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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 7/06/2011

Jul 06, 2011

Grains were mixed today after the Chinese rate hike of 25 basis points. December corn finished 4 cents lower. November soybeans ½ cent higher, and December wheat 9 cents lower. 

The USDA Supply and Demand Report will be released next Tuesday. I have included our estimates for the supply and demand tables and where it places carryout for next year in the chart below. As you can see we put the new June 30th acreage report’s numbers in for 2011/2012 production and how they compare to the last S & D report in June.
You can see that I have factored in a drop in corn usage for ethanol by 100 million bu for 10/11 as well as Feed and Residual as more of that demand switches to wheat, also due to a jump in the June 30th stocks report. This would put a much larger number of 930 million bushels carried “in” to the 2011/2012 crop year for corn. And if we get a 161 yield, we could easily see corn carryout back above 1 billion bushel for next year.
For wheat we now have the ending stocks number of 860.7 million bu. Next year we expect to see feed and residual usage climb up to 275 bringing carryout next year down to 659 million bu.
For soybeans, we lowered exports down to 1525 this year and 1500 for next due to lower demand pace. Competition from such a large South American soybean crop has had a large impact on demand for US beans. We also plugged in the USDA acreage change down to 75.2 million acres. Even with the lower exports, this would bring us down to an extremely tight carryout situation of 160 million bushels.
Of course the yield fluctuations can have tremendously different outcomes for carryout at the end of the year. Right now the fundamentals seem to support beans and wheat over corn and it is a good idea to make sure you are covered. Checking up with AMMO is a good way to make sure there aren’t any gaps in your marketing plan. Please call your broker with any questions and have a great rest of the week!

Best Regards,

 
EHedger
USDA Report 7 6 2011
 
 
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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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