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February 2010 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.

E Hedger Closing Grain Commentary 2/22/10

Feb 23, 2010
Market Settlement Change Low High 
March corn 371 1/2 11 1/2 360 376.75
March wheat 501 1/4 11 1/2 485.25 504
March beans 961 1/2 16 1/2 944.25 962.5
March soymeal 281.70 5.30 276.4 282.5
March soyoil 38.83 0.31 38.52 38.94
Apr live cattle 93.225 -0.075 92.90 93.38
Apr lean hogs 70.300 0.65 70.13 70.8
 
Corn, soybeans, and wheat all closed higher to start the week. In the absence of any real news the chatter has turned to slightly bullish information. There is talk about rains delaying harvest in parts of Argentina and Brazil. Also, that snowfall and winter conditions will lead to flooding in the upper Midwest this spring. Add in the lower dollar and strong Friday finish it led to a high range close in the grain markets. For the most part today’s action was due to short covering and technical buying. The commitment of traders report has continued to show funds holding large short positions in soybeans and wheat. We find today’s gains encouraging in that corn and soybeans are approaching price levels from the January report, such as $4.10-4.20 December 2010 corn and $9.50-9.80 November 2010 soybeans. For many producers these are profitable levels. 
There was also talk today about the USDA re-survey. The late harvested crop is thought to be smaller than what the USDA currently has written down. Until these numbers are released the short side of the market may remain cautious. However, regardless of the findings there are bushels that will have to be moved as temperatures heat up and quality becomes a larger concern. This will put pressure on the corn market on further advances. 
Please call us if you have any questions.
 
Get More From EHedger. Our commentaries are just one part of our whole risk management service. Please go to http://www.ehedger.com/getmore.htmlfor a free two-week trial of our full member website that gives you access to all our hedge and marketing recommendations, educational tools, market snapshots and much more. Also learn about our acclaimed AMMO Program that helps producers optimize their marketing strategies using the premier tools and insights in the industry.  
 
Get Organized. Get Ahead. Get EHedger 
 
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.
 

EHedger Closing Grain Commentary 2/17/10

Feb 17, 2010
Market Settlement Change Low High 
March corn 360    -7 1/4 359.5 368
March wheat 494 3/4 -10 1/4 492.5 504.75
March beans 951 1/2 -14    948 964
March soymeal 279.40 -4.50 277.7 284.4
March soyoil 38.75 -0.20 38.51 38.93
Apr live cattle 92.15 -0.025 91.70 92.20
Apr lean hogs 69.200 0.92 67.98 69.275
 
Corn, soybeans and wheat closed lower for the day. Today’s action was nearly the complete opposite of yesterday as those gains were given back. The dollar was sharply higher and traded above yesterday’s range. The early week volatility has led to large ranges over the past two days, but the end result is prices close to last Friday’s close. This sideways to lower action will likely continue for the remainder of this month as current fundamentals do not look to change anytime soon. Of course, the March reports will be significant to agricultural markets, but they are still several weeks away. Until then, sellers will be ready to step forward as prices approach levels seen right after the January report.
News from China will remain light as their markets are closed for the remainder of the week in observance of their New Year. Export sales will be out Friday. Once Chinese markets resume traders will focus on where China purchases soybeans. Large South American crops and harvest increasing will take away from American purchasing. On a side note, the CME Group is set to begin trading a DDG contract on Apr 26; for details check: http://cmegroup.mediaroom.com/index.php?s=43&item=2986&pagetemplate=article This contract will open futures up to a “corn crush” and provide ethanol plants and DDG end users a new avenue of pricing. 
 
Get More From EHedger. Our commentaries are just one part of our whole risk management service. Please go to http://www.ehedger.com/getmore.html for a free two-week trial of our full member website that gives you access to all our hedge and marketing recommendations, educational tools, market snapshots and much more. Also learn about our acclaimed AMMO Program that helps producers optimize their marketing strategies using the premier tools and insights in the industry.  

Get Organized. Get Ahead. Get EHedger 
 
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.

EHedger Closing Grain Commentary 2/10

Feb 10, 2010
Market Settlement Change Low High 
March corn 361 3/4 3 1/4 355.25 365.5
March wheat 496 3/4 14 1/2 480.75 503
March beans 937 1/2 13    918.75 939.75
March soymeal 276.40 5.80 270 276.5
March soyoil 38.27 -0.11 37.92 38.52
Apr live cattle 91.55 0.075 90.93 91.70
Apr lean hogs 68.175 0.33 67.73 68.5

The grain markets closed higher for the day. Yesterday’s weak markets were today’s leaders. Both soybeans and wheat closed with double digit gains. Corn, soybeans, and wheat seem to be taking turns as to which commodity leads the strength/weakness. Today’s close puts all three markets above Monday’s close and pre-USDA report. A big theme today was bull spreading soybeans. The March contract led the way behind tighter than expected ending stocks. November has been limited by available US acres and South American production. Brazilian production is expected to be a record, but their logistics will be an issue in getting soybeans to the market quickly. Today also saw a round of profit taking in long soyoil/short soymeal. The buying from last week’s lows has shifted the near term trend. Today’s action may signal additional buying for the remainder of the week, yet plenty of sellers remain above the market. The information below looks to be the main themes for the rest of this month. 
 
