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October 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 Afternoon Grain Commentary 10-31-2011

Oct 31, 2011

Grains were weak today with December corn down 8 cents at $6.47, December wheat Down 16 ¼ cents at $6.28 ¼, and November beans down 9 ½ cents at $12.07 ½.

The sharp break in outside markets and rally in the dollar is again weighing on grain prices.  The US Dollar was almost 1500 points higher today on further concerns over European debt fears and a sharp break in the Japanese Yen.  The Yen/Dollar currency spread was down 628 points or 4.8% and the Euro/Dollar spread was down over 2.25%!  This just basically shows there is a flight back to the US currency and can push dollar denominated products lower if this continues.

December corn continues to finish near the 200 day moving average as it has been for the last 3 weeks.  Export inspections came in at 27.726 mil bu of corn (30.5 expected), 48.518 mil bu of soybeans (42.5 expected), and 20.82 mil bu for wheat (17.5 expected).

Crop progress shows corn at 78% harvested compared to 62% as a 5 year average at this time of year.  Soybeans are also ahead of schedule at 87% harvested compared to 79% on average. 

These reports were not really major market movers and the biggest short term indicator is likely that extra drop the outsides had after the close.  We may open up lower on the overnight session tonight.

I wanted to quickly mention MF Global’s Chapter 11 filing this morning.  By now many of you have probably read the "wallstreet" headlines about MF Global.  If you are looking for a stable clearing relationship please give EHedger a call today to discuss the possibility of allowing us to service you.  You can contact us at 866-433-4371 or send an informational request to info@ehedger.com and we will get back to you in a timely manner.  Thanks and have a great week!

For a free trial of EHedger research please sign up using the link below:

www.ehedger.com/signup/

Best Regards,

EHedger

866-433-4371

www.EHedger.com.

Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge and financial resources. 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 LLC, its affiliates, officers, directors, employees or agents.


Chart 10.31.11

Friday's Grain Recap

Oct 28, 2011

Grains were mixed with heavy corn/bean spreading today ahead of the weekend. December corn finished up 3 ½ cents, while November soybeans finished down 18 cents.

The outside markets which had such influence yesterday were steady/flat after "bullish" consumer sentiment this morning.  Really it was a rather quiet trading session besides this without much news/headlines to move the market.  The fact that exports were rather weak yesterday during harvest is a sign that demand is still slow.  We have been talking about the world feed grain competition slowing demand for US corn.  Much of the price action still depends on this next USDA Supply and Demand report on November 9th.  RJOBrien released their estimates today.  They have national average yields pegged at 145.9 for corn and 41.0 for beans.

With firms still pricing in lower yields, weather looking good for South America, and with slow US export demand we are still highly concerned with the downside market risk.  We have strategies available to protect New Crop prices between now and spring when the crop insurance will be set.  To receive a 2 week trial of EHedger research, hedge recommendations, as well as our grain marketing software, please sign up using the link below.  Have a great weekend!

Chart: December corn (still hovering around the 200 Day moving average)

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Best Regards,

 

EHedger

866-433-4371

www.EHedger.com.

Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge and financial resources. 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 LLC, its affiliates, officers, directors, employees or agents.

EHedger Closing Grain Commentary 10/27/2011

Oct 27, 2011

Markets rallied sharply today after the European agreement was seen as very bullish for outside markets.  December corn finished 14 ¼ cents higher at $6.51 ½, November soybeans up 24 ½ cents at $12.35, and December wheat up 24 ½ cents at $6.44. 

Today’s strength was mainly derived from the strength in outside markets.  The Dow Jones futures were at one point trading over 400 points higher and the US dollar over 1600 lower.  A currency move as large as this usually draws quite a bit of support in commodities and today’s move was no exception.  We are again right back at the 200 day moving average for December corn, and 30 day moving average for soybeans.

Even though grains rallied, export sales were rather weak.  Here are the expected vs actual results for this week’s report:

                                                         Estimated Range                              Actual

Corn                                                  650,000-900,000 MTs                      361,300 MTs

Soybeans                                           650,000-950,000 MTs                      254,600 MTs

Wheat                                               300,000-500,000 MTs                      316,800 MTs

Given our weak export demand and being undercut in the world market by cheaper substitutes, we think this is another sign this market is going to have a hard time sustaining rallies.  This can certainly change if yields come in much lower on the November 9th report, or we have a foul weather event in South America.

To receive two free weeks of our commentary with hedge recommendations please sign up using the link below.

Chart: December Corn

Chart: November Soybeans

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Best Regards,

EHedger

866-433-4371

www.EHedger.com.

Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge and financial resources. 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 LLC, its affiliates, officers, directors, employees or agents.

EHedger Closing Grain Commentary 10/26/2011

Oct 26, 2011

Grains fell sharply today with corn down 13 ½ cents, beans down 15 cents, and wheat down 16 ¾ cents.

