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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 Weekly Grain Wrap-Up 10/30/09

Oct 30, 2009
 
 
SETTLEMENTS 10/30
         
 
Dec 09 Corn
366     
- 13 ½ 
Nov 09 Beans
978 
- 7 ½
Dec 09 Wheat
494 ¼    
- 9 ½ 
Dec 09 KC Wheat
499  
- 9
Dec 09 Min Wheat
513 ½      
- 10 ¼ 
Dec 09 Meal
297
+ 1.7
Dec 09 Oil
36.40
- 1.12
 
 
 
 
 
 
 
 
 




 
 
Corn closed 13-½ -cents lower on the day, 32-cents lower on the week and 22-cents higher on the month. This week, the “outside markets” dictated grain prices more than anything else. The U.S. dollar and the stock market have been trading in very large and choppy ranges. There has been a lot of money poured into commodities on the expectation of a weakening U.S. dollar and a recovering global economy. The U.S. dollar and the stock market seem to be looking for direction at current levels. This “choppy” trade in the outside markets is causing violent price swing in all commodities including grains. At the same time, harvest has had the slowest start in 30 years. This late harvest combined with “new money” entering the commodities, helped rally corn prices sharply during the month of October. Although this may be of relief to some farmers, this rally also caused some negative side effects. One side effect was that the U.S. has lost export business as corn out of South America became sharply discounted to U.S. corn. The largest negative of this rally is that it eliminated crop insurance payments for many farmers (those with GRIP or CRC). The average December futures price for the month of October was $3.72. With corn harvest likely to last into December, many farmers have been reluctant to make cash sales until the bushels are out of the field. Without the protection of crop insurance, there are now billions of un-priced and unprotected bushels hanging over the market. Because this crop has been very difficult to store, we could see a lot of bushels move directly to the market between now and Christmas. If the outside markets turn lower, this could be a very bad combination for the grains. I don’t know if the outside markets will turn lower or not, but as a producer I would be very cautious here. You should at least own some December puts until you can make cash sales. All of our customers should be caught up on our recommendations, please call if you have any questions.
 
Soybeans closed 7 ½ -cents lower on the day, 28-cents lower on the week and 51-cents higher on the month. November soybeans have been going mostly sideways since last spring. They closed the month of June at $9.81, the month of July at $9.82, the month of August at $9.79 ½ and the month of October at $9.78. As with corn, most producers will not be receiving crop insurance payments for soybeans. Besides the outside market influences, the soybean market has been pulled in two directions all year. The tight old crop stocks and record Chinese purchases have fought with the record new crop supplies from the U.S. and potential record crops in South America. This transition has proven very difficult especially with the constant harvest delays throughout the Delta. Currently, the weather outlook looks good for harvest progress. There was a strong system that moved through the Midwest and Delta over the past couple of days. This will further slow harvest, but the outlook calls for mostly dry weather over the next 10 days or so. If this forecast proves accurate, soybean harvest should wrap up in many areas of the Midwest. This should be enough to “turn” the soybean market lower as we head into January. With a great start to the South American growing season and a likely increase in acres here, we could see a massive increase in global stocks this coming year. I know there are still some obstacles ahead, but there is a good chance that soybeans will be the weakest grain/oilseed in 2010. 
 
SRW wheat closed 9 ½-cents lower on the day, 53-½ -cents lower on the week and 37-cents higher on the month. Massive short covering helped rally wheat $1.35/bushel in October. The wheat market is also being pulled in two directions. Huge global stocks have pushed prices to three year lows. However, the big picture seems to be changing. Wheat has already lost acres in South America and looks to lose acres in the U.S. this fall. The late corn and soybean harvest will prevent acres from being sown into wheat. If corn and soybean prices break sharply from here, wheat prices should follow. However, I think that the wheat market has already seen the most bearish fundamentals. The fundamentals are not necessarily bullish, but they are improving. For this reason I am looking to buy wheat on breaks from here. I will put some recommendations out next week for producers interested in buying some calls. 
 
 
 
 
 
 
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COMMENTS (1 Comments)

Anonymous
Keep reading a lot of the HRW and SRW might not get seeded, due to wetness. Think theres any hope for wheat prices down the road? Wont this equate to even more corn and soybeans next year?
10:02 AM Oct 31st
 
 
 
 
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