be. However, many of the producers we talk to are getting better yields than they expected and overall the crops are looking good in most areas. If the crop finishes up well we could see a very large corn and bean crop. It looks like in many areas producers are realizing that they are probably going to have even more grain to sell than they thought. This large amount of grain that has to be moved should keep pressure on the corn market (obviously a freeze or some unforeseen outside event could change this). I realize that many producers are below breakeven levels and refuse to sell their crop, even on rallies like we saw last Tuesday. It is a perfectly natural response not to want to sell at a loss and I realize that most farmers will be probably be helped out by crop insurance payments. However, there is a big difference to a farmers bottom line (even if it is a loss) if they sell Dec corn above 3.40 on the board,(which you could do the last three sessions) compared to having to sell it below 3.00 which is a potential risk if we see the crop finish up well. In addition, beans at 940 have even more potential downside risk if things finish up well. As I have said I would love prices to take off to the upside and see farmers make a lot of money on all their unsold grain. However, producers still have some real downside risk at these levels. If you are still holding a large amount of unsold grain use the rallies (like we saw Tuesday) to make some sales (or at least put some protection in place). You don’t have to go sell your entire crop but at least make some sales on rallies and hope prices continue to go higher so you can sell more. What I really don’t want to see is the situation set up where farmers are still holding a large amount of unsold grain with corn prices below 3 dollars and beans prices at eight dollars. In addition, those of you that are caught up on 2009 crop should…  Please give us a call if you have any questions.  
 
 
 
 
 
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COMMENTS (9 Comments)

Anonymous
9:54, do you have a point? Or do you just like numbers?
1:51 AM Sep 18th
 
Anonymous
Yes, that was one of the comments I was refering to. My point was that he doesn't make sense. The funds have been net longs in corn and soybeans for the majority of the year. This doesn't include the massive longs that are the Index Funds. You could argue that they have been keeping prices artificially too HIGH. So to infer that the traders are pressing prices lower is a complete falacy. If they are going to press prices lower, they should start off by being short the market, not long. We are the ones that are supposed to use fund longs to our advantage and sell to them.
1:46 AM Sep 18th
 
 
 
 
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