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May 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.

EHedger Afternoon Grain Commentary

May 27, 2010

Corn finished higher on the day but was outpaced by soybeans and wheat. Again it was the outside markets which led the way in grains. The US Dollar was down 1000 at one point in the day with a large correction off its recent highs. The Dow, S&P, and Crude oil were also sharply higher. The outside markets continue to whip around and are causing volatility to be a very common theme in our grain markets. No major changes as the weather still looks favorable for growing conditions. If the weather stays good through pollination, we will likely see December futures trade under $3.50 and head even lower towards harvest.  If the weather turns for the worst here in the U.S. and/or in China this growing season we should see corn prices find a bottom in the coming months. Corn export sales came in this morning at 1,030,800 MT for this year and -174,000 MT for next. This was down 24 percent from the previous week and was likely some of the resistance we saw in the corn market today.  At this time I still think we are well positioned with our hedges.
Beans were strong today with July Soybeans finishing up 13 ¾ at $9.51 ¾. The market was bull-spreading finishing the July/Nov spread 5 cents higher on the day. Much of this strength can be attributed to the higher stock market and lower US Dollar. But there could have also been some profit taking on the Corn vs Beans spread as that has had a large move since the end of April. Tomorrow is the last trading day of the month and we may continue to see some month-end liquidation in that spread. As a result of the sharply higher crude oil market bean oil saw another sharp rally today. This morning's Census Crush number came in below estimates at 136.5 versus the trade estimates of 138.2. Exports were also below expectations at 175,400 MT this year and 120,000 MT next. Based on the fundamentals that we have right now we feel that the bean market may be susceptible to a further break from these levels if the weather continues to hold. The record South American crop continues to come online and global stocks this fall will be 45% larger than last year. We will still have to grow a crop here in the U.S. obviously, but if we do have trend line yields we could see much lower prices this fall.  A lot can change (and usually does!) but if you are not caught up on sales I would look for a rally back towards $9.30-9.50 in November soybeans to do so.
Wheat led the way higher with beans today coming off long term lows in the wheat vs corn spreads. Wheat finished 6 cents higher in the July Chicago contract at $4.67 ¾. We continue to come up against bearish fundamentals with global stocks rising and harvest pressure coming out of the south. With the Euro Currency on a nice rebound today it is not surprising to see a small rally off the lows. As I have discussed in previous emails, the Euro Currency’s free fall has had a negative effect on US wheat prices as we have to break to be competitive with European wheat. Wheat export sales this morning were at 148,800 MT for this year and 336,700 MT for next. This was on the high end of estimates. Please be sure to call your broker to make sure you are all caught up with current strategies/sales.



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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 EHedger, its affiliates, officers, directors, employees or agents. Recipients assume the risk of reliance on and indemnify and hold EHedger harmless for any and all losses, costs, or tax consequences incurred as a result of their use of market information.

Closing Commentary 5/26/10

May 27, 2010
Today saw buying come back into the corn market as rumors that the Chinese are looking to pick up additional import licenses caused July corn to settle 7¼ cents higher at $3.71½. In addition to these rumors, the outside markets lent support for the whole session as crude oil traded $1.50 to $2.00 higher. The outside markets continue to whip around and are causing volatility to be a very common theme in our grain markets. Weather hasn't changed much; we are still looking at favorable growing conditions for most of the region through the weekend before a rain system looks to roll through early next week. If the weather stays good through pollination, we will likely see December futures trade under $3.50 and head even lower toward harvest. If the weather turns for the worst here in the U.S. and/or in China this growing season, we should see corn prices find a bottom in the coming months. Tomorrow morning we will have export sales numbers at 7:30 a.m. The average guesses for corn sales are 1,000,000 to 1,300,000 mt. We will release this number in our morning letter. I still think we are positioned well at this time. For those producers who still need to get caught up on the hedge recommendations that we have issued, please call your broker and discuss the available plan for your operation.
 
