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February 2012 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 2-29-2012

Feb 29, 2012

Grains finished mixed with May corn up ¾ of a cent at $6.58, May soybeans up 7 ½ cents at $13.20, and May wheat down ¼ of a cent at $6.68.

The USDA announced a few export sales before the morning session opened.  There was a private sale of 285,000 MTs of soybeans going to China (175,000 old and 110,000 new).  They also announced the sale of 120,000 MTs of option origin corn to Mexico.  Despite more cash sales the market opened up below where it was trading during the overnight close.

 

May corn once again is stalling out at that trendline resistance which started back in November (see chart).  The market may have held some resistance from the strength in the Dollar and weakness in equities and precious metals.

 

Chart: May Corn

Chart 2.29.12

 

Tomorrow morning the Weekly Export Sales Report will be released at 7:30 am.  Trade Estimates:

Corn                                     650,000 – 850,000 MTs

Wheat                                  500,000 – 700,000 MTs

Soybeans                              400,000 – 800,000 MTs

Source: Reuter’s Poll

 

Soybeans have had a large rally in February posting a gain of $1.14 ½ in the March contract!  Most of this can be attributed to South American production fears and a comparatively oversold status to corn.  March corn finished the month up 17 ½ cents while March wheat finished down 1 ¾ cents.   The Spring Federal crop insurance prices will be set at $5.68 for corn and $12.55 for soybeans.  Now that these prices are set we want to make sure we have adequate downside coverage between your crop insurance, cash sales, and futures/options positions.  The month of March will be extremely important with the Supply and Demand report on the 9th, but more importantly the Planting Intentions report which is on the 30th.

 

November soybeans have gained quite a bit back on corn (relatively speaking).  Even with this move we believe corn acres will still be in that high range near 94 million acres.  We see soybeans gaining about a million acres bringing our estimate to 76 million.  We expect the market to add back in up to 9 million acres in the US and 6 million acres in Canada that didn’t get planted last year due to weather issues.  Cotton and spring wheat prices are likely to get "outbid" on additional acres by corn and beans due to the price advantages in the market this year.  The USDA is forecasting a 1.623 billion bushel carryout for corn and 209 million for soybeans.  These estimates are AFTER increasing demand sharply from last year.  We certainly think demand may increase, but it will be AFTER the prices drop. In our opinion we are trading at very good prices compared to where we could be next fall if we get a normal growing season.  Corn getting back to $4.50 and beans under $10 isn’t so hard to believe with the potential production of this year.  Also, today’s ethanol report again showed an increase in stocks and a decrease in production which isn’t a great trend outlook from a demand perspective.  We also have to remember that this is all at the same time that the specs are loaded up with net long positions. 

 

For a free trial of the AMMO software and the EHedger research, please click on the signup 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 2-28-2012

Feb 28, 2012

Grains closed strong with wheat leading the way higher.  March corn settled 9 cents higher at $6.53 ½, March beans 11 ½ cents higher at $13.05 ¼, and March wheat 16 ½ cents higher at $6.62 ¼.

The soybean market has been especially supported with the assumption that South American production will be well below current USDA expectations.  We are now above the $13 level and have almost reached the 61.2% retracement level at $13.34.  Again, looking at the weather reports, we seem to have received plenty of rain towards the middle-end of their growing season and some of these production-cut estimates we have been reading seem over exaggerated to us.  We would be using these targets to catch up on sales if you haven’t done so yet.  For corn we have a couple of interesting patterns forming in the March and Dec charts.  We are at the top end of a large wedge in March corn.  For Dec corn, we broke through the bottom support but ended up being a false breakout as we are now back within the wedge range. The upside resistance level is now near $5.72.

Chart: March Corn

Chart 2.28.12

Chart: December Corn

Chart 2-2.28.12

For the majority of the day the market was "bullspreading" November 12 – November 13 beans and "bearspreading" December 12 – December 13 corn.  This seems obvious when we look at last week’s Commitment of Traders report and see the "managed money" decreasing net longs in corn and increasing their longs in soybeans, soyoil, and soymeal.  With a record net short position in Chicago wheat by the funds, we can still see that market find extra support from liquidation. 

The next USDA Supply and Demand report will be released next Friday, March 9th. The report that could show the most surprises is the March Planting Intention Report on March 30th. Now that we are back to a corn-bean ratio of 2.30 (new crop) we could see some of those acres start to move back to soybeans.

