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January 2011 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 Closing Grain Commentary 1/31/11

Jan 31, 2011

Markets were strong in almost every sector with especially sharp gains for grains.  March corn was up 15 ½ cents, March soybeans and March wheat both finished 15 cents higher. 
 
The situation in Egypt has everyone's attention and has pushed the market into a fear style trade.  Crude oil which is feeling the largest impact from the civil unrest has gained another $2.50.  This strength is certainly helping corn as well.
 
We also have protesting down in Argentina which is blocking much of their export activity.  The Argentina Grain Exchange released a statement saying they are "profoundly worried" about the protest and its effects on export pace.  This is seen as favorable for grain prices and could continue to provide support.
 
Another factor to consider is this is end of month buying from funds. Technically if we can break through the March high of $6.67 for corn and $14.325 for soybeans, we could see short covering and a bullish technical signal. Large speculators have been pouring money into multiple commodity markets and this has been highly correlated with the support.  Lastly I want to note that tomorrow the Egyptians are expected to stage a 1 million man march.  If this escalates or extends into other nations which are oil producing countries, it could have a profound effect on commodities so be wary of large swings.
 
Again I want to stress, these are profitable levels for many producers.  We don't want to NOT make the necessary sales while we are at these levels, we want to make sure to be adequately sold and that can vary by operation.  We recommend keeping your upside potential in the calls spreads; please call your broker for a specific recommendation for your operation.

 

 

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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 Closing Grain Commentary 1/29/10

Jan 29, 2011

The outside market panic flowed over into grains today and pushed corn, beans, and wheat lower.  March corn finished 6 ¾ cents lower, March 1 ½ cents lower, and March wheat was 20 ½ cents lower.   
 
This morning 4th quarter GDP came out at 3.2%, when the consensus was 3.5%.  Initially the market viewed this as favorable and pushed equities higher.  We also had a sale of 151,638 MT's of US corn announced to Japan, and 110,000 MT's of US soybeans announced to China which was seen as favorable.  At mid-morning the grains started to see pressure come in mainly spillover weakness from outside markets.  This sparked a selloff which lasted into the close.  The US dollar and the treasuries were sharply higher today as money flew towards less risky assets on a fear trade.  The unrest in Northern Africa has the market on edge and helped crude oil trade at one point to over $4 higher on the day.
 
Overall we are still fundamentally friendly this market and could continue to see support on breaks. We don't want to "lift" any cash hedges, but we feel call spreads are a decent way to stay in the market.  Breaks like today give us chances to get into some May corn/bean call spreads, please call your broker for specific trades.
 
Today's COT report shows the funds decreased their net long positions in corn and beans, but increased the positions in wheat.  This is all using futures and options. 
 
Again I want to stress, these are profitable levels for many producers.  We don't want to NOT make the necessary sales while we are at these levels, we want to make sure to be adequately sold and that can vary by operation. Please call your broker if you have any questions, or would like to re-evaluate your position.
 

 

 

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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 Closing Grain Commentary 1/21/11

Jan 21, 2011

Grains settled mixed to stronger today with bear spreads in control of corn and soybeans.  March corn finished 3 ¼ cents higher, March beans 2 cents lower, and March wheat up 21 cents.  To put it in perspective of what the spreads did - Dec corn up 11 ¼, Nov beans up 6 ½, and July wheat up 13 ½.
 
Exports were strong today, at least stronger than anticipated.  The following is the actual vs the expected range in 1000 MT's:
 
                        Expected                       Actual
Soybeans          450-750                        915.4
Corn                 500-900                        1029.8
Wheat               400-750                       1147.8
 
On top of these strong exports, we also had a sharply lower US dollar and strong equities.  Also today, Informa came out with its 2nd acreage estimate for 2011.  They are projecting corn acres at 90.9, bean acres at 76.7, and total wheat at 57.6.
 
On top of all this fresh data today, the EPA also announced the approval for E-15 ethanol blend for cars made between 2001 and 2007. This adds to the decision in October for approving E-15 for cars made after 2007.  All this was seen as friendly corn today.
 
Cattle on feed report estimates vs actual today:
 
                                                            Average                        Range               
                                                         of estimates                   of estimates       Actual
On-feed on Jan 1                                   104.2                            103.0-104.9        105
Placed in Dec                                         113.7                            102.8-120.6        116
Marketed in Dec                                    105.2                            102.9-106.9        105
 
More placed than expected and slightly more on feed than expected, this is slightly bullish grains.
 
Lastly I want to talk about the funds.  The latest Commitment of Traders report shows an increase in net long corn positions by 38,094 contracts by the large speculator.  They increased their net long soybean positions by 12,706 and reduced their net long ALL-wheat positions by 929 contracts.  Basically it means the big guys are still buying this market.
 
