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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.

Ethanol Production Lower

May 30, 2013

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Grains and oilseeds traded both sides of the market before closing mixed to slightly lower.  It was a rather slow news day with little changes made to the forecast and a neutral ethanol report.  December corn finished 3 cents lower at $5.62 ¾, November soybeans ¾ of a cent higher at $12.89 ¼, and July wheat 4 cents lower at $6.98 ¾.

Ethanol production was down 12,000 bbl from last week but ethanol stocks were also down 0.1 again.  This brings total stocks to 16.0 which is the lowest level since November 2010.  The lower ethanol stocks could be considered friendly except for the fact that we are still not keeping the weekly pace needed to reach the USDA’s projected corn usage for ethanol (assuming a conversion rate of 2.8 gallons per bushel).  Estimated profit margins using Iowa prices have been positive for 11 weeks in a row which correlates with the uptick in production.  In summary ethanol production and stocks have shown some recent strength but not enough to worry about a large change in corn ending carryout for the 2012 marketing year.

Even though the grains closed lower they are still well above their intra-day slumps.  This rally into the close may have been propelled by the weak US Dollar Index.  The dollar fell 600 points back to its 50 day moving average.

Dollar Index

Dollar Index

November soybeans are finding some resistance near the 200 day moving average as well as the psychological $13.00 level.

November Soybeans

November Soybeans

July corn has been unable to fill the recent gap and is once again losing some of its premium to December as exports remain slow.

July Corn

July Corn

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