For a free trial of the EHedger research, 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 2-27-2012

Feb 27, 2012

 Soybeans led the way higher to start the weak with old crop settling above the 200 day moving average for the first time since September of last year.  March beans finished 14 ¾ cents higher at $12.93 ¾, March corn 3 ¾ higher at $6.44 ½, and March wheat 4 ¾ cents higher at $6.45 ¾.

Old crop beans have been the upside leader lately as South American production concerns still are dictating trade.  We can see this in the weekly Commitment of Traders report which shows the "managed money" decreasing net longs in corn, increasing their shorts in wheat, and increasing their longs in soybeans, soyoil, and soymeal.  Today we actually made it back to the 50% retracement for soybeans. The 62.5% retracement level is approximately $13.34 which may be the next major target the market tries to reach before we find more resistance.  I have included a chart of March beans which shows these targets.

There are 2 days left in February to set the Spring Federal Crop Insurance price levels.  At this point we really can’t see much of a change in these prices as they are pretty much set at approx $5.67 ½ for corn and $12.53 for soybeans.

The next USDA Supply and Demand report will be released next Friday, March 9th. The report that could show the most surprises is the March Planting Intention Report on March 30th. Now that we are back to a corn-bean ratio of 2.30 (new crop) we could see some of those acres start to move back to soybeans

Please contact an EHedger broker to get a second opinion on your marketing plan using our proprietary Farm Marketing Software.  Have a great week!!!


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. Opinions, market data, and recommendations are subject to change at any time. This brief statement does not disclose all of the risks associated with trading commodities, futures, and options. For more information, see Disclosure Statement and Privacy Policy. The information contained on this Web site does not constitute a solicitation to buy or sell by EHedger. This Web site is not to be available to individuals in a jurisdiction where such availability would be contrary to local
regulation or law. No Claim to Orig. U.S. Govt. Works.

 

EHedger Afternoon Grain Commentary 2-24-2012

Feb 24, 2012

Grain prices finished mostly unchanged today with March corn up 1 ¼, March soybeans up 2 ¼, and wheat down ¾.

The USDA released its expected Supply and Demand estimates this morning for 2012-2013 crops.  For corn they have production at 14.270 bil bu and carryout at 1.616.  They have increased estimated corn usage by 815 million bushels from last year to get that carryout.  For soybeans, the USDA has production estimated at 3.250 and carryout at 205.  Now that the corn-soybean ratio reached the 2.30-1 level, it isn’t so clear where the acres will go when we get the planting intentions report at the end of next month.  The market has done its job trying to predict a large gain in corn acres as seen in the chart below.

Chart 1 2.24.12

At this point it still looks like we may have too many acres of everything for next year to keep prices at current levels.  Beans could get up to 76 million acres and corn is still looking at getting between 94-95 million acres.  The USDA is guessing 75 mil for beans and 94 mil for corn.  The 24 year trendline yield for corn is 163.1 bpa.  We have heard a lot of analysts calling for new crop corn yields to be significantly lower than trendline before we have even seen planting intentions.  If you look at the chart below, you will see that since 1988, we have been below trendline only 9 of the 24 growing years for corn.  By those odds, we have a 62.5% chance of seeing corn finish above trendline.   Looking back a couple of years ago when we were coming off of a good year, we saw a lot of analysts calling for above trendline yields.  I am not saying that we can predict the weather because hindsight will always be 20/20.  I am just showing the numbers of what we have seen in the past.  If we get the corn planted and have a normal growing year, we could easily be trading at levels well below where we stand today.

Chart 2.24.12

There are a few other notes to point out from the USDA Annual Outlook.  They are forecasting ethanol demand going down over the next 2 years due to overall gasoline demand going down and we are hitting the blending wall.  For corn-demand-for-ethanol to keep the same pace or go higher, we will most likely have to see the export market stay strong.  Brazil has been a heavy importer of US ethanol but if South America can get their sugar crop back in line, we could easily see these exports slow down.

Animal numbers are down sharply and animal profitability is increasing only slightly.  Cattle-on-Feed came out at 102% (estimates at 103%).  If we get the acres planted we could see the price heading lower and demand picking up with those lower costs.