Every night we seem to be finding positive support but immediately met with sell pressure on the open of the day session.  Again outside markets were unfavorable early but found plenty of support to finish the day.  The Dollar still finished stronger and crude oil 2.40 lower and may have contributed to the downward pressure today.

US corn, soybeans, and wheat world demand is all rather week due to the fact we are being undercut by foreign competition. We haven’t even seen an offered price for Egyptian tender in months because we are so far under Russian and Australian wheat.  Russia even sold corn to Spain today!  Feed wheat is cheaper than corn, so for the first time in 3 years we are having massive worldwide competition.  As long as this continues this demand is going to shift and is not something we are going to get back.   On top of this, we are coming to expiration of the ethanol subsidies.  I can see many reasons for this market to head lower, and unless yields come down a bunch, I don’t see a whole lot of reasons to go higher.

Technically December corn broke back below the 200 day moving average today as well as the near term trendline.  This could cause further downside technical weakness for corn.  Soybeans are trading well below their major moving average levels still and have recently given a bearish crossover on the Exponential Oscillator (see chart).  We obviously look at fundamentals above all else but it just goes to show we are also finding some technicians that may also be selling into this market. 

To receive two free weeks of our commentary with hedge recommendations please sign up using the link below.

 

Chart: December Corn

Chart: November Soybeans

 

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Best Regards,

EHedger

866-433-4371

www.EHedger.com.

Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge and financial resources. 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 LLC, its affiliates, officers, directors, employees or agents.

 

 

 

EHedger Afternoon Grain Commentary 10/25/2011

Oct 25, 2011

Grains were trading stronger in the overnight session, but opened and finished lower during the day session.  December corn closed ¼ cent lower at $6.50 ¾, December wheat down 6 ¼ cents at $6.36 ¼, and November soybeans down 1 ¼ cents at $12.25 ½.

The fact that we opened lower could be attributed to the selloff in the outside markets early this morning.  A cancellation of the EcoFin meeting a day before Wednesday’s Euro Summit was viewed as bearish the Euro Currency and bullish the US Dollar.  Despite this crude oil still found plenty of support today as it crossed some more technical moving averages and for the first time since 2008 the front month crude was trading higher than the rest of the contracts going all the way to 2019 over supply concerns.

December corn has stayed near the 200 day moving average for the past 11 trading sessions in a row.  We have been in a rather tight trading range ever since the October supply and demand report and the markets seems to be waiting for more fundamental direction.  Bean’s and wheat are both trading lower from the October report even despite renewed interest in soybeans from the managed money.

Until we know more about the crop size the market seems to want to stay rather range bound.  Of course a shift in demand can always change this, or a sharp move in outside markets.  If you would like to receive a trial of EHedger services, including our official hedge recommendations, please sign up using the link below.

Corn 10.25.2011

For a free trial of EHedger research please sign up using the link below:

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Best Regards,

EHedger

866-433-4371

www.EHedger.com.

Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge and financial resources. 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 LLC, its affiliates, officers, directors, employees or agents.


EHedger Closing Grain Commentary 10/21/2011

Oct 21, 2011

Markets were higher to start the day but sold off into the close.  December corn finished ¼ cent lower at $6.49, November soybeans down 12 ¾ cents at $12.12 ¼, and December wheat up 1 ¼ at $6.32.

Despite outside markets trading sharply higher we still found liquidation as we witnessed bear-spreading in corn, beans, and wheat.  The latest Commitment of traders report shows another reduction of net long positions in corn and wheat, yet an increase in net longs in soybeans by the "managed money".  This report does however point out that fund liquidation has slowed recently which has been reflected in the supportive prices over that week’s timeframe.

The Euro Summit on Sunday can potentially be a major market mover for equities/currencies and whatever weakness or strength we see out of this may affect grains as well when we open Sunday night.  Today the market seemed optimistic about it with almost a 300 point rally in the Dow. 

Looking out to next year the new crop corn/bean ratio is trading at spread contract lows.  Many companies are forecasting an increase in bean acres next year when we believe any acreage increases will flow to corn with the price incentive.  I have included a chart of November 12 beans vs December 12 corn on a 1:2 scale.

 

The fact that Chinese bean demand has been weak and world bean supply is not currently a problem is not helping beans hold support.  Unless we see another yield reduction on the November Supply and Demand report, it may take an adverse weather event in South America for beans to trade higher.  Corn demand has obviously picked up a bit with the large Chinese sale last week.  For the corn market to try to post a significant rally again we may need to see further yield reductions on the November report (which we don’t think we will get) or a significant increase in demand (which may be difficult given all the feed options the world has).

For a free trial of EHedger research please sign up using the link below:

 

www.ehedger.com/signup/

Best Regards,

EHedger

866-433-4371

www.EHedger.com.

Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge and financial resources. 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 LLC, its affiliates, officers, directors, employees or agents.

EHedger Closing Grain Commentary 10/20/2011

Oct 20, 2011

It was a choppy, two sided trade today in the grains.  December corn finished at the highs up 11 cents.  December wheat finished 11 ¼ cents higher and November soybeans finished unchanged.

Overnight markets started off bearish but were able to rally back to unchanged.  Amazingly the same thing happened for beans in the Day session before rallying into the session close.  Export sales were at the low end of expectations for corn, wheat, and beans and weren’t expected to give the market much support.  With the Euro Summit this weekend, there were wild fluctuations between the US dollar and Euro currency. When the dollar fell today the commodities markets were able to find support.

 

Export sales were as follows:

                           Estimated Range                                              Actual

 

Corn                   1,800,000 MTs - 2,500,000 MTs                   1,845,800 MTs

Soybeans            750,000 MTs - 1,100,000 MTs                       594,700 MTs

Wheat                 450,000 MTs - 650,000 MTs                         399,400 MTs

 

December corn has been testing the 200 Day Moving average for the last 8 trading sessions, but today it finally settled above it.  This may prompt some more technical buying in the short term.  For the past few trading sessions it looks like there has been a big "unwinding" of long beans short corn spreads.  Beans had benefited the most from the October S&D report, and we are witnessing an exit of this trade.  Looking at the corn/bean ratio for NEW crop, we are at spread contract lows.  Many companies are forecasting an increase in bean acres next year when we believe any acreage increases will flow to corn with the price incentive.  I have included a chart of November 12 beans vs December 12 corn on a 1:2 scale.

 

The fact that Chinese bean demand has been weak and world bean supply is not currently a problem is not helping beans hold support.  Unless we see another yield reduction on the November Supply and Demand report, it may take an adverse weather event in South America for beans to trade higher.  Corn demand has obviously picked up a bit with the large Chinese sale last week.  For the corn market to try to post a significant rally again we may need to see further yield reductions on the November report (which we don’t think we will get) or a significant increase in demand (which may be difficult given all the feed options the world has).

 

Chart:  Long 1 November 12 bean to Short 2 December 12 corn.

 

 

 

For a free trial of EHedger research please sign up using the link below:

 

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Best Regards,

EHedger

866-433-4371

www.EHedger.com.

Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge and financial resources. 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 LLC, its affiliates, officers, directors, employees or agents.

 

Wednesday's Grain Market Recap

Oct 19, 2011

Grain prices fell into the close after a general "risk-off" liquidation in a number of commodity and equity markets.  December corn finished 5 ½ cents lower at $6.38 ½, November beans 25 ¾ cents lower at $12.25, and December wheat down 5 ¾ cents at $6.19 ½.

November soybeans lead the way lower on rumors of a Chinese crusher cancelling 2 cargos of soybeans.  Even with soybeans sharply lower for much of the day, corn and wheat managed to stay positive for much of the day but had a sharp selloff in the last 15 minutes.

Export sales will be released tomorrow morning. I have included the following estimates:

                                                                       Estimated Range

Corn                                                   1,800,000 MTs - 2,500,000 MTs

Soybeans                                            750,000 MTs - 1,100,000 MTs

Wheat                                                 450,000 MTs - 650,000 MTs                         

We will have actual export sales in tomorrow’s morning letter.

At this point we aren't expecting further yield reductions from the current USDA estimated levels.  For the market to kickstart fund buying again we may need to see a major shift in demand.  The market continues to find resistance on rallies which may be a result of more fund liquidation.  We will get their latest activity listed on the Commitment of Traders report on Friday.  For now we like re-owning bean hedges with January calls, and holding off on any more corn/wheat calls until we see a further setback.

For a free trial of EHedger research please sign up using the link below:

 

www.ehedger.com/signup/ 

Best Regards,

EHedger

866-433-4371

www.EHedger.com.

Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge and financial resources. 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 LLC, its affiliates, officers, directors, employees or agents.

 

EHedger Grain Commentary 10/18/2011

Oct 18, 2011

Grains held support again as outside markets finished sharply higher. December corn finished 3½ cents higher at $6.44, November soybeans 2¼ cents lower at $12.50¾ and December wheat 1 cent higher at $6.25¼.

A revision of the export inspections was released this morning, with sharp differences from what we saw yesterday on the newswires. Corn was actually 21.17 million bushels, beans 45.036 million bushels and wheat 16.359 million bushels. Despite the sharp increase in soybean inspections, the market still held beans most resisted for the day.

The Dow Jones futures rallied sharply late in the day on a report of an EU bailout plan. This strength may continue into the overnight session, and we may see grain supported on the 6:00 open.

