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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 5/18/12

May 18, 2012

Sharp moves today in grains with a selloff in beans and a huge rally in wheat.  July corn closed 10 ½ cents higher at $6.35 ½, July soybeans 33 cents lower at $14.05, and July wheat 37 ½ cents higher at $6.95 ¼! 

The same story continues in the wheat today: funds shortcovering along with dryness concerns in Russia.  July wheat managed to surpass the 200 day moving average (see chart) today which is the first time since September 1st.

Chart: July Wheat 

The corn was also stronger following the wheat market.  The corn vs wheat feed story has been going on for the past year and the last USDA Supply and Demand report shows the significant switch over to feed grade wheat in the world demand numbers.  Wheat hasn’t been this high to corn in the front month contracts since this time last year!

Chart: Corn – Wheat

 

The soybean spreads have had some very large swings in the past couple of days.  On Monday the July – November spread was trading as low as +73 ¾ cents, yesterday it hit a high of +$1.34.  Now we are back down to $1.17.  These are major moves for the old crop – new crop markets and the choppiness is expected to continue.  We know that the funds have been loaded up with net long soybean positions.  Today’s COT report shows the managed money reducing their net long position by 12,239 soybean contracts (as of Tuesday).  This still leaves them net long 218,088 contracts!

For now we want to remain with our current EHedger recommendations.  The last thing I wanted to mention is the change to the CME grain trading hours. I know they have changed the hours 3 times over but now it looks like we have something set in stone.  They will open on Sunday night at 5pm and trade electronically until 2pm (a 21 hour trading day).  Here is the email I received from the CME group this afternoon:


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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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