Based on support from the higher bean oil market and stronger corn market, the July soybean contract finished the day 7½ cents higher at $9.38. As a result of the sharply higher crude oil market, bean oil saw a sharp rally. This, coupled with a good performance in the corn market, kept beans from trading back toward the trendline we have been discussing in November beans ($9.03). Based on the fundamentals that we have right now, we feel that the bean market may be susceptible to a further break from these levels if the weather continues to hold. The record South American crop continues to come on line and global stocks this fall will be 45% larger than last year. We will still have to grow a crop here in the U.S., obviously, but if we do have trendline yields, we could see much lower prices this fall. A lot can change (and usually does!), but if you are not caught up on sales, I would look for a rally back toward $9.30 to $9.50 in November soybeans to do so. The export sales guesses are between 450,000 and 650,000 mt. Census crush is also coming out tomorrow, at 7 a.m. The numbers will be posted in our morning letter. For those producers who have their hedges in place, we would continue to stay hedged. For the producers that still need to protect new crop bean sales, please give your broker a call to discuss the available strategies that we have.
 
Wheat was a follower of the higher corn and bean market for the entire session before finally finishing 1¼ cents higher in the July Chicago contract at $4.61¾. The wheat market continues to come up against bearish fundamentals, with global stocks rising and harvest pressure coming out of the south. After the grain markets closed, the euro broke sharply to the lows, and this may continue to pressure the wheat market, given the amount of wheat that is exported out of Europe. In order to be a player in the export markets, we have to be competitively priced against European wheat. Tomorrow morning's guesses for wheat export sales are between 350,000 and 450,000 mt. There are still strategies that we are implementing for wheat producers, so if you are in need of a strategy, please be sure to get in touch with your broker.



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Also learn about our acclaimed AMMO Program that helps producers optimize their marketing strategies using the premier tools and insights in the industry.
 
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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 EHedger, its affiliates, officers, directors, employees or agents. Recipients assume the risk of reliance on and indemnify and hold EHedger harmless for any and all losses, costs, or tax consequences incurred as a result of their use of market information.

EHedger Afternoon Grain Commentary

May 21, 2010

Corn closed 7-cents higher on the day and 6-cents higher on the week.  Weak financial markets, a strong dollar and liquidating commodity markets all weighed on corn prices this week.  As nearby corn prices broke back towards the $3.50 area, strong demand helped support prices.  China bought another 4 cargoes of U.S. corn this week and this has many wondering if we are starting a new trend.  The Chinese government continues to release reserves weekly and prices continue to rise.  This week the Chinese government announced they would double the amount of corn released each week to try and "cool down" prices.  Large U.S. supplies and a great start to the 2010 growing season is keeping a lid on prices as December (new crop) futures approach the $4 level.  I hate sounding like a broken record, but strong demand and big supplies should keep the corn market in a trading range for now until we know more about the size of the crop.  So far the weather has been good and extended forecasts look good as well.  If the weather stays good through pollination, we will likely see December futures trade under $3.50 and head even lower towards harvest.  If the weather turns for the worst here in the U.S. and/or in China this growing season we should see corn prices find a bottom in the coming months.  I still think we are positioned well at this time.  Hopefully the July calls we sold this week will expire worthless and this will leave us with September calls which will take us through pollination and the end of August. 

 

November soybeans closed ½ cent lower on the day and 19-cents lower on the week.  This was a bad close for the soybean market.  November soybeans traded under $9/bushel this week and at the lowest level since last October.  The record South American crop continues to come online and global stocks this fall will be 45% larger than last year.  A good weather outlook next week should help soybean plantings progress nicely.  Chinese demand has softened as record imports have helped build surpluses and cool domestic prices.  Although demand remains strong, supply has grown at a much faster pace.  Even with very optimistic demand figures for China, U.S. and global supplies look burdensome.  We will still have to grow a crop here in the U.S. obviously, but if we do have trendline yields we could see much lower prices this fall.  If the weather stays good, expect prices to break back towards the $8.20-8.50 level in November futures.  Unless the outside markets completely collapse, I would expect soybeans to find support under $8.50 until we know more about the crop size.  If the weather stays good through August, I would not be surprised to see soybeans closer to $7 bushel at harvest.  The large South American crop will ensure competitively priced soybeans well into our "gut slot" of exports in the September-December timeframe.  A lot can change (and usually does!) but if you are not caught up on sales I would look for a rally back towards $9.30-9.50 in November soybeans to do so.  For those of you who are caught up, I think we are in a good position. 

