EHedger Closing Grain Commentary 1/29/10
Jan 29, 2011
The outside market panic flowed over into grains today and pushed corn, beans, and wheat lower. March corn finished 6 ¾ cents lower, March 1 ½ cents lower, and March wheat was 20 ½ cents lower.
This morning 4th quarter GDP came out at 3.2%, when the consensus was 3.5%. Initially the market viewed this as favorable and pushed equities higher. We also had a sale of 151,638 MT's of US corn announced to Japan, and 110,000 MT's of US soybeans announced to China which was seen as favorable. At mid-morning the grains started to see pressure come in mainly spillover weakness from outside markets. This sparked a selloff which lasted into the close. The US dollar and the treasuries were sharply higher today as money flew towards less risky assets on a fear trade. The unrest in Northern Africa has the market on edge and helped crude oil trade at one point to over $4 higher on the day.
Overall we are still fundamentally friendly this market and could continue to see support on breaks. We don't want to "lift" any cash hedges, but we feel call spreads are a decent way to stay in the market. Breaks like today give us chances to get into some May corn/bean call spreads, please call your broker for specific trades.
Today's COT report shows the funds decreased their net long positions in corn and beans, but increased the positions in wheat. This is all using futures and options.
Again I want to stress, these are profitable levels for many producers. We don't want to NOT make the necessary sales while we are at these levels, we want to make sure to be adequately sold and that can vary by operation. Please call your broker if you have any questions, or would like to re-evaluate your position.
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