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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.

Weather forecasts control the grain market 5/14/09

May 14, 2009
 
 
SETTLEMENTS 5/14
         
May 09 Corn
421 1/2
+ 2
July 09 Corn
428 1/4
+ 1 3/4
May 09 Beans
1166
+ 16
July 09 Beans
1147 1/2
+ 19 1/2
May 09 Wheat
581 1/2
+ 2 3/4
July 09 Wheat
593 1/4
+ 4 1/2
May 09 Meal
381.5
+ 3
May 09 Oil
38.60
- 0.30
 
The grains closed higher today rebounding from lower overnight markets. Export sales were out this morning showing solid figures for corn and beans, while a weak number for wheat. Corn sales were 936 thousand MT of old crop and 246 for new crop. Bean sales were 402 thousand MT for old crop beans and 353 for new crop. Meanwhile, wheat’s dismal sales were 103 thousand MT for this year and 132 for next year. Bean sales have almost already met the current USDA projection, needing only to average 54.1 thousand MT for the remainder of the marketing year and corn sales are well on pace to meet projections. Additionally, meal sales were strong. With these sales figures and the known tight ending stocks old crop beans are finding support and continue to close near their daily highs. The most important news continues to be the weather. Forecasters are calling for another system to move across much of the Midwest Friday/Saturday and then next week finally finding some drier days. The better weather next week is greatly needed for many farmers to catch up. If planting progresses quickly this will keep a lid on sharp rallies for the time being, however, the corn market still needs to keep a premium in price to keep the acreage in corn. Open interest in corn is now at its highest level for 2009 thanks to this week’s surge. Beans are at their highest open interest level since last summer. A continued wet pattern will have people worried about losing too many corn acres to soybeans. If that happens, we could see Dec. futures test this year's high of $4.72 and maybe even $5.00. The calls we bought this week should be used as "ammunition" to make cash sales if/when futures rally to those levels. 
 
If you are bullish corn because of the wet weather, you should probably be equally bearish new crop soybeans. We will likely see cotton acres in the Delta, corn acres in the Eastern Midwest and Spring wheat acres in the Northern Plains switch to soybeans...the question is how many acres. The bullish old crop fundamentals have "pulled" up new crop soybeans to near $10/bushel. The USDA slashed total acres in their last Planting Intentions report. By our count, there are up to 6 million acres still unaccounted for. This combined with a wet spring could lead to a massive increase in soybean acres.  
 
            Wheat closed higher today. The fundamentals for HRW and SRW wheat differ greatly from those of the HRS market. HRS wheat looks to lose acres in the U.S. and possibly in Canada. HRW and SRW fundamentals are bearish and getting worse. Global stocks continue to build and demand remains weak. As a producer of winter wheat, you should be caught up on sales and re-own HRS calls if you are worried about planting delays in spring wheat.
 
 
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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 (1 Comments)

Anonymous
Won't the late spring make double cropping hard - and isn't the second crop usually soybeans?
11:59 AM May 15th
 
 
 
 
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