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Grain Hedge

RSS By: Brock Schimbeno, AgWeb.com

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.

Grain Markets Continue to Climb

Jan 26, 2012

The equity and commodity markets continued to climb higher this week as a "risk on" sentiment has taken hold.  The Dow is up 23.15 as of the close Thursday to finish at 12,734.63.  Oil continues to hover around $100 at $99.79 a barrel at the end of trade today, which is up $1.59 on the week.  Gold reached 6-week highs en route to a settlement of $1,720.70 an ounce up $53.80 for the week.  The dollar index has fallen off sharply lending some underlying support to the grain markets.

Corn has moved higher to the tune of 23 cents on the March contract to finish trade Thursday at $6.34 ½.  Concerns surrounding dry and hot weather in Argentina continue to keep support under this market.  Adding to the bullishness has been a brisk consumption pace by ethanol plants and export sales that remain ahead of the USDA projections for the year.  Export sales beat expectation once again and were reported as 958,100 MT, which is up 26% from last week.

Soybeans have had an impressive rally of their own this week, adding 35 ¾ cents to the March contract that settled at $12.22 ¾ today.  The oilseed has benefited from reductions to the production outlook for Brazil and Argentina.  Harvest delays in South America are bolstering the bullishness too.  Crush margins are thought to be improving for Chinese importers and a weaker dollar index is making our exports more attractive on the world market.  Export sales missed expectations at 466,300 MT, which is down 53% from last week.

Wheat has been the leader to the upside for the grains this week and is up 43 cents on the March CBOT contract to settle at $6.53 ½ Thursday.  Early in the week, Russia announced that exports from that country were nearing the proposed target of 25 MMT at which point they will curb or eliminate exports all together.  This lit a fire under the wheat market sending it sharply higher.  Speaking of export sales that came in at the high end of expectations at 604,700 MT, which is up 3% from last week.

Slow and steady the equity and commodity markets have climbed higher over the last couple of weeks.  Solid economic data domestically, a weaker dollar index, and a little more stability out of the Euro zone has aided in the rally.  Adding fuel to the bull’s run is a possible export ban from Russia and production reductions due to stressed crops in South America.  These issues will have to be monitored as we move towards the Planting Intentions report on March 30th.

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