We continue to find resistance at the 200-day moving average in corn ($6.475). Unless we see a major shift in demand, it may be hard for the corn and wheat markets to rally much from here. With such a large world supply of wheat, we may continue to see fund selling into any rallies. We have talked about the "managed money" being long corn and beans for quite some time (even after the latest liquidation), but we also have to look at how short they are in Chicago wheat. With a high insurance price set early for wheat, it had plenty of time to ensure acres here in the U.S. and is one more fundamental that could keep the price resisted. At the same time, we have talked about how a low wheat price could keep the price of corn resisted as well as demand shifts.

We feel soybeans are the one product that has a little better story pricewise. With the latest USDA Supply and Demand report estimating a slight decline in yields and with carryout estimated at 160, they are still looking at a tight bean supply in the U.S. Today’s export inspections were impressive for soybeans based on expectations. Knowing that the global market can put a premium in beans if there are any weather scares in South America this winter (their summer), we could see beans’ price most supported from that. Please sign up for a two-week free trial using the link below to get specific strikes/prices or if you would like to test our marketing software product, AMMO.

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Chart: December corn

(Red: 50 Day moving average Blue: 100 day moving average Grey: 200 day moving average)

Best Regards,

EHedger

866-433-4371

www.EHedger.com.

Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge and financial resources. 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 LLC, its affiliates, officers, directors, employees or agents.

Corn Holds Support despite Outside Market Weakness

Oct 17, 2011

Grains finished mixed as the outside markets tumbled. December corn finished ½ cent better at $6.40½.  November beans were the weakest today, down 17 cents at $12.53, and December wheat finished 1½ cents higher at $6.24¼. Given that the Dow Jones futures were more than 225 points lower on the day and the US Dollar Index more than 500 points higher, I would say grains held their own to start the week.

Export inspections at 10:00 a.m. were not favorable for soybeans at all. Expectations were for 30 million bushels of beans when it actually came in at 10.599 million bushels. Corn was at 28.443 (32.5 expected) and wheat was 22.079 (18 expected).

The weekly crop progress report shows corn harvest pace at 47%, which is ahead of the five-year average pace of 41% at this time of year. Soybean harvest pace is at 69%, which is ahead of the five-year average pace of 61%. Wheat planting pace is at 73%, which is behind the five-year average pace of 77%.

Corn, wheat and beans have all come well off of oversold levels. December corn continues to find resistance at the 200-day moving average, which is currently at $6.47 (also the high for the day). Wheat and soybeans are both well below their major moving averages, but soybeans had more of a bullish supply story from the October Supply and Demand Estimates report. For re-ownership strategies, we like looking to soybean calls in January. For specific strikes/prices, please sign up to receive a free two-week trial of our research, including our hedge recommendations, by clicking on the sign-up link below. Have a great week!

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Chart: December corn

 

(Red: 50 Day moving average Blue: 100 day moving average Grey: 200 day moving average)

 

Chart: November soybeans

 

(Red: 50 Day moving average Blue: 100 day moving average Grey: 200 day moving average)

 

 

Chart: December wheat

 

(Red: 50 Day moving average Blue: 100 day moving average Grey: 200 day moving average)

 

Best Regards,

EHedger

866-433-4371

www.EHedger.com.

Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge and financial resources. 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 LLC, its affiliates, officers, directors, employees or agents.

 

Strong week for grains!

Oct 14, 2011

Grains closed higher with beans leading the way. December corn finished 1 ¾ cents higher at $6.40, November soybeans up 13 cents at $12.70, and December wheat up 4 ¾ cents at $6.22 ¾.

The weekly export sales data was favorable for corn today but beans have held the most support after the Supply and Demand report this week. With the US Dollar sharply lower and equity indices and energies sharply higher, grains had a lot of help from outside markets.

 

Export sales were as follows: 

                                                                         This year                                  Next year

Wheat                                                             483,600 MTs                            17,000 MTs

Corn                                                                1,258,900 MTs                         85,400 MTs

Soybeans                                                         672,400 MTs                           0.0 MTs

Informa released their acreage estimates this morning and are as follows:

Corn 93.1 million acres, down 1.2mil from Sept estimate, up 1.3 mil from 2011

Soybeans 77 million acres, up 1.2 mil from Sept estimate, up 2 mil from 2011

All wheat 57 million acres, up 385,000 from Sept estimate, up 2.6 mil from 2011

All cotton 12 million acres, unchanged from Sept estimate, down 2.8 mil from 2011


The commitment of traders report this afternoon shows the "Managed Money" slightly reducing their net short wheat position, and slightly reducing their net long corn and soybean positions. With demand picking up in corn this week we could see the liquidation slow down from the funds.

We still like reownership strategies in the January soybean options. Please call in for specific strike/prices. Have a great weekend!

