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 Afternoon Grain Commentary 10-4-2011
Oct 04, 2011
Markets continue to look weak, with lower trades across many commodities and equities today. For ag futures, soybeans once again led the way lower, with November beans falling 17½ cents. December corn finished 4¾ cents lower and December wheat 15½ cents lower.
We did, however, see a late-day rally in the Dow Jones futures and may see some strength on the open tonight. FC Stone’s latest yield estimates were released today, with corn at 148.7 and beans at 42.8.
With December corn trading $2 off its highs and November soybeans $3 off their highs, we are quite oversold. Between now and the Oct. 11 report, we expect volatility to remain high and outside markets to have an influence. Since we already have higher than expected old crop stocks, the yields are going to be the next major focus for the upcoming report. For this market to gain support, we need to see another major fundamental change such as further yield reductions or increased demand. The stocks report obviously revealed some demand destruction this year when stocks came in higher than expected.
We want to conservatively re-own bushels on this latest break using options. We like the corn option spreads we have laid out if you are well sold and you have run it through AMMO. Buying back bean sales using calls is still ideal, even though we have had higher volatility lately. For wheat, we can re-own bushels by bull spreading December-July contracts as a way to roll forward your hedge. We can also look at call spreads for wheat for a defined risk trade (please call your broker for strikes/prices).
To producers who need more downside protection: Please call your broker to discuss available strategies using AMMO.
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Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge and financial resources. 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 EHedger LLC, its affiliates, officers, directors, employees or agents.