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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 Grain Commentary 4/18/12

Apr 18, 2012

Grains finished lower with soybeans having the largest move.  May corn finished 15 cents lower at $6.01 ¾, May soybeans down 18 cents at $14.07 ¾, and May wheat down 4 ¾ cents at $6.10 ¾.

Ethanol production was down slightly while the ethanol stocks stabilized helping to add to the corn weakness.  Crude oil also had a large selloff today. The old crop / new crop corn spreads were sharply lower for the second day in a row.  Open interest in May and July corn dropped a combined 10,574 contracts and increased by 5,227 contracts for December. This suggests the large 2-day break in corn spreads has been a combination of liquidation and rolling positions from old to new crop.  I have included a chart of the July – Dec corn spread with the USDA report dates to show some of the recent moves.

Chart: July – December Corn

Corn Chart

Soybean spreads on the other hand continue to remain near the recent highs despite the selloff in the flat price.  July – November soybeans finished down ¼ cent at +75 ¾ cents.  The USDA announced another sale of 120,000 MTs of new crop soybeans to China this morning.  Tomorrow morning we will have the Weekly Export Sales report at 7:30 CST.  The estimates are as follows:

Corn                                  700,000 – 950,000 MTs

Soybeans                           850,000 – 1,100,000 MTs

Wheat                               450,000 – 650,000 MTs

 

May corn option expiration is still a concern as more and more of these puts get "into-the-money".  As I discussed yesterday, there is a massive amount of open interest in the May $6.50 corn puts all the way down to the $6.00 puts.  The last major strike level in sight for corn is $6.00 so this may be place where we find support.

 

For now we want to stay with the current EHedger recommendations. To receive a free trial of the EHedger research including hedge recommendations, please sign up using the link below. Thanks and have a great week!

 

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Best Regards,

EHedger

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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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