EHedger Report

EHedger Grain Commentary 4/18/12

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

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,