EHedger Afternoon Grain Commentary 7.5.2011
Jul 05, 2011
Grains continued their rebound today finishing 18 ¾ higher for September corn, 23 ¼ higher for September wheat, and 5 ½ higher for September soybeans.
There are rumors of China buying more corn on this break as import margins have gotten strong. Basically their cash price didn’t drop like ours did on last week’s setback. Technically we are also rallying back up towards filling the recent gap at 6.20 ½ (Dec corn). There have been stories of some ethanol plants switching to wheat instead of corn in Indiana and Ohio. On top of this French wheat futures have been rallying after yields are coming in 20-30% lower. This supports the idea that wheat will be supported by any rallies in corn as margins between the two are close. I have included a chart of September wheat against new crop corn and NEXT year’s wheat. You can see that the price has fallen dramatically since the beginning of the year and as a substitute it is getting to a point where it makes sense for more feed use at these levels. Producers who have on farm storage for soft red winter wheat will want to store the wheat and sell into the deferred contracts to try to collect the carry (depending on basis levels, please call your broker to discuss).
The weekly crop progress report shows conditions improving for soybeans and corn. Corn is now at 69% good-to-excellent compared to 68% last week and 71% last year. Soybeans are at 66% which is right where they were at this time last year.
For those of you that haven’t had a chance to use AMMO please get in touch with your broker. The AMMO program will allow you to see where your farm operation stands mark-to market taking into consideration cash sales, HTA’s, futures and options, and crop insurance. The profitability matrix will help you discover where your farm’s profitability is based on various yield and harvest price scenarios. The "what if" calculator will then allow you to build a strategy that eliminates risk and maximizes your farm’s profitability. Please call your broker for more information about how you can put AMMO to work for you.
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