 

Chart: December corn (keeps settling below the 200 day Moving Average)

Chart: November soybeans (coming well of oversold levels with major moving averages still well above these levels)

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Best Regards,

EHedger

866-433-4371

www.EHedger.com.

Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge and financial resources. 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 LLC, its affiliates, officers, directors, employees or agents.

Soybeans finish strong

Oct 13, 2011

Beans finished strong today while wheat and corn remained lower on the day.  December corn finished 2 ½ lower on the day at $6.38 ¼, December wheat 8 ¾ cents lower at $6.18, and November beans 17 ½ cents higher at $12.39 ½.

The big news this morning was a confirmation of a large corn sale to China.  The sale of 900,000 MTs of 11’-12’ corn to China came before the opening.  They also announced another 292,100 to "unknown" destinations as well as 110,000 MTs of Soybeans to "unknown".  Despite these sales, corn opened up lower and traded down to new lows for the day before finding support towards the latter half of the trading session.

Weakness could still be stemming from the disappointing report for Wheat and Corn yesterday with increased ending stocks for both.  The analysts that continue to call for lower corn yields found no reductions with an unchanged yield estimate by the USDA.  Funds and large traders who may have been trading a lower corn yield may be rethinking their strategy at the moment which is a downside market risk if more liquidation comes from this.

World wheat ending stocks are estimated at 202.37 Million MTs which is up sharply from the last report in September (up about 4%).  They were estimated to be up 76 Million Bushels here in the US alone which is a 10% increase.  This was the most significant information on the report as the world has options.  Why contract US corn out of the gulf when you have cheaper feed grade wheat you can buy from Russia or Australia?

Corn yield was left unchanged from the September report at 148.1 bpa as a national average.  Most were guessing a little higher, but we did show another reduction in exports of 50 million bushels to help offset this.  This combined with the Ending stocks rising to 1.128 billion bu from last year raised the carryout to 866 million when I believe the average guess was 800 million.

Beans were the only thing that were reported positive on the October S & D report with yield reductions to 41.5 and another decrease in ending carryout to 160.  Now with S. American beans currently getting planted we may see any foul weather related stories keep beans supported and it is a La Nina year.  Overall between corn and soybeans I am more favorable of NEXT year’s prices as they both have to hold support to continue to compete for acres.

If I were to take anything away from the report it would be that we are going to have a hard time sustaining significant rallies in corn and wheat UNLESS we see a major shift in demand.  Today’s corn sale to China didn’t seem to capture the bull’s attention but IF we see heavy demand coming in it can always change.  As producers we are still at record corn prices for the month of October and selling additional bushels at these levels makes sense.

For upside potential we can continue to look at buying bean calls and call spreads.  If you would like to get our specific recommendations, please sign up for a 2 week free trial with the link below. 

Chart:  December corn

Red-50 Day Moving Average; Blue-100 Day Moving Average; Grey-200 Day Moving Average

 

Chart: November soybeans

Red-50 Day Moving Average; Blue-100 Day Moving Average; Grey-200 Day Moving Average

To receive a two-week free trial of our research, including a tryout of the revolutionary AMMO software, please click on the link below:

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Best Regards,

EHedger

866-433-4371

www.EHedger.com.

Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge and financial resources. 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 LLC, its affiliates, officers, directors, employees or agents.

USDA Report Slightly Bearish?

Oct 12, 2011

Grains finished mixed today with wheat sharply lower.  December corn finished 4 ¼ lower on the day at $6.40 ¾, December wheat 34 cents lower at $6.26 ¾, and  November beans 4 cents higher at $12.39 ½.

Today’s report was disappointing for the bulls as wheat and corn ending stocks both disappointed the average of estimates. The analysts that continue to call for lower corn yields found no reductions with an unchanged yield estimate by the USDA.  Funds and large traders who may have been trading a lower corn yield may be rethinking their strategy at the moment which is a downside market risk if more liquidation comes from this.

World wheat ending stocks are estimated at 202.37 Million MTs which is up sharply from the last report in September (up about 4%).  They were estimated to be up 76 Million Bushels here in the US alone which is a 10% increase.  This was the most significant information on the report as the world has options.  Why contract US corn out of the gulf when you have cheaper feed grade wheat you can buy from Russia or Australia?

Corn yield was left unchanged from the September report at 148.1 bpa as a national average.  Most were guessing a little higher, but we did show another reduction in exports of 50 million bushels to help offset this.  This combined with the Ending stocks rising to 1.128 billion bu from last year raised the carryout to 866 million when I believe the average guess was 800 million.

Beans were the only thing that were reported positive on today’s report with yield reductions to 41.5 and another decrease in ending carryout to 160.  Now with S. American beans currently getting planted we may see any foul weather related stories keep beans supported and it is a La Nina year.  Overall between corn and soybeans I am more favorable of NEXT year’s price as they both have to hold support and continue to compete for acres.

