EHedger Afternoon Grain Commentary 7-21-2011
Jul 21, 2011
Weather changes have again created another volatile two sided trade today. December corn ended up finishing 4 ¾ cents lower at $6.73, November soybeans finished 4 cents higher at $13.88, and December wheat down 18 ½ cents at $7.16 ¾.
This morning’s forecast called for less heat with more chances of rain next week. This combined with low export sales immediately put corn on the defensive. At midday, we are again getting conflicting weather reports about how hot and how dry it actually will be next week. This combined with a sharply lower US Dollar the market was able to come sharply off its lows today.
US Weekly export sales were lower than expected today for corn, wheat and soybeans. Here are the following actual vs expected (in 1000’s of MTs):
Expected Range Actual
Corn 900-1400 901.5
Soybeans 400-550 445.9
Wheat 300-500 403.5
Source: Reuters
One more thing to mention that many aren’t talking about is the feed wheat situation. Right now Russian feed wheat is almost $80 per ton cheaper to feed than corn is, almost $2 per bushel. If corn tries to stay where it is now, we could see much of this demand shift to cheaper feed grade wheat. This is one more factor for corn that could end up bringing the overall price down.
If weather continues to come in with problems in the extended forecasts, or they take out rain we could easily see corn/beans go after their contract highs for new crop. If they end up reducing the ridge or increasing precipitation, we could just as easily see this extra risk premium come right out of the market. We like to remain with current hedges, and look to be long Sept calls if you want more upside coverage to take you through the rest of the summer. Please call your broker for details on the Sept options.
Best Regards,
EHedger
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