 

           Wheat closed 2-cents higher on the day and about unchanged on the week.  The weak outside markets and falling Euro helped push July futures back towards contract lows.  Global supplies remain burdensome and this combined with a falling Euro is making it difficult for the U.S. to pick up export business despite falling prices.  India, the world's 2nd most populous country, is running out of storage for wheat and is being forced to export excess supplies. Currently India's wheat reserves are pegged at 8X the target level.  With a good crop about to be harvested here in the U.S., it is hard to make a bullish argument for wheat.   Even with the lowest acres in 97 years, U.S. stocks took to swell to over 1 billion bushels!   The Variable Storage Rate (VSR) for the SRW wheat market may cause an artificially tight situation this year and cause basis levels to strengthen considerably.  Anyone that has storage should store as much SRW wheat as possible and hedge by selling deferred futures.  With storing wheat so "profitable" we should see every elevator and producer store wheat.  The market is currently at a $1.10/bushel carry from July 2010 to July 2011.  This is at least a 23% return for those who can store wheat during that timeframe...not bad considering current interest rates.  In order to "pull" wheat out of these locations, the buyer must be willing to pay a price that is as attractive. This happens either by the spreads narrowing or by basis levels rising sharply (in my opinion).  Please call if you have any questions


 
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Also learn about our acclaimed AMMO Program that helps producers optimize their marketing strategies using the premier tools and insights in the industry.
 
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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.

Closing Grain Commentary 5/20/10

May 21, 2010
Corn opened the day lower and quickly traded to the lows of the session early. About midday the US Dollar index had a large turn off of its highs where corn rallied into the close finishing 2 ¾ higher in the July contract. Sales were strong today coming in at the high end of the average guesses at 1,354,100 for this year and 239,000 for next year. Most of these sales were to Japan and China. In our opinion corn appears to remain in a trading range and looks to gain buying interest down towards the $3.50 area in July and $4.00 seems to be fair value for the new crop December contract.  The European debt crisis remains a key point of interest for all investors (see Euro chart below). Today was a reversal of the dollar/euro trade causing the dollar to post as much as a 900 point loss at one point in the dollar. Other commodities also had large ranges today. Crude oil in the June contract posted a $7 range. Given the action that we have seen in all markets it feels like to us that we are in the middle of a liquidating market with investors choosing cash over riskier assets. Today the Dow finished on its lows down 349 points in the futures. Stories of Germany eliminating the use of short selling in their stock market have all investors wondering what will happen next.   The weather pattern looks favorable in our opinion for continued planting progress and there is talk that a long term ridging pattern may be in the cards. As a firm we generally do not put much stock in long term weather forecasts but having the September calls in place will protect you should the idea of hot and dry weather be on your mind. 
Soybeans had a large range today trading down to $8.93 in the November contract but finishing 2 ¼ higher on the day at $9.08. The July contract's low today touched the long term trendline and bounced to settle 5 ½ higher on the day.  This may offer continued technical support in the beans. Sales came in on the lower end of the range at 475,500 in the old crop and 86,000 new crop. The bean market saw more bull spreading of the July and November bean contracts.  If beans happen to settle below the weekly trend line it appears to us that a continuation of a sell off could potentially continue.
Wheat sales today were in line with estimates at 250,500 old crop and 205,200. Like corn and beans, wheat had a 2 - sided trade today finishing a ½ cent higher in the July wheat. As the Euro's value continues to deteriorate, European wheat exports look more attractive. In our opinion this is going to cause pressure on US wheat as we try to remain competitive on an export level.  Outside of short covering rallies wheat appears to be on a continuing break and producers should be looking to lock in profitable levels. We have been putting together strategies for wheat producers; please give your broker a call to discuss some of the strategies that are available. 


 
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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.

Closing Grain Commentary 5/18/10

May 18, 2010


Corn opened the session higher in line with overnight gains, and ended up settling 3 ¾ cents higher for the July contract. In our opinion corn appears to remain in a trading range and looks to gain buying interest down towards the $3.50 area in July and $4.00 seems to be fair value for the new crop December contract. The European debt crisis remains a key point of interest for all investors (see Euro chart below). It appears to us that for some time a common trade has been the purchasing of commodities and selling the dollar. As a result, as this trade is unwound the dollar has seen a sharp rally and we have broken the grain markets towards the lower end of the ranges. We are at key technical points in all of the grains and this is something that needs to be closely monitored. With regards to the upcoming weather, most weather forecasters are in agreement with the idea of a drying 6-10 day forecast for the majority of the corn belt.  
 



