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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 Closing Grain Commentary 1/12/11

Jan 12, 2011

Well the market seemed to be waiting for a bullish report and it didn't disappoint.  March corn finished 24 cents higher, March Soybeans 58 cents higher, and march wheat 11 cents higher.  I have included a copy of the report below, but let's go through the numbers.
 
First market surprise:  lower corn and soybean yield.  Corn yield was projected by industry analysts at 153.9 and came out at 152.8. Soybean yield was projected at 44 but came out at 43.5. This put the production number lower than what the market was expecting.  The report then shows an increase in corn used for ethanol by 100 million, and a decrease in feed usage.  Food and residual usage was higher.  All of this combined brought US corn carryout down to 745 million bu, and Beans at 140 million bu.  These are both below analyst expectations and the reason for such a sharp incline. On top of that, we had decreases in world corn and soybeans carryover which was supportive. 
 
For wheat we did have an increase of 3.67 million acres of winter wheat as well as an increase in world wheat carryout.  This is likely why wheat was the laggard of the three today, even with a lower US carryout number.
 
So the question is "where do we go from here?"  The report only puts more emphasis on next year's acres.  We need to have an increase in acres and at least a normal growing year to keep up with the high demand.  This means we could be looking at more upside potential for corn, wheat, and beans between now and the March Planting Intentions report as these markets continue to compete for acres.  Unless there are major changes in the outside markets or major fund selling, we could keep seeing support under these markets.
 
At some point demand will obviously be rationed especially starting on the ethanol side. Crude oil has stayed strong, and a move above $100 will certainly help the corn rally continue.  We will monitor this closely. 
 
With all this said, these are still great prices, and we have them right now.  Having scale up orders in to take advantage of these rallies is a great idea on guaranteed bushels.  As we get closer to setting the spring Federal crop insurance price, being more aggressive on selling those guaranteed bushels might be a good idea if it looks good in the AMMO program. 
 
For now we will have to see what this recent news will bring us price wise.  If you have any questions or would like to take another look at your strategy, please call your broker today1664

 

 

 

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Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. 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 E Hedger, its affiliates, officers, directors, employees, or agents. Recipients assume the risk of reliance on and indemnify and hold E Hedger harmless for any and all losses, costs, or tax consequences incurred as a result of their use of market information.

 

 
 
 
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