For a free trial of the EHedger research, 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 2-21-2012

Feb 21, 2012

Grains finished mixed with March corn down 12 ¼ cents, beans up 3 ½ cents, and wheat down 11 cents.  The corn-bean ratio continues to come back in favor of beans.  For the month March corn is now down 9 ½ cents while March beans are up 72 cents!

After coming in from the long weekend and seeing crude oil make new highs above $106 per barrel, you would think corn could draw more support than it did.  I don’t want to sound like a broken record, but this could still be a massive unwinding of intra-commodity spreads as we see these huge swings between the products.

We did see USDA sale announcements before the morning session started.  There were 250,000 MTs of soybeans contracted to China for 2012-2013 delivery as well as 110,744 MTs of corn contracted to "unknown destinations".

On Thursday the USDA will announce "unofficial" 2012 carryout estimates at their Annual Outlook conference.  We have been talking about an expected increase in corn acres for a while now and the market seems to be responding to the same prospect.  Beans have made a large comeback to corn as we have obviously seen in the monthly net changes.  We think this latest rally in beans is an opportunity to get hedged in that market again.  To receive a trial of the EHedger morning/afternoon grain commentaries with hedge recommendations, please sign up using the link below.  Have a great week!

www.ehedger.com/signup

 "Managed Money Net Futures/Options Positions" Source: Commitment of Traders

Corn: Net Long 206,053 contracts which is a decrease in net longs by 1,661 contracts

Chicago Wheat: Net Short 44,441 contracts which is an increase in net shorts by 13,572 contracts

Soybeans: Net Long 81,042 contracts which is an increase in net longs by 1,292 contracts

 

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 2-17-2012

Feb 17, 2012

Grains finished strong to close the out the week.  March corn settled 5 ½ cents higher at $6.41 ¾, March beans up 9 ¼ cents at $12.67 ½, and March wheat up 15 ¼ cents at $6.44.  For the month of February, March beans are now up 68 ½ cents compared to March corn up 2 ¾ and March wheat down 22 cents. 

Grains were stronger overnight led by soybeans. After the overnight closed we did see that massive soybean sale to China of 2.803 MMTs mostly for 2012/2013.  This was in line with expectations.  We also saw sale announcements of 132,000 MTs of corn to S. Korea, 120,000 MTs of SRW to unknown and 20,000 MTs of US soyoil to Morocco.  Cash bids remain firm as producer selling continues to be slow.  Wheat exports have finally started to pick up as we have recently become more competitive in the world again.  Ukraine stated they would limit wheat exports to 1.7 MMTs from now through July.

I have talked a lot about the corn-to-soybean ratio over the past couple of days.  The market has done its job trying to predict an increase in corn acres before we actually see planting intentions.  We are at great levels for hedging new crop soybeans again as we don’t see the need for beans to really "bid" for acres given current world supply.  The market continues to put a large premium estimating South American production to be lower than current USDA estimates.  If these fears are in fact overstated and production ends up not as bad as "some" say, then we may find this latest rally a good place to have sales on the books.  Based on what we have seen so far for weather we still agree with the USDA expectations for S. American production. 

"Managed Money Net Futures/Options Positions" Source: Commitment of Traders

Corn: Net Long 206,053 contracts which is a decrease in net longs by 1,661 contracts

Chicago Wheat: Net Short 44,441 contracts which is an increase in net shorts by 13,572 contracts

Soybeans: Net Long 81,042 contracts which is an increase in net longs by 1,292 contracts

 

**We will be closed Monday, February 20th in observance of Presidents day.  Grains will re-open on the night session Monday at the regular time of 6 pm CST.  We will be back in the office on Tuesday morning.  For a free trial of the EHedger research, 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.

Thursday's Market Recap 2/16/12

Feb 16, 2012

The price of corn gained on the price of beans after a large run in the month of February.  In fact, March beans are up 59 ¼ cents so far this month while March corn is down 2 ¾ cents even after today’s trade.  March corn finished 9 ¼ cents higher at $6.36 ¼, March beans 2 ¾ cents lower at $12.58 ¼, and March wheat 2 ¾ cents higher at $6.28 ¾.  