If I were to take anything away from this report today it would be that we are going to have a hard time sustaining significant rallies in corn and wheat.  As producers we are at record corn prices for the month of October and selling additional bushels at these levels still makes sense.

For upside potential we can still look at buying bean calls and call spreads.  If you would like to get our specific recommendations, please sign up for a 2 week free trial with the link below. 

Chart:  December corn.  "you can see how we came off the 200 day moving average (grey line)"

 

Chart: November soybeans. "the majority of major moving averages are well above these levels and this was a friendly report"

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Best Regards,

EHedger

866-433-4371

www.EHedger.com.

Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge and financial resources. 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 LLC, its affiliates, officers, directors, employees or agents.

EHedger Afternoon Grain Commentary 10-11-2011

Oct 11, 2011

Grains were wildly bullish today with corn finishing "limit up".  The December corn contract settled at $6.45 (up 40 cents) and was limit up for the latter half of the day.  November beans finished 58 cents higher at $12.35 ½ and December wheat 49 ¼ cents higher at $6.60 ¾.

The fact that we have been severely oversold in grains over the past couple of trading sessions caught up to the market, especially being a day away from the report.  When we crossed the short term highs and traders had to start jumping out of short positions and buy-stops were triggered the market rallied further.  Also, we have been discussing the 200 day moving average in corn being a significant level to make additional sales which is right at $6.45 ½.  We rallied right to this level today and intrinsically traded just above it (see chart). Besides that there were no major news headlines to warrant such a rally today.

Crop progress was delayed until this afternoon and came out as follows:

Corn                                                              October 9th                         5 year average

Mature                                                                 89%                                        88%

Harvested                                                           33%                                        32%

Condition:  Good-excellent gained 1 percent week-over-week now at 53%.

Soybeans                                                         October 9th                         5 year average

Harvested                                                           51%                                        46%

Condition: Good-excellent gained 2 percent week-over-week now at 56%

Winter wheat is now 59% planted which is behind the 5 year average of 67% at this time of year.  It is 28% emerged compared to 38% on average.

The USDA Supply and Demand report will be released tomorrow morning at 7:30 am. The trade estimate for the 2011-2012 wheat ending stocks figure is 747 million bushels versus 761 million bushels a month ago. The corn production estimate is 12.492 billion bushels with a yield of 148.9 bpa (12.497 billion last month; 148.1 bpa). The corn ending stocks are estimated to be 795 million bushels versus 672 million bushels a month ago. The soybean production estimate is 3.094 billion bushels with a yield of 42.0 bpa (3.085 billion bushels last month; 41.8 bpa). Soybean ending stocks are estimated to be 181 million bushels versus 165 million a month ago.

We will have the report results and our reaction in tomorrow morning’s letter and automated phone call.  Please call in if you would like to discuss the report. 

Chart 10.11.11 

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Best Regards,

EHedger

866-433-4371

www.EHedger.com.

Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge and financial resources. 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 LLC, its affiliates, officers, directors, employees or agents.

Grains higher to start the week

Oct 10, 2011

Grains finished the day stronger with December corn up 5 cents, December wheat up 4 cents, and November soybeans up 19 ¼ cents.  With the Dow Jones futures over 250 higher and the Dollar Index 1400 lower, grains were given a lot of outside market support.  At one point corn was 18 ½ cents higher on the day but just like last week grains have been struggling to hold onto any gains.

Due to the holiday, the release of Export Inspections as well as Crop Progress will be pushed to tomorrow.  The next USDA Supply and Demand report will be released Wednesday morning at 7:30am. The trade estimate for Wednesday’s USDA 2011-2012 wheat ending stocks figure is 747 million bushels versus 761 million bushels a month ago. The corn production estimate is 12.492 billion bushels with a yield of 148.9 bpa (12.497 billion last month; 148.1 bpa). The corn ending stocks are estimated to be 795 million bushels versus 672 million bushels a month ago. The soybean production estimate is 3.094 billion bushels with a yield of 42.0 bpa (3.085 billion bushels last month; 41.8 bpa). Soybean ending stocks are estimated to be 181 million bushels versus 165 million a month ago.

Until we actually get the report estimates the market could stay range bound at these levels.  We have seen plenty of liquidation from the funds already.  To see buying resume, we likely need a fundamental shift in demand, or further yield reductions on Wednesday’s report.  Tomorrow will be the last "Day" session to get positions on ahead of the report.  I would only recommend buying back hedges with "defined risk" option strategies for those who are well sold in this market.  If you need more downside protection, please call in to discuss current strategies with an EHedger representative today! 

Chart: December Corn

Red: 50 day moving average Blue: 100 day moving average Grey: 200 day moving average

 

Chart: November Soybeans

Red: 50 day moving average Blue: 100 day moving average Grey: 200 day moving average

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Best Regards,

EHedger

866-433-4371

www.EHedger.com.

Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge and financial resources. 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 LLC, its affiliates, officers, directors, employees or agents.

Grains finish lower ahead of weekend

Oct 07, 2011

Corn, soybeans, and wheat all finished lower today.  We continue to find sell pressure on rallies in grains.  Despite finding resistance, December corn still finished 7 ½ cents higher on the week.  November beans finished 20 ¾ cents lower for the week, and December wheat finished down 1 ¾. 

Favorable rains expected over the weekend helped KC wheat finish near the lows despite Minneapolis wheat trading as much as 42 ½ higher on the day.  The latest CFTC Commitment of Traders report shows the Managed Money still net short 31,957 contracts of Chicago wheat (using futures and options) after reducing that by 4358 contracts week-over-week.  They are still net long 26,318 contracts of KC wheat after reducing that position by 11,910 contracts.  For spring wheat, which has much smaller open interest (number of positions), they are net long 6,735 contracts.

The funds have also been reducing net long positions in corn and soybeans as well.  For corn Managed Money is still sitting long 171,334 contracts after liquidating/reducing the position by 32,535 contracts week-to-week.  We can see the same thing for soybeans with net long positions of 50,122 contracts with a net long reduction of 19,088 contracts.  The point here is that the big traders have been getting out of longs and is a main reason grains have been unable to sustain any rallies lately.

The market is oversold but for the liquidation to stop and fresh buying to come into the market we may have to see a fundamental change in demand or another reduction in yield on this next report.  This week we did see corn exports pick up but we will need to see even more demand come in.  We are trading down from the time we received Thursday’s export sales report despite this "favorable" news.  We also had a few sale announcements of US Soybeans to China this week which didn’t seem to do much for the price as we still finished sharply lower for the 5th week in a row.

I would only recommend buying back hedges with "defined risk" option strategies for those who are well sold in this market.  If you need more downside protection, please call in to discuss current strategies.  Have a great weekend!

Chart: December wheat

Chart: December corn

Chart: November soybeans

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Best Regards,

EHedger

866-433-4371

www.EHedger.com.

Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge and financial resources. 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 LLC, its affiliates, officers, directors, employees or agents.

EHedger Afternoon Grain Commentary 10-6-2011

Oct 06, 2011

Corn and beans were trading higher for most of the day before finishing unchanged on the close.  Outside markets were supportive with the Dow Jones up over 175 points and crude oil $3 higher.  Despite this rallies have continued to be met with more sell pressure.

Export sales this morning were better than expected for corn and allowed for a quick rally on the open.  Beans and wheat weekly export sales were as expected. 

                                          Estimated Range                                              Actual

Soybeans                           550,000 MTs – 850,000 MTs                         741,800 MTs

Corn                                600,000 MTs – 1,300,000 MTs                      1,291,300 MTs

Wheat                               300,000 MTs – 650,000 MTs                         431,200 MTs

There was not a whole lot of fresh news today besides sales.  Obviously there are still plenty of traders waiting to sell rallies in this market. For grains to turn around and go higher again we may need to see more fundamental changes like even lower yield estimates from the USDA or a change in demand.  Just in case the report is bullish we have been buying back hedges using option strategies.  Even though we have already made a sharp move lower in grains it doesn’t mean that the weakness is necessarily over.  We still have a large number of spec longs in corn and soybeans that can be liquidated and the outside markets have been extremely volatile and weak these past few months.  I would only recommend buying back hedges with "defined risk" option strategies for those who are well sold in this market.  If you need more downside protection, please call in to discuss current strategies.

Corn 10.6.11

Beans 10.6.11

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Best Regards,

EHedger

866-433-4371

www.EHedger.com.

Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge and financial resources. 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 LLC, its affiliates, officers, directors, employees or agents.

Recap of Wednesday's Trade

Oct 05, 2011

Grains finished stronger today along with the outside markets.  December corn was up 17 ¾ cents at $6.05 ½, November soybeans up ¾ cents at $11.63 ¾, December wheat finished 21 ¼ cents higher at $6.25 ¼.

We are coming off of oversold levels and are a week away from the next Supply and Demand report. With crude oil up over $4 higher today and the stock market making a nice rebound grains easily found support as well.  We had FC Stone’s estimates released yesterday and Informa’s estimates today.  Informa is projecting corn yield to be 149.5 and bean yield at 41.8.  Tomorrow morning we will have weekly export sales data at 7:30am CST.  The estimates are as follows:

Soybeans                                           550,000 MTs – 850,000 MTs

Corn                                                  600,000 MTs – 1,300,000 MTs

Wheat                                                300,000 MTs – 650,000 MTs

Harvest pace should remain strong through the end of the week with the favorable forecast. Until we get more direction from USDA yield estimates, or some sort of major shift in demand we could remain choppy and range bound.  For producers that are heavily sold we like re-owing with call strategies.  To receive the specific option strategies please feel free to sign up for a complementary trial using the link below.  Good luck with the rest of harvest!

