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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 4/27/12

Apr 27, 2012

It was another strong day for the old crop contracts with May corn leading the way!  May corn finished 29 cents higher at $6.53 while July corn finished 18 cents higher and is now 27 ½ cents discount to May!  July soybeans closed 13 ¼ cents higher while November closed 3 ¼ cents higher (new spread high again).  May wheat closed 16 ¼ cents higher at $6.42 ¼.

Monday is first notice day for May grain futures.  With spreads moving like they have the past few days I would think this volatility will continue right into delivery.  I have included a chart of May – July corn to show the massive rally it has made over the past two trading sessions.

Chart: May – July Corn

Corn Chart

The USDA announced heavy new crop corn sales this morning with an "unknown destination" buying 1.440 Million MTs!  China reportedly bought 120,000 MTs of old crop corn and 116,000 MTs of new crop soybeans.  Also another "unknown destination" bought 110,000 of new crop soybeans.

We continue to see export demand pick up and now it is flowing into new crop corn.  We will have to see how the flat price reacts during delivery next week.  Old crop soybeans continue to gain on new crop and are now trading July at a $1.31 ½ premium over November.  What is rather surprising is the market also has November soybeans trading at a 23 ½ cent premium to March 13!  The common theme with the money-flow is bullspreading!  Bullspreading has also helped push the July soybeans over $15 today which we haven’t seen front month beans trade above $15 since July 2008!  An interesting fact: in 2008 we only had 8 weeks total where FM beans were able to touch or trade above $15.00. 

Lastly I wanted to discuss the massive changes we saw on today’s Commitment of Traders report.  The "managed money" reportedly lowered their net long corn position by 43,511 contracts!  It is no wonder corn has had a hard time sustaining any strength!  They now stand with a net long position of 103,079 contracts of corn.  Soybeans added a meager 2,615 contracts to their net long position but stand with a massive 243,389 net long position!

For now we will continue to watch export sales and announcements for direction in these markets. We obviously can see that the funds have deleveraged corn and are still loaded up with long beans.  This will make getting out of that position interesting when the time comes I am sure. To receive a free trial of the EHedger research including hedge recommendations, please sign up using the link below. Thanks and have a great weekend!

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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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