USDA weekly export sales data showed corn sales at the high end of estimates while beans and wheat were at the low end.  We did however see another wheat export sale to Egypt, this time for 180,000 MTs.  Rumors of Chinese corn purchases were thrown around today, we just have to keep in mind how many times we heard these last year that ended up baseless, never coming to fruition.  We will discuss the reality of corn exports to China again when we see actual USDA sale announcements, not without confirmation though.

I have talked a lot about the corn-to-soybean ratio over the past couple of days.  This is the first day since January 31st that the new crop ratio fell (meaning corn gained on soybeans). The market has done its job trying to predict an increase in corn acres before we actually see planting intentions.  We are at great levels for hedging new crop soybeans again as we don’t see the need for beans to really "bid" for acres given current world supply.  The market continues to put a large premium estimating South American production to be lower than current USDA estimates.  If these fears are in fact overstated and production ends up not as bad as "some" say, then we may find this latest rally a good place to have sales on the books.  Based on what we have seen so far for weather we still agree with the USDA expectations for S. American production.  For a free trial of the EHedger research, 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 2-14-2012

Feb 14, 2012

Soybeans held the most strength for the second day in a row.  March beans were up 3 cents and settled at $12.55.  March corn fell 5 cents to settle at $6.33 ½, and March wheat fell 6 ¼ to settle at $6.35.

Soybeans continue to gain on corn. We have finally started to do some soybean export business.  The market has started forcing people out of their bear spread soybean positions as well as the short beans long corn spreads. We talked in yesterday’s letter about the market trying to buy bean acres as well.  So between the short covering and "bidding" for acres they have been able to keep beans more supported than corn recently.  We also have wheat the same price of corn which is a factor keeping corn resisted.  The fact that we have tons of wheat in the world and Australia just came out with a better wheat weather forecast.  We have heard more stories of ethanol plants slowing and/or closing down production on poor ethanol margins and record ethanol stocks.  We will have to see what the weekly report says tomorrow for production.

New crop corn is still expected to gain acres.  I talked a little bit about the new crop corn/bean ratio which is at 2.23 today after being as low as 2.0 to 1 back in November.  Eventually this could be a repeat of the 2007 growing year, where we came into the year with corn/bean ratio that was around 2.0 and ended that winter at about 2.83 (formula=beans/corn).  Corn obviously needs to secure those extra acres first and we need to see a somewhat normal growing year.  By our estimates the corn/bean ratio would have to get back to 2.3 to 1 for beans to start gaining acres again given current prices and cost of production.

The Chinese trade delegation is in town.  The fact that they usually buy a large chunk of their soybean imports during this week has given the bean market a lot of optimism.  This is usually a "buy rumor – sell the fact" type scenario and we will to see just how much they purchase.

South America is expected to get some needed rains next week, so I would expect the bean rally to start fizzling out this week without another catalyst.  They’ve already priced in the demand, and the downside of the Brazilian crop.  They have already priced in the corn gaining acres on beans.  This is most of what the market likely needs to price in for now.  This is the first time in several months that we feel new crop beans have as much downside risk as new crop corn does.  Look to start hedging new crop beans at these levels as we are getting much closer to fair value.  If you haven’t done much for new crop beans please give us a call, we have some strategies we can look at.

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 2-13-2012

Feb 13, 2012

Grains finished strong with new day session highs made on the close for beans and wheat.  March corn opened up strong and finished 7 ¾ cents higher at $6.39 ½.  March soybeans rallied 13 cents in the last 15 minutes of trade to finish up 23 cents at $12.52. March wheat also had a large late day rally and finished up 11 ¼ cents at $6.41 ¼.

Today’s strength started with the outside markets overnight after the Greek Parliament approved the latest austerity measures which was seen as favorable for many asset classes.  Weather also played a factor with a dry forecast in Southern Brazil.  The Chinese trade delegation is also currently visiting and the expected soybean export business from this has got the market a little bit excited as well.

Baseline USDA acreage estimates for 2012-13 crops that were gathered back in November were also released today.   They have the market focusing on the fact that we may see more corn acres and less bean acres at these prices.  The main acreage report (Planting Intentions) won’t be out until the end of March.  The fact that corn is expected to gain much of the available acres is being looked at as "bullish" beans when it may really still be a "bearish" corn story.  Corn has had to "entice" acres as the stocks/use ratio is legitimately low for the US and the world and we need to replenish stocks.  World soybean stocks have not been as tight and this has been reflected in the corn/bean ratios.  Eventually this could be a repeat of the 2007 growing year, where we came into the year with corn/bean ratio that was around 2.0 and ended that winter at about 2.83 (formula=beans/corn).  Corn obviously needs to secure those extra acres first and we need to see a somewhat normal growing year.  With that said, the current new crop ratio is 2.22 and we think corn can still expect plenty of acres.  Our supply and demand tables will remain the same for now.  If you would like to check them out again please see the chart below.

