EHedger Afternoon Grain Commentary 2-17-2012
Feb 17, 2012
Grains finished strong to close the out the week. March corn settled 5 ½ cents higher at $6.41 ¾, March beans up 9 ¼ cents at $12.67 ½, and March wheat up 15 ¼ cents at $6.44. For the month of February, March beans are now up 68 ½ cents compared to March corn up 2 ¾ and March wheat down 22 cents.
Grains were stronger overnight led by soybeans. After the overnight closed we did see that massive soybean sale to China of 2.803 MMTs mostly for 2012/2013. This was in line with expectations. We also saw sale announcements of 132,000 MTs of corn to S. Korea, 120,000 MTs of SRW to unknown and 20,000 MTs of US soyoil to Morocco. Cash bids remain firm as producer selling continues to be slow. Wheat exports have finally started to pick up as we have recently become more competitive in the world again. Ukraine stated they would limit wheat exports to 1.7 MMTs from now through July.
I have talked a lot about the corn-to-soybean ratio over the past couple of days. The market has done its job trying to predict an increase in corn acres before we actually see planting intentions. We are at great levels for hedging new crop soybeans again as we don’t see the need for beans to really "bid" for acres given current world supply. The market continues to put a large premium estimating South American production to be lower than current USDA estimates. If these fears are in fact overstated and production ends up not as bad as "some" say, then we may find this latest rally a good place to have sales on the books. Based on what we have seen so far for weather we still agree with the USDA expectations for S. American production.
"Managed Money Net Futures/Options Positions" Source: Commitment of Traders
Corn: Net Long 206,053 contracts which is a decrease in net longs by 1,661 contracts
Chicago Wheat: Net Short 44,441 contracts which is an increase in net shorts by 13,572 contracts
Soybeans: Net Long 81,042 contracts which is an increase in net longs by 1,292 contracts
**We will be closed Monday, February 20th in observance of Presidents day. Grains will re-open on the night session Monday at the regular time of 6 pm CST. We will be back in the office on Tuesday morning. For a free trial of the EHedger research, please click on the link below.
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