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January 2009 Archive for 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.

Grains Close Lower; We Continue to Watch South American Weather

Jan 29, 2009
SETTLEMENTS
             
Mar 09 Corn
381 ¾
-2 ¾
May 09 Corn
393
-2 ½
Mar 09 Beans
970 ½
-12
May 09 Beans
977 ¾
-12 ¼
Mar 09 Wheat
578
-17 ¼
May 09 Wheat
591
-17
Mar KC Wheat
608
-18
Mar Min Wheat
657 ¾
-15 ½
Mar 09 Meal
308.7
-2.8
Mar 09 Bean Oil
32.37
-0.54
 
The Bottom Line
1) Recent rains have helped Argentine crop; market waiting to see if additional rains develop next week.
2) Conditions in Brazil continue to improve
3) Export sales were solid for corn and beans and disappointing for wheat. 
4) The census crush came in as expected.
5) The egg set placement was down over 7% from a year ago.
4) Domestic demand remains weak for corn, wheat and soy products.
           
 
All three grains closed lower on the day. The market’s volume continues to be light. This morning’s export sales were over a million tons for corn for the second week in a row. However, US corn sales are extremely far behind and two weeks of good sales is no reason to get bullish at these levels. China was on holiday this week; therefore it was no surprise that bean sales were off. The bean markets main focus continues to be the weather in Argentina. The past four days we have seen showers in the region but the system forecasted for Sunday and Monday appear to be what everyone is watching. The models continue to be in disagreement as to the totals and coverage of this system. It appears the market may wait until next week to see what kind of rains the system actually brings before it reacts. Even if the rains are disappointing we still have seen conditions improve in Argentina over the past week and there is another system forecasted for late next week. The Wheat market struggled throughout the session. The short covering rally yesterday made the wheat vulnerable to a sell off. In addition, this morning’s weak sales number added to selling pressure.
                       
Go to www.ehedger.com for a free two-week trial that includes our hedging recommendations, trades of the day, market recaps or to simply open an account.
 
Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. The market information contained in this message has been obtained from sources believed to be reliable, but is not guaranteed as to its accuracy or completeness. Market information may not be consistent with current or future market positions of E Hedger, its affiliates, officers, directors, employees, or agents. Recipients assume the risk of reliance on and indemnify and hold E Hedger harmless for any and all losses, costs, or tax consequences incurred as a result of their use of market information.

Corn And Soybeans Break After Argentina Improves, Demand Weakens

Jan 27, 2009
SETTLEMENTS
             
Mar 09 Corn
377 ½
-16 ¼
May 09 Corn
388 ½
-16 ¼
Mar 09 Beans
976
-33
May 09 Beans
983 ¾
-33
Mar 09 Wheat
584 ¾
-7 ¾
May 09 Wheat
597 ½
-7 ¾
Mar KC Wheat
615
-6 ¾
Mar Min Wheat
662 ½
-3
Mar 09 Meal
308.6
-7.7
Mar 09 Bean Oil
32.77
-1.00
 
                       
All three grains closed lower. Corn and Soybeans closed sharply lower and wheat followed. The recent rains in Argentina combined with additional forecasts next weekend and next week combined with lower temperatures, drove corn and soybeans sharply lower. If additional rains develop this weekend and next week, Argentina conditions should continue to improve and the market should start to focus on demand and U.S. acres. Meat prices and energy prices continue to break and this is also weighing on prices as margins in all sectors continue to suffer. Talk of changes in U.S. ethanol policy and continued buying of RIN certificates by blenders is weighing on the ethanol industry. Vera Sun has closed 12 of their 16 plants and national capacity is now down 5% since last October. Blenders continue to buy RIN certificates, as they are cheaper than buying ethanol and blending it with gasoline. These factors could lead to corn demand from ethanol down another 200-300 million bushels. Animal numbers continue to decline; yet prices continue to collapse.   Unfortunately, demand does not look bright for the corn market, and with China on holiday, the only strong demand factor is absent. Brazil and Argentine production will be down due to the drought in Argentina, but even aggressive estimates only lower total production by 200-300 million bushels. The problem is that demand is falling faster than supply. Again, a lot can change but right now prices just look too high.
                       
Go to www.ehedger.com for a free two-week trial that includes our hedging recommendations, trades of the day, market recaps or to simply open an account.
 
Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. The market information contained in this message has been obtained from sources believed to be reliable, but is not guaranteed as to its accuracy or completeness. Market information may not be consistent with current or future market positions of E Hedger, its affiliates, officers, directors, employees, or agents. Recipients assume the risk of reliance on and indemnify and hold E Hedger harmless for any and all losses, costs, or tax consequences incurred as a result of their use of market information.