Supply and Demand

Thanks and have a great week!

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 2-10-2012

Feb 10, 2012

Grains finished mixed with March corn down 5 ¼, March soybeans up 1 ½ cents, and March wheat down 16 cents.

Wheat broke some resistance levels on more follow through selling after the report.  In the end the new crop corn and new crop wheat had the largest price drops.  The 2012 new crop corn/bean ratio is the highest it has been since July of last year.  The market is obviously expecting more corn acres and is acting accordingly ahead of time.  World wheat supply is certainly weighing on the US market as we found follow through selling from yesterday’s report.

USDA Report:

The USDA report didn’t reveal much difference from the market’s expectations.  The few main differences that I see are a higher world wheat carryout and smaller reductions than expected for South American production.  Total corn production combined between Argentina and Brazil was estimated by the market to be down about 5.1 MMTs and the USDA only reduced it by 4 MMTs with a total of 83 MMTs expected. 

Some analysts have been calling for much larger production cuts.  Our thought is we have passed the critical risk time period and have had regular rains since, so we don’t expect further mark downs from the USDA anytime soon.

The world wheat carryout seems to continue to grow.  This is a looming competitor to our corn exports and should continue to put a cap on corn so long as we still have feed options in the world.  Combine that with lower cattle numbers and record ethanol stocks and we have a potential to keep demand increases limited this year.  The market that really needs to keep acres is corn and as long as it gets the 94-95 million acres that we think it can, the long term price risk remains.

Report Highlights:

US corn carryout – 801 million, expected 790, Jan report – 846

US bean carryout – 275 million, expected 270, Jan report – 275

US wheat carryout – 845 million, expected 860, Jan report – 870

Argentine corn production lowered to 22 MMTs, ave guess at 22.3, Jan report at 26

Brazilian corn production at 61 MMTs, ave guess at 59.6, Jan report at 61

World wheat carryover 213.1 MMTs, Jan report 210

World corn carryover 125.4 MMTs, Jan report 128.1

Argentine bean production lowered to 48 MMTs, Jan report at 50.5

Brazilian bean production lowered to 72 MMTs, Jan report at 74

For our customers in the Northern IL areas, we will be speaking next Monday, February 13th at the 2nd Annual Agricultural Outlook Meeting. .  The meeting is sponsored by EHedger, First Midwest Bank, and Beck’s Hybrids.  Gary Schnitkey from the University of Illinois will be speaking as well as other industry professionals including Dan Dempsey from EHedger who will be discussing the brand new AMMO farm management software.

 

Breakfast Meeting

Will County Fair Atrium

710 West St.

Peotone, IL  60468

Registration begins at 8:30am and Breakfast Served at 9:00am

 

Dinner Meeting

Pour Richards Tap & Restaurant

210 Tremont St.

Odell, IL  60460

Registration begins at 5:30pm and Dinner Served at 6:00pm

 

Please R.S.V.P by Friday February 10, 2012

to Maggie Robisky 815-941-3725 or Email: maggie.robisky@firstmidwest.com

 

 

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.

 

 

 

Post-report comments 2-09-2012

Feb 09, 2012

Grains finished lower with the biggest losses in wheat.  March corn finished 5 ½ cents lower at $6.37, March soybeans down 4 cents at $12.27 ½, and March wheat down 14 ¾ cents at $6.46.

The USDA report didn’t reveal much difference from the market’s expectations.  The few main differences that I see are a higher world wheat carryout and smaller reductions than expected for South American production.  Total corn production combined between Argentina and Brazil was estimated by the market to be down about 5.1 MMTs and the USDA only reduced it by 4 MMTs with a total of 83 MMTs expected. 

Some analysts have been calling for much larger production cuts.  Our thought is we have passed the critical risk time period and have had regular rains since, so we don’t expect further mark downs from the USDA anytime soon.