Soybeans were eight cents higher overnight and opened four cents higher for the day session before settling 1 ½ cents lower for the July contract. Beans continue to remain weak as we approach the major trend line on the weekly continuous chart (see chart below.) In our opinion we may be nearing a test of the $9.00 level for the new crop November contract. If beans happen to settle below this trend line it appears to us that a continuation of a sell off could potentially continue.
 



Wheat opened up slightly higher on the day before settling 1 ¼ cents lower for the July Chicago contract. Once again the situation in Europe and the declining value of the Euro is making European exports more attractive. In our opinion this is going to cause pressure on our US wheat as we try to remain competitive on an export level. Outside of short covering rallies wheat appears to be on a continuing break and producers should be looking to lock in profitable levels. We have been putting together strategies for wheat producers, please give your broker a call to discuss some of the strategies that are available. 






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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.






 
 
 

Closing Grain Commentary 5/17/2010

May 17, 2010
 
Corn opened the session lower but off the overnight lows. Most of this can be attributed to outside markets. The European debt crisis is still on the front of everyone’s minds. This has allowed for large upside swings in the US Dollar and has brought commodities in general down with it. The weather forecast also remains favorable as a ridge is expected for portions of the Midwest into the first part of next week. Corn finished the session towards the lows at $3.56 (July Corn.) Crop progress shows corn planting progress at 87% vs 61% last year and 5 - year average at 78%. Crop condition shows corn at 67% percent good to excellent. These were pretty much in line with estimates.   
 
Soybeans also broke recent lows and settled Nov Beans down at $9.16 ½. Beans continue to remain weak as we approach the major trendline on the weekly continuous chart (see chart below.) If beans happen to settle below this trendline, this could be seen as technically bearish. Soybean crop progress came in slightly bullish at 38% planted which is below the estimates around 45-46% planted.
 
Wheat opened up near unchanged and traded lower into the day. Dec wheat finished 2 lower at $5.17 ½, while the contract low for Dec wheat is 5.07 (April 5th 2010.) Wheat supplies remain large and we continue to see wheat head back towards those lows, with potential for large swings in between. Planting progress for Spring wheat is at 79% while last year was 49% and the 5 – year average is 80%. Winter wheat crop condition remains unchanged with the good to excellent category at 66%. now trading near unchanged.





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.

Closing Grain Commentary 5-14-2010

May 14, 2010
Corn opened the day lower and traded sharply lower through the first part of the session. Corn ended up finishing 6 cents lower on the week. We still believe corn is in a trading range for now. Up at $3.99 Dec corn we saw heavy producer selling and could see end-user buying another 10 cents lower from our current level.  Tuesday’s USDA Supply and demand report and recent Chinese corn purchases both confirm there is still stronger than anticipated demand. Even with great weather and great planting progress we could find end user support on breaks. Continued weak outside market influence should be watched closely as it can also offer resistance to the corn market.
Soybeans finished the day sharply lower finishing 8 cents lower on the week (Nov 10.) Today’s NOPA crush estimates fell below expectations by about 7 million bushels. Tuesday’s USDA report also showed carryout to be larger than expected. We still think beans can go lower from here so for a producer we recommend being well protected.  Call your broker about today’s new crop Soybean’s recommendation.
Wheat had a tough time keeping its recent week-over-week gains. It ended up finishing 33 ½ cents lower on the week (Dec 10.) There is still plenty of wheat right now with a billion bushel carryout. With wheat getting cheap compared to corn you could see some of that go to feed but we still see wheat going lower.   For producers we still want to store wheat when possible and sell into the deferred contract months to collect the carry. Please contact us with 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.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.