We are still feeling the aftershocks of the report with a bullish bias to these markets.  For now, we will likely see the market supported on further breaks.  This doesn't rule out the possibility of a large break from unforeseen events, so I recommend staying well hedged in the cash market and keeping your upside potential in the call spreads.

 

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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 Closing Grain Commentary 1/20/11

Jan 20, 2011

Grains settled strong after a very weak start.  March corn finished 12 ¾ cents higher, March beans 2 ¾ cents higher, and March wheat up 6 ¼ cents.
 
The trade continues to be choppy in 2011.  Exports are being watched very closely by the market.  The rumored 500,000 MT's of Australian Feed grade wheat bought by China was lowered down to 150,000 MT's.  Weekly exports were delayed until tomorrow due to the holiday week.  They will be in the EHedger Morning Grain Bulletin.
 
Expected weekly sales tomorrow in 1000 MT's:
 
Soybeans          450-750
Corn                 500-900
Wheat              400-750
 
Also today, China signed a 1.8 billion dollar agreement for soybean purchases from the United States.  At the same time, the Buenos Aires Grain Exchange said they are expecting the Argentine corn crop to fall to 19.5 Million MT's, which is well below the USDA's 23.5 number on the 12th.  These factors certainly are supportive for our markets.
 
 
Cattle on feed report estimates for tomorrow at 2PM:
 
Average                        Range
of estimates                   of estimates
On-feed on Jan 1                                   104.2                            103.0-104.9
Placed in Dec                                         113.7                            102.8-120.6
Marketed in Dec                                     105.2                            102.9-106.9
 
We are still feeling the aftershocks of the report with a bullish bias to these markets.  For now, we will likely see the market supported on further breaks

 

Stop Guessing & Start Marketing

 

 Free trial 1[1] 

 

Click icon above for a Free Trial of EHedger Premium Research package and watch the AMMO Demo video.

 

 

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 1/19/11

Jan 19, 2011

Grains settled mixed with corn sharply lower, beans near unchanged, and wheat higher.  March corn finished 18 ¼ cents lower, March beans 1 ¾ cents lower, and March wheat up 4 cents.
 
Corn's break today marks a true key reversal in the March contract.  This may lead to more weakness in the near term.  The selloff was attributed to the rumors of Chinese purchasing 500 MT's of feed grade wheat which could take away from future corn demand.   Fundamentals remain strong, so a large break could still have support coming in below the market.
 
Soybeans followed corn's weakness and came off its highs as well.  Improving weather in Argentina is also seen as resistance in the bean market.
 
I have included the estimates for the cattle on feed report this Friday:
 
Average                        Range
of estimates                  of estimates
On-feed on Jan 1                                   104.2                            103.0-104.9
Placed in Dec                                         113.7                            102.8-120.6
Marketed in Dec                                    105.2                            102.9-106.9
 
We are still feeling the aftershocks of the report with a

Stop Guessing & Start Marketing

 

Free trial 1[1] 

Click icon above for a Free Trial of EHedger Premium Research package and watch the AMMO Demo video.

 

 

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.

 bullish bias to these markets.  We will be looking for levels to re-own on further setbacks using May call spreads, but for now I would sit tight and wait for that opportunity to present itself.
 
If you have any questions please call your broker.

 

 

EHedger Closing Grain Commentary 1/13/11

Jan 13, 2011

More follow through purchasing after the report.  March corn finished 11 ½ cents higher, March Soybeans 1 cents higher, and March wheat 13 cents higher. Also today we had a sharply lower US Dollar which provided support for all commodities.
 
We had exports this morning and they were all below expectations.  Weekly exports are as follows:
 
175,200 MTs of Wheat
507,500 Million MTs of Corn
675,000 MTs of Soybeans
 
There was also an announcement of 116,000 MT's of Corn to Unknown destinations before the market opened.
 
Regarding Wednesday's Report:
First market surprise:  lower corn and soybean yield.  Corn yield was projected by industry analysts at 153.9 and came out at 152.8. Soybean yield was projected at 44 but came out at 43.5. This put the production number lower than what the market was expecting.  The report then shows an increase in corn used for ethanol by 100 million, and a decrease in feed usage.  Food and residual usage was higher.  All of this combined brought US corn carryout down to 745 million bu, and Beans at 140 million bu.  These are both below analyst expectations and the reason for such a sharp incline. On top of that, we had decreases in world corn and soybeans carryover which was supportive.
 
For wheat we did have an increase of 3.67 million acres of winter wheat as well as an increase in world wheat carryout. 
 