The world wheat carryout seems to continue to grow.  This is a looming competitor to our corn exports and should continue to put a cap on corn so long as we still have feed options in the world.  Combine that with lower cattle numbers and record ethanol stocks and we have a potential to keep demand increases limited this year.  The market that really needs to keep acres is corn and as long as it gets the 94-95 million acres that we think it can, the long term price risk remains.

Report Highlights:

US corn carryout – 801 million, expected 790, Jan report – 846

US bean carryout – 275 million, expected 270, Jan report – 275

US wheat carryout – 845 million, expected 860, Jan report – 870

Argentine corn production lowered to 22 MMTs, ave guess at 22.3, Jan report at 26

Brazilian corn production at 61 MMTs, ave guess at 59.6, Jan report at 61

World wheat carryover 213.1 MMTs, Jan report 210

World corn carryover 125.4 MMTs, Jan report 128.1

Argentine bean production lowered to 48 MMTs, Jan report at 50.5

Brazilian bean production lowered to 72 MMTs, Jan report at 74

 

To sign up for a free trial of the EHedger research please click on the following linK: 

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.

________________________________________________________________________________ 

For our readers in the Northern IL areas, we will be speaking next Monday, February 13th at the 2nd Annual Agricultural Outlook Meeting. .  The meeting is sponsored by EHedger, First Midwest Bank, and Beck’s Hybrids.  Gary Schnitkey from the University of Illinois will be speaking as well as other industry professionals including Dan Dempsey from EHedger who will be discussing the brand new AMMO farm management software.

Breakfast Meeting

Will County Fair Atrium

710 West St.

Peotone, IL  60468

Registration begins at 8:30am and Breakfast Served at 9:00am

 

Dinner Meeting

Pour Richards Tap & Restaurant

210 Tremont St.

Odell, IL  60460

Registration begins at 5:30pm and Dinner Served at 6:00pm


Please R.S.V.P by Friday February 10, 2012

to Maggie Robisky 815-941-3725 or Email: maggie.robisky@firstmidwest.com

 

 ________________________________________________________________________________ 

 

 

 

EHedger Afternoon Grain Commentary 2-6-2012

Feb 06, 2012

Wheat ended the day strong while corn and beans were near unchanged. March corn settled down a ¼ cent at $6.44 ¼, March soybeans up ½ cent at $12.33, and March wheat was up 7 ¾ cents at $6.68 ½.

Weekly export inspections were above expectations for corn and soybeans yet below expectations for wheat. 

Weekly Export Inspections:

Corn                   39.389 mln bu (35.0 mln expected)

Soybeans            37.292 mln bu (37.0 mln expected)

Wheat                 14.505 mln bu (18.5 mln expected)

Overall outside markets did not give much direction for the day.  We have the report out on Thursday, February 9th.  We don’t expect to see much major changes from the last Supply and Demand report in January.  The one area that they may change is the South American production estimates.  We still think that Argentine corn production is going to be in the 21 – 22 MMTs range.

Over the past few EHedger letters we have started to include our production estimates. With our expectations of 95 million corn acres, and 75 million bean acres, there is a great chance that we end up with a much larger carryout at the end of next year than where we stand today (see included chart).  We have to keep in mind that the 7 year average price for front month corn is still approx $4.20 and $9.79 for soybeans.  Although we still have to get through the growing year without significant weather problems, there is plenty of leeway given the amount of potential acres and where trendline yields stand.

Now that we are starting to set the average Feb price for the spring crop insurance levels, we are getting a clearer picture everyday of what to expect for a revenue guarantee.  Once that level is set we can make a more informed decision of how much downside protection we need to keep on for the year using futures, options, and cash sales for each individual. 

For our readers in the Northern IL areas, we will be speaking next Monday, February 13th at the 2nd Annual Agricultural Outlook Meeting.  The meeting is sponsored by EHedger, First Midwest Bank, and Beck’s Hybrids.  Gary Schnitkey from the University of Illinois will be speaking as well as other industry professionals including Dan Dempsey from EHedger who will be discussing the brand new AMMO farm management software.  If you would like to attend, please RVSP before Friday February 10th by contacting Maggie Robisky at 815-941-3725 or by email at Maggie.robisky@firstmidwest.com .  You can also contact us for RSVP at 866-433-4371 or at info@ehedger.com .  Have a great week!

www.ammoag.com

 

 

Best Regards,

EHedger

866-433-4371


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 2-3-2012

Feb 03, 2012

 Soybeans finished strong today after some "bullish" estimates were released for South American soybean production from Informa.  March beans finished 15 ½ cents higher at $12.32 ½, March corn up 1 ½ cents at $6.44 ½, and March wheat down 2 cents at $6.60 ¾.