Closing Grain Commentary May 12th

May 12, 2010

Interesting trade in the corn market today. News that COFCO, a Chinese Government owned and run corporation, had purchased six cargoes of optional origin corn quickly sent the corn market higher. The significance of this news in our opinion is that the origin is optional thus not necessarily meaning it comes from the United States. We do feel however, that the action of China importing corn is a story that needs to be monitored as this is a new event that we haven’t seen for some time. Basis levels were weaker which signals that we came up against farmer selling towards the highs of the day. Our overall opinion remains the same that we are going to be range bound. As July futures reach the $3.90 level we have seen that farmer selling begins to pressure the market and there is good solid demand for cash corn from an end user perspective down around the $3.50 area.   Today we issued a trade recommendation for our producers to sell the July $3.70 calls that we bought for $.25 cents. Any producer that had their order in before the market opened got filled on that order.  Should we see another break or experience changing fundamentals we may look at re-owning these calls for summer protection. Lastly, we issued another recommendation  this morning to have standing orders to sell another 10% of 2010-2011 corn for $4.02 or better.

The soybean complex opened stronger as a follower to the corn market and traded seven cents lower by mid-session before settling for the day unchanged in the new crop November contract.  The export sales report tomorrow morning will be closely monitored as we have seen decreasing demand for beans the past few weeks. Without changing fundamentals we feel that these levels will end up being very profitable as we make our way through harvest. We do understand that things can change but having good solid hedges in place at these levels are very important in our opinion.

 

Wheat continues to be an interesting commodity to say the least. An early rally this morning on no news sent the Chicago Wheat contract as much as 15 cents higher before selling off sharply and finishing the day 1 ¾ lower in the July Chicago contract. Fundamentally the wheat market is losing export business and still has a surplus of supplies worldwide. This will make the Chicago wheat contract susceptible to an even further break despite the occasional short covering rally.  There are solutions that we have been implementing for our wheat producers so please call us if you are a wheat producer that needs to get production on.

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.

Closing Grains Commentary May 11

May 12, 2010
Corn opened the day down a half cent in the July contract at 370 and rallied into the midmorning session. The May USDA Supply and Demand report was seen as "friendly" to corn with the carryout at 1.818 (average guess was 1.884). This decrease was due to an increase in exports as well as an increase in ethanol usage. Planting progress on Monday shows corn at 81% planted and 39% emerged. These are both well above the five-year averages of 62% planted and 21% emerged. Despite this bearish news, corn demand has remained steady with more rumors of Chinese buying today. Between this and the USDA report, it may have enough strength to test the high end of the range again (above 3.95 Dec. corn). We are still encouraging producers to get caught up on sales, but we have been using some call strategies to get upside protection.
Soybeans opened lower on the day but have since traded higher. The USDA report today was seen as "bearish" soybeans and remains weak compared to corn. The carryout was estimated at 0.338 but came in above expectations at 0.365. After breaking into the end of last week, we still remain above the trendline on the continuation chart. If we happen to break this trendline and settle below, we could see another large break in beans (see chart). With planting progress ahead of schedule at 30%, we still want to remain properly hedged for producers. In our opinion, bean volatility has been lower than usual, so there have been some good ways to get hedged using options. 


Coming into the week, we were hitting two-month highs (5.17 July wheat). On Monday we saw a large correction and July finished 17¾ lower. The USDA report came out at 0.997 for carryout, which was above the average guess of 0.961. Crop conditions continue to show wheat in good shape. HRW is 66% good-excellent but we see 2% dropdown to fair/poor. Producers should store wheat and hedge on the futures market. There is a huge carry in the futures market and a discount in the basis right now. With the potential for a sharp reduction in the SRW crop, we could see cash prices improve rapidly after harvest. Please call 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.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 EHedger, its affiliates, officers, directors, employees, or agents. Recipients assume the risk of reliance on and indemnify and hold EHedger harmless for any and all losses, costs, or tax consequences incurred as a result of their use of market information.

 

EHedger Afternoon Grain Report

May 05, 2010

Corn and wheat closed higher and soybeans closed lower. All three markets opened sharply lower in response to the sharply lower Euro and sharply higher dollar. The situation in Greece is getting out of control and this caused the Euro to make new 13-month lows versus the U.S. Dollar. Energy and equities were also sharply lower.  Rumors of an additional 10 cargoes of corn sold to China helped corn rally and close higher on the day. There is also some weather premium being put into the corn and wheat ahead of the frost/freeze that is expected to hit the Plains and Midwest over the weekend. Currently temps do not look threatening enough to cause any serious damage, but the funds are short corn and wheat and long soybeans and this is causing some unwinding of this trade. Meal was weak today and this weighed on the soybean market. China announced that they may not accept soybean imports from Argentina (as they have already announced for soybean oil from Argentina). Argentina and China are in a trade war, and this announcement seems to be more political than anything else. Informa will come out with their newest acreage estimates on Friday… most people expecting a little more corn and a little less soybean. Weekly exports sales are out tomorrow morning and estimates are high for both corn and soybeans. China has been an aggressive buyer of beans for next fall and corn exports have been high. Soybeans still look overpriced and corn still looks to be in a trading range and towards the upper part of the range. The wheat market continues to rally on short-covering.