Grains End Mostly Higher On Choppy Trade

Jan 26, 2009
SETTLEMENTS
             
Mar 09 Corn
393 ¾
+3 1/4
May 09 Corn
404 ¾
+3 ¼
Mar 09 Beans
1009
+0
May 09 Beans
1016
+ ½
Mar 09 Wheat
592 ½
+9 ¾
May 09 Wheat
605 ¼
+9 ¾
Mar KC Wheat
621 ¾
+11 1/4
Mar Min Wheat
665 ½
+4 3/4
Mar 09 Meal
316.3
-2.0
Mar 09 Bean Oil
33.77
+0.17
 
                       
Grains closed mixed. All three grains opened sharply higher and slowly sold off throughout the day. A strong stock market, a weak U.S. dollar, strong crude oil and mixed weather helped on the open. Argentina saw some decent rains over the weekend and amounts were variable and widespread. This caused mixed feelings in the soybean complex and caused the soybean market to trade on both sides of the market. More rains are forecasted for the weekend and again next week. These forecasts kept pressure on the soybean market throughout the day. With the recent rains and more rains forecast, the soybean market may need additional news to continue the rally. The crop has already been hurt, but the recent rains have helped. If Argentina sees additional rains this weekend and again next week that should be enough to prevent further losses. Chinese soybean demand has been very strong, and will need to pick back up next week to keep the market supported. Corn and wheat have remained supported along with the soybeans. The “funds” are net shorts in the corn and large shorts in the wheat. There seems to be some unwinding of short positions in the corn and wheat and long positions in the soybeans. Argentina continues to deny export permits for wheat and Russia has been supporting their domestic market. These two factors have helped rally the world wheat price, making the U.S. more competitive. With soybeans and wheat remaining supported, corn has had to keep pace. With Argentina losing acres and the U.S. losing acres, the wheat market could remain supported on large breaks as we head into the growing season, and the large global and U.S. stocks should keep wheat under pressure on rallies. Look to make sales above $6.50 and avoid them below $5.25 for now. Total acres for corn and soybeans could still increase by up to 6+ million. Without demand picking up, corn and soybean ending stocks look to soar in 2009 (unless weather doesn’t cooperate!). If you have not made 2009 sales yet, give your broker a call. There are many different ways to help protect these prices.
                       
Go to www.ehedger.com for a free two-week trial that includes our hedging recommendations, trades of the day, market recaps or to simply open an account.
 
Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. The market information contained in this message has been obtained from sources believed to be reliable, but is not guaranteed as to its accuracy or completeness. Market information may not be consistent with current or future market positions of E Hedger, its affiliates, officers, directors, employees, or agents. Recipients assume the risk of reliance on and indemnify and hold E Hedger harmless for any and all losses, costs, or tax consequences incurred as a result of their use of market information.

Corn Closes Sharply Lower... Again

Jan 13, 2009
SETTLEMENTS
             
Mar 09 Corn
362 ½
-18 ¼
May 09 Corn
373 ¼
-18
Jan 09 Beans
969 ½
+15 ½
Mar 09 Beans
971 ½
+5 ½
Mar 09 Wheat
570 ¾
+1
May 09 Wheat
583 ½
+1
Mar KC Wheat
597
+2
Mar Min Wheat
637
+8 ¾
Jan 09 Meal
296.3
-0.2
Jan 09 Bean Oil
34.60
+0.42
 
                       
Corn, soybeans and wheat closed mixed. Corn closed sharply lower once again and wheat and soybeans closed slightly higher. Old crop soybeans remained supported on continued worries in Argentina, but after being 70-cents lower yesterday still closed only 5-cents higher. Corn and wheat have the most bearish fundamentals right now, but soybeans are one large rain away from having another large break. With new crop corn and soybeans gaining a net 4 million or more acres this spring, they should take turns breaking. Last month Informa estimated a large switch from corn acres into soybeans acres. However, that number was derived using the high fertilizer prices from last summer. Now, with fertilizer prices falling in most areas of the country, soybeans needed to rally against corn to keep the acreage mix unchanged. As more and more people sit down and figure out that we have too many total acres, new crop corn, soybeans and wheat should continue to come under pressure as we head into planting. The only way to keep stocks from building any further is to pick up demand. Corn and wheat will need to keep breaking until demand recovers. Right now, it looks like all three will need to take out their lows in order to achieve this. The one exception could be old crop soybeans. Demand from China has been a record for soybeans; the question is if it will continue after their new year. If it does, old crop soybeans should continue to gain on new crop soybeans, corn and wheat.
                       
Go to www.ehedger.com for a free two-week trial that includes our hedging recommendations, trades of the day, market recaps or to simply open an account.
 
Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. The market information contained in this message has been obtained from sources believed to be reliable, but is not guaranteed as to its accuracy or completeness. Market information may not be consistent with current or future market positions of E Hedger, its affiliates, officers, directors, employees, or agents. Recipients assume the risk of reliance on and indemnify and hold E Hedger harmless for any and all losses, costs, or tax consequences incurred as a result of their use of market information.
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