Informa lowered Argentine corn production to 22.5 million (1.5 lower from previous estimate), Argentine bean down to 46.5 million MTs (4.5 lower from previous estimate), and finally Brazilian soy production to 70 MMTs (down 2 MMTs).   They did however increase Ukrainian corn acreage which bumped up their corn production estimate by 3.5 MMTs.

The outside markets were overall supported today from "bullish" jobs data this morning.  The unemployment number dropped to 8.3% which is the lowest level since Feb 2009.

We have included our estimates for Supply and Demand for this year and next in the chart below.  We used the 16 year trendline yields to fill in the estimates for production purposes.  These came out to be 162.2 bpa for corn, 43.5 bpa for soybeans, and 44.9 bpa for wheat.  Obviously we have had weather problems the last couple of years which has resulted in below trendline yields, but we can’t rely on having weather problems this year to keep prices supported.  This is one of the reasons we have used strategies to cover downside risk but still allow for upside potential.

We are projecting corn acres to be 95 million as the corn/bean ratio still supports planting corn.  Between the 10.4 million acres in 2011 that were claimed preventive plant, and the 1.5 million acres coming out of crp, we think we could easily see 8 million acres added this year.  We increased corn by 3 million, and winter wheat is already up 1.3 million (USDA number).  That conservatively leaves room for 3.7 million to go to spring wheat, cotton, and other crops. We ended up INCREASING demand substantially in all three products and still came out with a 1.854 billion bushel carryout for corn, 0.366 for soybeans, and 0.890 for wheat. 

Supplyanddemand

 

www.ammoag.com

 

 

Best Regards,

EHedger

866-433-4371


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 2-2-2012

Feb 02, 2012

Grains finished mixed with corn and beans holding steady and wheat selling off.  March corn finished 1 cent higher at $6.43, March beans up 1 ¾ cents at $12.17, and March beans down 11 ½ cents at $6.62 ¾.

Weekly Export Sales:

Corn                                                   912,000 MTs for 2011/2012 (high end of estimates)

Soybeans                                            308,400 MTs for 2011/2012 (low end of estimates)

Wheat                                                518,900 MTs for 2011/2012 (as expected)

We have included our estimates for Supply and Demand for this year and next in the chart below.  We used the 16 year trendline yields to fill in the estimates for production purposes.  These came out to be 162.2 bpa for corn, 43.5 bpa for soybeans, and 44.9 bpa for wheat.  Obviously we have had weather problems the last couple of years which has resulted in below trendline yields, but we can’t rely on having weather problems this year to keep prices supported.  This is one of the reasons we have used strategies to cover downside risk but still allow for upside potential.

Best Regards,

EHedger

866-433-4371

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 2-1-2012

Feb 01, 2012

The grain markets were higher to start the 1st day of February. March corn settled 3 cents higher at $6.42. March soybeans ended up settling 16 ¼ higher at $12.15 ¼. March wheat settled the day 8 ¼ higher finishing the session at 6.74 ¼.The weather forecast for South America is still calling for favorable conditions for the next couple of weeks outside of some dryness that occurs over the next couple of days in Southern Brazil.

Wheat has once again gained on corn and is now trading at a 32 1/4 cent premium to corn in the March contracts. This is significant since it has been trading in and out of a discount to corn since June which has surely affected the amount of corn being fed in the world. If wheat is no longer cheap enough to be a feed substitute the corn market may have to rally to ration demand. Much of this depends on the South American crop as the market has already priced in a high risk premium for crop damage. Obviously there has been some damage from the heat stress; the question still remains how much. 

Weekly export sales will be released tomorrow morning at 7:30am. Corn sales are estimated to be between 700,000MT-950,000MT. Soybean sales are estimated to be between 350,000MT-550,000MT. Wheat sales are estimated to be between 400,000MT-600,000MT. We will release the sales in all of the EHedger morning commentaries.


Best Regards,

EHedger

866-433-4371


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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