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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 1/14/13

Jan 14, 2013

Soybeans lead the way higher to start the week. March soybeans were up 44 ¾ cents at $14.18.  March corn closed 15 ¼ cents higher at $7.24 and March wheat 12 ¼ cents higher at $7.67.

The soybean strength started on Sunday night and continued into the closing bell.  The USDA announced the sale of 120,000 MTs of US Soybeans to China.  NOPA crush was below the average trade guess by 1.1 million bushels but still at a strong monthly pace.  Conditions are a little dry in Southern Brazil and Argentina.  The dryness is not expected to be an overly bullish factor yet even though many headlines are trying to find a reason for today’s strength.  We can’t say the report was bullish either.  What I believe we are seeing is an increase in confidence.  Funds have been reluctant to hold large long positions especially ahead of the January reports.  This makes sense given the historical uncertainty for the December stocks numbers. Now that we are past the report it may be a "risk-on" scenario again for the funds.

Corn and wheat are finding support not only from soybeans but follow through buying from Friday’s reports.  Wheat acres were lower and corn stocks were well below expectations.  Tuesday the last day of the fund repositioning and we feel a short term bottom may be forming for old crop corn and wheat.

USDA REPORT BREAKDOWN

Corn stocks were reported to be 8.03 billion bushels as of December 1st (average guess was 8.283 billion).  Corn production was slightly higher than expected but so was use.  The WASDE report raised feed demand by 300 million bushels for the year lowering carryout expectations to 602 million.

Soybean stocks were 1.966 billion which was right in line with expectations.  Soybean production was stronger than expected after harvested acres were reported at 76.1 million.  This was considered ‘bearish’ compared to the average analyst estimates as well as initial report response.

Wheat had the strongest report when all-wheat acres were reported at 41.8 million almost a full million less than expected.  With a poor start to the growing year, lower acres than expected, and a competitive price in the world market again, wheat has the strongest fundamentals in our opinion.  Given the fact that corn stocks came in less than expected we feel both products have a chance to at least hold support at these levels.

New crop corn and soybeans were stronger on Monday but failed to hold the same strength old crop has had.  Strong bull-spreading is a result of tight stocks and very large new crop acre estimates. Although I agree that we need to hold solid prices through March 1st to get the higher insurance revenue guarantee, the higher acres are a concern of ours for 2013 prices. For this reason we want to remain with the current EHedger sale recommendations especially through March 1st.  If you would like a second opinion of your current marketing plan, please sign up for a trial using the link below.

USDA REPORT SUMMARY VS EXPECTATIONS

Trade Estimates for US Dec. 1 Stocks

 

 

 

 

USDA

Average

Range

Dec 1, 2011

Sept 1, 2012

Wheat

1.660

1,684

1,553-1,750

1,663

2,104

Corn

8.030

8,219

8,000-8,750

9,647

988

Soybeans

1.966

1,981

1,800-2,100

2,370

169

 

 

 

 

 

 

Trade Estimate for US Crops

 

 

 

 

 

USDA

Average

Range

2012

2011

Corn

10.780

10,650

10,325-10,800

10,725

12,358

Corn Yield

123.4

122.6

121.3-125.0

122.3

147.2

Harvested Acres

87.375

86.89

84.56-87.72

88

83.981

 

 

 

 

 

 

Soybeans

3.015

2,993

2,935-3,104

2,971

3,094

Soybean Yield

39.6

39.6

38.9-41.0

39.3

41.9

Harvested Acres

76.104

75.56

74.70-75.90

75.693

73.776

 

 

 

 

 

 

Trade Estimate for U.S. 2013 Ending Stocks

 

 

 

USDA

Average

Range

2013

2012

Wheat

716

741

637-792

754

743

Corn

602

647

489-760

647

988

Soybeans

135

135

114-186

130

169

 

 

 

 

 

 

Trade Estimates for US Winter Wheat Acres

 

 

 

USDA

Average

Range

2012-13

2011-12

All Winter

41.8

42.585

41.700-44.650

41.324

40.646

Hard Red

29.1

30.296

29.900-31.000

29.863

28.480

Soft Red

9.42

8.898

8.217-10.000

8.120

8.561

White

3.27

3.474

3.300-3.920

3.350

3.360

 

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Best Regards,

EHedger

866-433-4371

www.EHedger.com

 

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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