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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 Afternoon Grain Report

May 04, 2010

           Corn closed lower, soybeans closed mixed and wheat closed higher. All three markets opened lower mostly in response to a sharply higher U.S. dollar, sharply lower stock market and sharply lower energy market. The grains found some buying around key technical price points and this helped futures prices rally. Buying in the final 5 minutes helped wheat prices rally 6-cents and corn rally 5 cents. Unlike crude oil and the stock market, the grains have already been on large breaks. So far the growing season has been very good and as long as this continues this should help keep a lid on prices. There are some calls for some frost/freezing temps next week although temperatures do not look to get cold enough to do much damage if any. Still, this could be causing some buying “just in case” temperatures come in colder than expected...more times than not these rallies are selling opportunities. With options reasonable priced, I would look at buying some calls if you were concerned about a late frost.


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.  
 
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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 Afternoon Grain Report

May 03, 2010

Corn, soybeans and wheat all closed lower on the day. Soybeans were the weakest on the day, led down by soybean meal which closed $8/ton lower on the day. Wheat was around 10-cents lower on the day until a rally late in the day that helped wheat close only 1-2 cents lower. Corn remained 3-5 cents lower for the majority of the day. Planting progress came in about as expected. Corn planting was pegged at 68% complete versus last year’s 32% and the 5-year average of 40%. Soybeans are 15% planted versus 5% last year and 8% average.  Spring wheat is 60% planted versus 22% last year and 47% average. Winter wheat was rated 68% in good-to-excellent condition down 1% from last week.
 
A mostly favorable weather outlook is weighing on prices towards the current highs. Corn staged a quick 30-cent rally off of the lows last week. This attracted some farmer selling as was evident by the sharp break in basis levels. As long as the weather stays good, corn should continue to run into resistance as December futures run up towards $4/bushel. With such a good start to the planting season, we should see corn and soybean acres increase from the March Intentions Report as the total acres still look to low in our opinion. Demand remains good for corn and this should help support prices near last week’s lows until we know more about the growing season. This could keep corn in a 30-cent trading range for now. The December puts we sold and July calls we bought last week should have us positioned well going into the growing season. Please call if you have any questions.
 
Soybeans are also being planted at a record pace. Weekly export inspections were below expectations again this week and much below year ago levels. With basis levels deteriorating this could be signaling that enough soybeans have finally come out of South America to satisfy the large global demand. If this is indeed the case, we should see prices continue to setback as long as weather cooperates. We will have our first 2010-11 Supply and Demand estimates on May 11th. Using the acres from the March Intentions and trend yields, the carryover looks to easily surpass 400 million bushels. With soybeans at very high price levels and with option volatility at very low levels, the market is providing a unique opportunity in our opinion. For the first time we can recall, the market is giving you the opportunity to protect soybean prices from going higher and/or going lower for a very reasonable price. Usually option premium is much higher (especially with $10 soybeans) as we head into the growing season. This will change in our opinion, so if you need to protect unsold bushels or if you want to have some upside exposure against bushels you have already sold you should do so very shortly. 
 
Wheat conditions declined slightly from last week. Overall, conditions remain very high. The HRW wheat crop looks big and getting bigger. Timely rains have helped produce what looks to be a bumper crop in many areas. We will get reports from the annual Kansas Wheat crop tour this week. This should confirm the many reports of high yields throughout the state. Wheat is on a nice rally as the funds continue to liquidate their short positions in Chicago. Once this short-covering is done, we could easily see prices break back towards contract lows as we head into harvest. If you need to get caught up on sales you should start right now. If you have storage, take advantage of the huge “carry” in the market and forward contract or sell deferred futures (i.e. December or March). Please call 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.
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