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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 Afternoon Grain Commentary 11/19/12

Nov 19, 2012

Grains were stronger Monday after favorable news out of China as well as strong US equity and energy markets.  December corn closed 11 ¾ cents higher at $7.38 ¾, December wheat up 3 ¾ cents at $8.41 ¾, and January soybeans up 11 ½ cents at $13.94 ¾.

The CNGOIC announced the temporary halt of Chinese soybean reserve sales.  Year-to-date the Chinese government has sold roughly 3.7 million mts of soybeans.  They will stockpile soybeans again on new crop supply.  Chinese equities were also higher after touching 3 year lows.

On Friday the EPA announced that they would not be waiving the RFS ethanol mandates which has contributed to some of the recent corn strength.  We are hearing talk of renewed world interest in US corn as well.

Winter wheat prices have been relatively weak lately but we continue to see declining crop conditions.  Last week we saw a record low good-excellent level for November at just 36%.  Today’s report showed another drop this time 2% down to 34% good to excellent.  Here is a chart of front month December wheat:

December Wheat

Traditionally this holiday week can be strong for soybeans and since we are only 1 trading day off the recent lows we may be "due" for a supportive correction.  Export inspections were strong for soybeans again at 61.992 million bushels.  South American weather remains favorable for production and will be the main fundamental providing resistance.

Not surprisingly we saw a major shift in grain positions by the managed money on last week’s Commitment of Traders report. They liquidated 23,962 longs and added 8,622 shorts of corn making a total net long drop of 32,584 contracts (using futures and options)!  For soybeans they liquidated 26,047 long contracts and added 12,632 shorts for a 38,679 contract decline!  This basically proves what we already know, the massive positions have been liquidating AND getting short and prices have come down.  We want to remain adequately hedged in the cash market and keep our upside in calls.

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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.

 
 
 
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