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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 1/21/11

Jan 21, 2011

Grains settled mixed to stronger today with bear spreads in control of corn and soybeans.  March corn finished 3 ¼ cents higher, March beans 2 cents lower, and March wheat up 21 cents.  To put it in perspective of what the spreads did - Dec corn up 11 ¼, Nov beans up 6 ½, and July wheat up 13 ½.
 
Exports were strong today, at least stronger than anticipated.  The following is the actual vs the expected range in 1000 MT's:
 
                        Expected                       Actual
Soybeans          450-750                        915.4
Corn                 500-900                        1029.8
Wheat               400-750                       1147.8
 
On top of these strong exports, we also had a sharply lower US dollar and strong equities.  Also today, Informa came out with its 2nd acreage estimate for 2011.  They are projecting corn acres at 90.9, bean acres at 76.7, and total wheat at 57.6.
 
On top of all this fresh data today, the EPA also announced the approval for E-15 ethanol blend for cars made between 2001 and 2007. This adds to the decision in October for approving E-15 for cars made after 2007.  All this was seen as friendly corn today.
 
Cattle on feed report estimates vs actual today:
 
                                                            Average                        Range               
                                                         of estimates                   of estimates       Actual
On-feed on Jan 1                                   104.2                            103.0-104.9        105
Placed in Dec                                         113.7                            102.8-120.6        116
Marketed in Dec                                    105.2                            102.9-106.9        105
 
More placed than expected and slightly more on feed than expected, this is slightly bullish grains.
 
Lastly I want to talk about the funds.  The latest Commitment of Traders report shows an increase in net long corn positions by 38,094 contracts by the large speculator.  They increased their net long soybean positions by 12,706 and reduced their net long ALL-wheat positions by 929 contracts.  Basically it means the big guys are still buying this market.
 
We are still feeling the aftershocks of the report with a bullish bias to these markets.  For now, we will likely see the market supported on further breaks.  This doesn't rule out the possibility of a large break from unforeseen events, so I recommend staying well hedged in the cash market and keeping your upside potential in the call spreads.

 

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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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