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February 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.

Short Covering Helps Grains Rebound

Feb 05, 2009
SETTLEMENTS
             
Mar 09 Corn
371 ¼
+13
May 09 Corn
381 ½
+12 ¾
Mar 09 Beans
980
+30 ½
May 09 Beans
983 ¼
+29 ½
Mar 09 Wheat
561 ¾
+19 ½
May 09 Wheat
574 ¾
+19 ½
Mar KC Wheat
590
+20
Mar Min Wheat
654 ½
+17 ½
Mar 09 Meal
308.0
+7.5
Mar 09 Bean Oil
33.05
+0.70

The Bottom Line:
1) This morning’s export sales were above expectations for corn, within the estimates for wheat, and a bit disappointing for beans.
2) Commodities in general found support during the session.
3) Argentina received some additional rains overnight.            
 
Corn, wheat, and beans all saw strong buying during the session. Overall, there was no major news to spark today’s rally. The strong corn sales may have added to the buying interest. However, beans and wheat lead the way and there was nothing impressive about their sales. Overall, it looked like people continue to want to buy the market and they are looking for any reason to do so. There were even stories out there that you need to buy corn because temps are going to get above 40 and the corn on the ground may rot (obviously not a legitimate reason to buy corn). Sure you can get your rallies, especially after big breaks like we just had. However, at this point there just does not appear to be a fundamental reason to start an up-trend from these levels. In addition, yes the producer does still have significant downside risk even after the recent break. The market is going to give rallies like we saw today and producers should make sure to use these rallies to catch up on their sales.
                                                                                                      
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.

Heavy Rains in Argentina Drive Grains Lower Once Again

Feb 03, 2009
SETTLEMENTS
             
Mar 09 Corn
361 ¾
-8 ¾
May 09 Corn
372 ¾
-9
Mar 09 Beans
946
-13 ½
May 09 Beans
950 ¼
-15 ½
Mar 09 Wheat
552 ½
-11 ¼
May 09 Wheat
565 ½
-11 ¼
Mar KC Wheat
581
-12
Mar Min Wheat
643
-3 ½
Mar 09 Meal
301.8
-4.4
Mar 09 Bean Oil
31.53
-0.23

The Bottom Line;
1) Recent rains have helped Argentine crop, more rains expected this week and next
2) Conditions in Brazil continue to improve
3) China ends holiday season; the question is whether they continue to buy U.S. soybeans or if they switch to South America.            
 
All three grains closed lower once again. Heavy 1-3” rains in Argentina came as a surprise overnight and this drove prices lower after the open. There are another 3 rain events forecast by next Wednesday, with at least one calling for 1”+ widespread rains starting Thursday. If Argentina receives these rains, we should be done worrying about a drought. The market should continue to shift focus to demand and U.S. acres. New crop corn and soybeans were the weakest contract today and that may be evidence that the market is starting to focus on U.S. acres. We have had a large break, and we could be due for a short-covering rally. However, with the potential for 6 million+ more acres of corn and soybeans combined and a large amount of unsold grain, the market should continue to struggle on large rallies. It is easy to feel like you have “missed the boat”. Many producers never pull the trigger on sales because they feel like they are worried that prices will turn around and rally. There are plenty of strategies out there to at least protect you if prices do continue to fall…(and unfortunately I think they will).
                       
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 Start The Month Lower

Feb 02, 2009
SETTLEMENTS
             
Mar 09 Corn
370 ½
-8 ½
May 09 Corn
381 ¾
-8 ½
Mar 09 Beans
959 ½
-20 ½
May 09 Beans
965 ¾
-21
Mar 09 Wheat
563 ¾
-4 ¼
May 09 Wheat
576 ¾
-4
Mar KC Wheat
593
-8
Mar Min Wheat
646 ½
-5 ½
Mar 09 Meal
306.2
-4.8
Mar 09 Bean Oil
31.76
-0.97

The Bottom Line;
1) Recent rains have helped Argentine crop, more rains expected this week and next
2) Conditions in Brazil continue to improve
3) China ends holiday season; the question is whether they continue to buy U.S. soybeans or if they switch to South America.            
 
All three grains closed lower today. Corn and soybeans were sharply lower for the majority of the day. After a lower weekly and monthly close on Friday, the market saw some follow-through selling today. The forecast still calls for rains in Argentina every couple of days from now until next week. This is relieving some of the concerns on continued crop deterioration. Now that the soybean crop is entering the filling stage, these rains have definitely come at the right time. With the South American growing season starting to finish up over the next 30 days, the market should continue to shift focus from South America back to demand and U.S. acres. Many people have been forecasting a large rally in prices in an effort to “buy” acres. Unfortunately, this has caused the farmer to hold an unusual amount of un-priced grain. I think this is a huge mistake. In my opinion, corn and soybeans will have more acres this year than last. With normal growing conditions, we could see ending stocks grow considerably in 2009. With acres increasing and demand still weak, prices should continue to break as we head into planting. The large amount of un-priced grain should keep a lid on large rallies for now.
                       
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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