EHedger Closing Grain Commentary 12/27/10
Dec 27, 2010
Monday soybeans had a very strong day after continued concerns over Argentine weather. March corn settled 1 ¼ higher, January soybeans 24 ½ higher, and March wheat 2 ¾ cents lower.
On Christmas day China announced an interest rate hike of 25 basis points which was expected to hold some resistance on the markets. Corn and wheat managed to stay mixed but soybeans rallied strong throughout the day. This is also on weaker than expected export inspections for soybeans. The 6 - 10 day forecast is still calling for hot and dry weather in Argentina which is providing support. For Brazil weather still remains favorable but heavy rains in the Northeastern section and dry conditions in the South are being monitored closely.
Export inspections were flat to weak:
Corn estimated range: 29 - 34 actual: 32.6
Beans estimated range: 35 - 40 actual: 23.3
Wheat estimated range: 22 - 27 actual: 17.5
March Corn and Soybean contracts are making new highs for 2010. Technically the market still looks strong but is getting towards overbought levels. The Commitment of Traders report was delayed until today. It shows heavy increases in net long positions by the funds in Corn and Beans. At the same time it shows their net short positions have only increased for Natural Gas. Many traders are concerned that in early 2011 they will flip and start to roll out of corn and reduce their Nat Gas short positions. If this happens it could be negative grains near term. We are still looking at getting short term put protection on for corn and beans, and after days like today it only looks cheaper to do so. Please call your broker if you need to get more protection on for your 2011 crops.
Markets are expected to be low volume through December 31st as many traders are on vacation. Today we did see very low volume in corn and wheat, but decent size in soybeans. If you are looking to add additional protection, or have any market questions, please don't hesitate to give your broker a call.
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