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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 8-18-2011

Aug 18, 2011

Today grains traded lower along with the sharply lower outside markets. December corn finished 12 ½ cents lower at $7.13, December wheat down 18 ¾ cents at $7.39 ¼, and November soybeans down 5 ¾ at $13.61. 

Right now the story is still Demand destruction versus supply concerns.  Weekly sales today were poor for corn and we continue to see this week after week.  Ethanol has obviously plateaued, if it weren’t for exports to Brazil we would probably see further reductions.

The weekly export sales were out this morning and are as follows (in 1000 MTs)

                                                         Estimated Range              Actual

Corn:                                                  600-1250                       523.8 (poor)

Soybeans:                                            400-900                        421.5 (fair)

Wheat                                                  400-700                      548 (as expected)

Supply concerns have obviously been high enough lately to keep the price well supported since we are just one day off the contract highs.   Rains are expected to be favorable in the short term.  It all depends on where the national average yield goes from here.  Currently for corn it is set at 153 by the USDA which is well below the trend.  If you look at the last 7 of the 8 times the USDA has dropped the August yield estimate significantly, the final yield ended up being MORE than the August projection.  The point is many analysts are still expecting further final yield reductions which may end up being the case, but we have to remember that the USDA has a history of overestimating these reductions when it comes to the August reports.

With the Dow Jones having another 500 point swing today it looks clear that the market isn’t ready to drop the volatility just yet.  We want to stay in sustainable positions and stay well hedged at these levels. 

Please call your broker if you have any questions.

Best Regards,

EHedger

 

For a free trial of EHedger services including the morning automated phone call, daily afternoon market commentary, and/or a free consultation, please contact EHedger at 866-433-4371. You can also visit us at www.EHedger.com.

 

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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