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Grain Hedge

RSS By: Brock Schimbeno,

Grain Hedge is a self-directed discount brokerage that saves farmers money when trading in the futures and options market. For $7 commissions per side producers can execute their marketing strategy with authority, any time the markets trade.

Are the Bears Exerting Force?

Nov 17, 2011

It did not take much by way of bad news to propel the commodity markets out of their recent ranges.  The equities fell too, as Euro-zone debt issues continue to bolster risk-off attitudes and trades.  The Dow has lost 382.95 points as of the close Thursday finishing at 11,770.73.  Oil hit its highest level in several months early in the week, but is unchanged overall at $99 a barrel at the close today.  Gold has slid $68 an ounce to settle at $1,720.60, while the dollar index has risen sharply.  The grain markets are down sharply this week.

Corn is the leader to the downside for now losing 24 cents off the December contract ending trade Thursday at $6.14 ½.  Today was finally the day when we broke out of the recent sideways trend and fell through several support levels along the way.  Economic uncertainty around the globe and very poor export sales opened the door for bears to jump into the driver’s seat.  Speaking of export sales, they were reported as 208,900 MT, which is down 17% since last week.

The technical and fundamental landscape for soybeans is relatively weak adding fuel to the bearish fire.  The oilseed lost another 7 ¼ cents on the January contract to settle at $11.68 ¼ Thursday, a four-month low.  Harvest is all but complete domestically and internationally Brazil and Argentina have had a near-perfect start to their respective growing seasons.  Rumors of Chinese purchases kept support under the market preventing a virtual free-fall.  Export sales were reported as 746,100 MT, which is up 23.5% since last week.

Wheat continues to suffer from excess global supply and lost 23 ¾ cents on the December CBOT contract to finish trade today at $5.92 ½.  The Southern Plains received some beneficial rains to aid the winter wheat crop that is almost completely emerged after a rather slow planting.  A sharply higher dollar index certainly isn’t helping matters either.  Export sales were reported as 317,100 MT, which is up 6% from last week.

Bears have once again taken over the driver’s seat for the commodity markets.  Relatively weak demand, a sharply stronger dollar, and ample supplies will cap any rallies in the near future.  Attention has turned from supply side issues to the demand side and the picture isn’t pretty.

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