So the question is "where do we go from here?"  The report only puts more emphasis on next year's acres.  We need to have an increase in acres and at least a normal growing year to keep up with the high demand.  This means we could be looking at more upside potential for corn, wheat, and beans between now and the March Planting Intentions report as these markets continue to compete for acres.  Unless there are major changes in the outside markets or major fund selling, we could keep seeing support under these markets.
 
At some point demand will obviously be rationed especially starting on the ethanol side. Crude oil has stayed strong, and a move above $100 will certainly help the corn rally continue.  We will monitor this closely. 
 
With all this said, these are still great prices, and we have them right now.  Having scale up orders in to take advantage of these rallies is a great idea on guaranteed bushels.  As we get closer to setting the spring Federal crop insurance price, being more aggressive on selling those guaranteed bushels might be a good idea if it looks good in the AMMO program. 

 

Stop Guessing & Start Marketing

 

Free trial 1[1] 

 

Click icon above for a Free Trial of EHedger Premium Research package and watch the AMMO Demo video.

 

 

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 1/12/11

Jan 12, 2011

Well the market seemed to be waiting for a bullish report and it didn't disappoint.  March corn finished 24 cents higher, March Soybeans 58 cents higher, and march wheat 11 cents higher.  I have included a copy of the report below, but let's go through the numbers.
 
First market surprise:  lower corn and soybean yield.  Corn yield was projected by industry analysts at 153.9 and came out at 152.8. Soybean yield was projected at 44 but came out at 43.5. This put the production number lower than what the market was expecting.  The report then shows an increase in corn used for ethanol by 100 million, and a decrease in feed usage.  Food and residual usage was higher.  All of this combined brought US corn carryout down to 745 million bu, and Beans at 140 million bu.  These are both below analyst expectations and the reason for such a sharp incline. On top of that, we had decreases in world corn and soybeans carryover which was supportive. 
 
For wheat we did have an increase of 3.67 million acres of winter wheat as well as an increase in world wheat carryout.  This is likely why wheat was the laggard of the three today, even with a lower US carryout number.
 
So the question is "where do we go from here?"  The report only puts more emphasis on next year's acres.  We need to have an increase in acres and at least a normal growing year to keep up with the high demand.  This means we could be looking at more upside potential for corn, wheat, and beans between now and the March Planting Intentions report as these markets continue to compete for acres.  Unless there are major changes in the outside markets or major fund selling, we could keep seeing support under these markets.
 
At some point demand will obviously be rationed especially starting on the ethanol side. Crude oil has stayed strong, and a move above $100 will certainly help the corn rally continue.  We will monitor this closely. 
 
With all this said, these are still great prices, and we have them right now.  Having scale up orders in to take advantage of these rallies is a great idea on guaranteed bushels.  As we get closer to setting the spring Federal crop insurance price, being more aggressive on selling those guaranteed bushels might be a good idea if it looks good in the AMMO program. 
 
For now we will have to see what this recent news will bring us price wise.  If you have any questions or would like to take another look at your strategy, please call your broker today1664

 

 

 

Stop Guessing & Start Marketing

 

Free trial 1[1] 

 

 

Click icon above for a Free Trial of EHedger Premium Research package and watch the AMMO Demo video.

 

 

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 1/10/11

Jan 10, 2011

Volatility remains high ahead of the report.

 

Corn and soybeans were the upside leaders as wheat sold off going into the close.  March Corn finished up 12 cents, March Soybeans up 15 ½ cents, and march wheat finished down 6 ¾ cents. 

  

Today's rally is a continuation of the double digit choppy trade continued from last week.  Most of it can be attributed to money flow.  The market is still trying to position itself for the USDA report and for the year. This is causing large fluctuations in the grains, especially the spreads.  Dryness in Argentina is also causing the market to put premium back into corn and beans.  There were rumors today that China will start buying US corn soon, which are still just rumors.  The upcoming report will still dictate the near term trade and set the stage for the 2011 acreage battle. 

 

Export inspections this morning were above last week for wheat/beans, but lower for corn.  The US dollar turning lower today helped support grains.  Crude oil and gold were both higher as well.

 

With just one trading day before the report, it is important to re-evaluate your hedges to see if any changes need to be made.  I encourage you to use the AMMO program to make sure you are covering your input costs just in case the report is a surprise.   These levels are still looking attractive for sales. 

 

If you are looking to add additional protection, or have any market questions, please don't hesitate to give your broker a call.

 

Stop Guessing & Start Marketing

 

 Free trial 1[1]

 

 

Click icon above for a Free Trial of EHedger Premium Research package and watch the AMMO Demo video.

 

 

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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