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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 5/14/2012

May 14, 2012

Soybeans have continued their downward selloff from last week closing 19 cents lower in July and 26 ½ cents lower in November on heavy volume.  November soybeans are back below $13 which we haven’t seen a November soybean close below that level since March 12th.  July corn held support finishing 2 cents higher at $5.83, and July wheat 1 ¼ cent higher at $5.98 ¼.

Over the past couple of months we have pointed out just how large of a long position the "managed money" has been growing/holding in soybeans.  At this point it is pretty clear that we are seeing liquidation in these markets especially in soybeans which is driving them lower.  On Friday we got the latest glimpse of their actual positions and saw that they reduced their net longs by 23,561 contracts but are still holding a net 275,328 long contracts using futures and options!  This is still a massive long position that adds quite a bit of downside potential.  For November soybeans, the next major moving averages where we may find support are at the 100 day which is at $12.83 and the 200 day at $12.67 ¼ (see chart). 

Chart: November Soybeans 

December corn was able to hold support today despite sharply lower outside markets and lower soybeans.  This could be another product of spread-liquidation as buying soybeans and selling corn has been a large trade since the beginning of the year.  We briefly traded below the psychological $5.00 level on Friday but had less than a 10 cent range today.

Chart: December Corn   

After the day session closed the USDA released their Weekly Crop Progress worksheet as scheduled.  Corn is now projected to be 87% planted and 56% emerged!  This is well above the 5 year average pace for this time at 66% planted and 28% emerged.  The same goes for soybeans with a national planting pace of 46% (average 24%) and 16% emerged (average 5%).  Winter wheat crop condition did drop by 3% in the good-excellent categories but is still at 60%.

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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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