EHedger Afternoon Grain Commentary 3-19-2012
Mar 19, 2012
Grains finished weak with front month wheat leading the way lower. May corn settled 9 ½ cents lower at $6.63 ½, May soybeans down 7 ½ cents at $13.66 ½, and May wheat down 19 ¾ cents at $6.52 ¼.
The fact that Russia announced that they do not see the need to limit grain exports this year put some downside pressure on US wheat prices today. They went on to say that they may see Russian grain exports each a record 27 MMTs this year. This combined with lower than expected export inspections this morning kept downside pressure on the market right through the day session close.
I talked on Friday about the July – November soybean spread which is just coming to its long term trendline resistance and held that level today (see chart). We don’t see near term export pace raising enough for the US carryout to drop significantly on the next WASDE report as many analysts are calling for. We did see a minor uptick in crush on the last crush report. If anything the market has done all it can to ensure that soybeans will gain/hold enough acres in the US to help cover any shortfalls that the South American crop had after this year’s weather related problems. Until then, World stocks-usage rates have not gone down significantly as we don’t even have a definite South American production number just yet. With soybean volatility still running at a relatively low level, hedging using the old crop options may not be a bad idea.
We expect March to continue to be a volatile month as traders gear up for the Planting Intentions report and Quarterly stocks data. We like staying with the current EHedger recommendations. If you have any questions, please contact your broker. Thanks and have a great week!!!
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