 

To receive a two-week free trial of our research, including a tryout of the revolutionary AMMO software, please click on the link below:

www.ehedger.com/signup/

Best Regards,

EHedger

866-433-4371

www.EHedger.com.

Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge and financial resources. 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 LLC, its affiliates, officers, directors, employees or agents.

 

 

EHedger Afternoon Grain Commentary 10-4-2011

Oct 04, 2011

Markets continue to look weak, with lower trades across many commodities and equities today.  For ag futures, soybeans once again led the way lower, with November beans falling 17½ cents. December corn finished 4¾ cents lower and December wheat 15½ cents lower.

We did, however, see a late-day rally in the Dow Jones futures and may see some strength on the open tonight.  FC Stone’s latest yield estimates were released today, with corn at 148.7 and beans at 42.8.

With December corn trading $2 off its highs and November soybeans $3 off their highs, we are quite oversold.  Between now and the Oct. 11 report, we expect volatility to remain high and outside markets to have an influence.  Since we already have higher than expected old crop stocks, the yields are going to be the next major focus for the upcoming report. For this market to gain support, we need to see another major fundamental change such as further yield reductions or increased demand. The stocks report obviously revealed some demand destruction this year when stocks came in higher than expected.

We want to conservatively re-own bushels on this latest break using options. We like the corn option spreads we have laid out if you are well sold and you have run it through AMMO. Buying back bean sales using calls is still ideal, even though we have had higher volatility lately.  For wheat, we can re-own bushels by bull spreading December-July contracts as a way to roll forward your hedge. We can also look at call spreads for wheat for a defined risk trade (please call your broker for strikes/prices).

To producers who need more downside protection: Please call your broker to discuss available strategies using AMMO.

To receive a two-week free trial of our research, including a tryout of the revolutionary AMMO software, please click on the link below:

www.ehedger.com/signup/

Best Regards,

EHedger

866-433-4371

www.EHedger.com.

Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge and financial resources. 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 LLC, its affiliates, officers, directors, employees or agents.

 

EHedger Afternoon Grain Commentary 10-3-2011

Oct 03, 2011

After a wide trading range, grains finished mixed with corn unchanged, soybeans slightly lower and wheat higher. With corn lock limit down on Friday, limits were expanded to 60 cents today.  Initially we found plenty of weakness in the overnight trade, touching new lows for the move at $5.72¼ before coming back to finish at $5.92½.

Corn, beans and wheat are all well oversold at this point and could be due for a rally. With December corn trading $2 off its highs and November soybeans $3 off their highs, between now and the Oct. 11 report would be a good chance to see short covering. The funds have been liquidating and are a major reason for the sell-off, along with normal harvest pressure. As we continue through harvest, we could see bushels coming to market keeping grains resisted, especially after rallies. This may make it hard for grains to sustain any sort of a rebound unless there is a fundamental change, such as another decrease in yields on this next supply and demand report. Although the market looks oversold, we don’t want to forget about 2008, when corn fell back into the $3 range and soybeans fell back to $8 to $9 levels, as equities and commodities both liquidated during the financial collapse. These last two months in equities have reminded the market how unstable they still really are.

Crop progress was released today and is as follows:

Corn                                                             October 2nd                         5-year average

Mature:                                                           79%                                        78%

Harvested                                                        21%                                        23%

Condition:  Unchanged with the good-excellent category remaining at 52%.

Soybeans                                                       October 2nd                         5-year average

Dropping Leaves                                                  76%                                        83%

Harvested                                                           19%                                        25%

Condition:  Gained 1% in the good-excellent category at 54%.

Winter wheat is 42% planted, while the average five-year pace is 53% at this week.

We will see where they end up taking demand away from when we get the October S&D report, but until then the quarterly stocks report was certainly bearish. So where do we go from here? For soybeans, we have hit the 50% retracement at $11.86 already. The next target (maybe support) would be at the 68.2% retracement at $11.19¼. For corn, we blew past the 50% retracement today at $5.80¾, but managed to rebound and trade higher. The next downside target would be $5.33 (68.2% retracement), with upside resistance at the 200-day moving average of $6.43¾.

Please call in if you have any questions or would like a free consultation with an EHedger broker. Have a great week!

To receive a two-week free trial of our research, including a tryout of the revolutionary AMMO software, please click on the link below:

www.ehedger.com/signup/

Best Regards,

EHedger

866-433-4371

www.EHedger.com.

Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge and financial resources. 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 LLC, its affiliates, officers, directors, employees or agents.

 

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