The supply/demand table for corn saw ending stocks slightly lower than estimates, 1.719 bil bu vs. 1.747. Ethanol usage was raised 100 mil bu, while exports were lowered 50 mil bu. Ethanol usage now stands at 4.3 bil bu, a 623 mil bu increase from last year at this time. This reflects 33% of total usage dedicated to ethanol and also puts current plants at full capacity. The changes are not surprising. Ethanol margins have been extremely strong, while corn exports have been underperforming. Feed usage was left unchanged, likely due to the fact that the increased ethanol production will supply extra DDGs for feed usage. The supply side of the equation was left UNCHANGED. There continues to be speculation that this figure will be adjusted in March, but that is more than a month away and our expectations are not for any major revisions at this time.
 
With the report out of the way the corn market will now have to wait until March for new information. Many farmers need to move corn on rallies due to storage and quality issues so this will limit rallies. However, the dollar has slightly pulled back from 8-month highs. Funds have the buying capacity to overpower the markets in the short term and push them higher. For this reason it is a good idea to have standing orders in place to catch up on sales. A rally to $3.80-3.95 in May and December from $4-4.20 are possible targets.
 
The supply/demand table for soybeans was friendly, but not unexpected. Ending stocks were lowered to 210 mil bu from pre-report estimates of 217. The tightness in ending stocks was a result of a 10 million bu increase in crushing and a 25 mil bu increase in exports. This puts the stocks/use ratio at 6.4% vs. 4.5% last year. Exports have been strong in large part to Chinese buying, but the question remains how much this figure will decrease once South American soybeans become available to the world market. Conditions there have been mostly ideal and their harvest is getting started. This means that additional hedge pressure will come forward. The USDA raised Brazil soybean production to 66mmt (1 mil tone higher). Also, the availability of additional acres for spring planting will limit rallies in the new crop. Higher crude oil and the positive EPA ruling have kept soyoil supported. However, history has told us before that it is hard for soybean oil to lead the rest of the soy complex higher. Therefore, use spillover strength and look to catch up on soybean sales at $9.50-9.80 in May and rallies towards 9.50 in November. The $9 level in November will continue to be tested this week. 
 
The ending stocks for wheat were higher than pre-report estimates (981 mil bu vs. 974). The only change was an increase in imports. Despite wheat near contract lows, we are not seeing US wheat find business. The world market still has plenty of available wheat and the US stocks/use ratio is an enormous 49% vs. 29% a year ago and 13.2% two years ago. Yet, there are some interesting developments at work in the wheat market. Hard red winter wheat lost a substantial number of acres and many areas were planted in poor conditions. The fact that the wheat market has already factored in bearish information may encourage buyers near contract lows (July wheat below $5). Yet for now wheat looks to continue in step with the corn market.  

As always, please call us to speak about your specific situation.

 
 
Get More From EHedger. Our commentaries are just one part of our whole risk management service. Please go to http://www.ehedger.com/getmore.html for a free two-week trial of our full member website that gives you access to all our hedge and marketing recommendations, educational tools, market snapshots and much more. Also learn about our acclaimed AMMO Program that helps producers optimize their marketing strategies using the premier tools and insights in the industry.  

Get Organized. Get Ahead. Get EHedger 
 
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.
 

EHedger Closing Grain Commentary 2/3/10

Feb 03, 2010
Market Settlement Change Low High 
March corn 353    -12    352.75 368.25
March wheat 469    -18 1/4 468.25 494.75
March soybeans 908    -17 1/2 908 934
March soymeal 268.90 -4.70 268 276.9
March soyoil 36.90 -0.57 36.72 37.53
Apr live cattle 90.1 0.225 89.15 90.10
Apr lean hogs 67.075 0.23 66.65 67.3


The grain markets closed sharply lower today.  Yesterday’s positive session did not see follow through buying as corn, beans, and wheat finished with double digit losses and right on the lows of the day.  Crude oil turned from higher to lower, as the dollar traded over 300 points higher to $79.50.  We are near 6-month highs in the US dollar.  The dollar rally and grain selloff looks to be the outcome of growth concern in China.  A slowdown in the Chinese economy will be negative to all commodities.  Yet, the largest bearish fundamentals continue to be the negative numbers from last month’s supply/demand report.  The abundant supply along with the excess available spring acres continues to pressure the market after any strength, as seen yesterday. 

 

Demand for corn and wheat should start to increase as prices are currently on a large break and nearing contract lows.  An increase in demand for beans will still be difficult to achieve with a steady South American harvest just around the corner.  Meanwhile, the EPA finalized some regulations for their renewable fuel program.  There were no major changes.  A report can be found at http://www.epa.gov/otaq/renewablefuels/index.htm  To add to the negativity we will have to watch open interest in the grain markets.  A large amount of longs have been added since last year and with the downward movement many “trend following” funds may start changing their position.

 

Tuesday the 9th is the next USDA crop production and supply/demand report.  Although no major changes are predicted the USDA could easily throw in more surprises.  Analyst estimates will be out later this week.  Otherwise, the next major report and trend changing data will come forward in March with the updated USDA numbers and prospective planting. 

 

As always, please call us for a chat about your specific situation.

 

Get More From EHedger. Our commentaries are just one part of our whole risk management service. Please go to http://www.ehedger.com/getmore.html for a free two-week trial of our full member website that gives you access to all our hedge and marketing recommendations, educational tools, market snapshots and much more. Also learn about our acclaimed AMMO Program that helps producers optimize their marketing strategies using the premier tools and insights in the industry.  

Get Organized. Get Ahead. Get EHedger 

 

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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