EHedger Closing Grain Commentary 2/14/11
Feb 14, 2011
Corn and beans had a sharp setback today while wheat managed to remain higher. December corn finished 10 ¾ cents lower, November beans finished 14 cents lower, and December wheat finished 4 ¼ cents higher.
Today the U.S. Crops Baseline Report was out at the high end of estimates and was a large part of the intra-day selloff. They are projecting ethanol usage to slow in 2011 to 4.875 Bill Bu. Also bearish, is the increase in expected acreage to levels not seen since 2008. The 8 major crops are expected to jump to 255 million acres from 245 million acres in 2010. Again, these are preliminary projections, the main acreage report will still be of more significance in March.
Recent weather in Argentina has been favorable for soybean production according to the Agriculture Ministry. Rains are still needed in the Southern regions, but for the most part they have played a significant role in reviving expected production. Their corn crop production is still expected to remain below expectations.
The next WASDE report will be on March 10th. After that, we will have the March 31st planting intentions report. We want to be more aggressive on sales between now and then. In fact, we want to consider the idea of getting all the way sold on guaranteed bushels right now, and re-own with call spreads. I believe this recommendation would be best considered on an individual basis with your broker and with a close look at your breakevens/ROI's. Many times we make highs in February, and we want to secure these levels while we are up here. We would still want to keep upside in the market on these bushels with call strategies. Please call your broker to discuss a specific strategy for your operation.
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