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September 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 9/26/12

Sep 26, 2012

CBOT grains had another double digit loss day.  December corn closed 19 cents lower at $7.24 ¾, November soybeans 38 ½ cents lower at $15.73, and December wheat down 17 ¼ cents at $8.69 ¼.

Without much supportive fundamental information the markets continued their downward trend.  Ethanol production was down 25,000 bbl on today’s EIA report and stocks were left unchanged.  We did see a private 2012 soybean sale of 140,000 MTs to an "unknown destination".  Egypt bought 300,000 MTs of wheat (from Romania and France).  CIF basis was steady to firm for corn and beans but producer selling has slowed after the most recent price break.

September has been a particularly poor month for grains.  December corn is down 75 cents or -9.38%.  December wheat is down 20 ¼ cents (-2.28%) and November soybeans down $1.83 ½ (-10.45%). The August low for November beans is $15.55 ¼, a settlement below there on Friday would signal a monthly key reversal.  Now that we have surpassed the first major retracement level of $15.81 without breaking a sweat, the next major target for November beans would be $15.17. This is the 50% retracement level and 100 day moving average.

November Soybean ChartNovember Soybeans

December corn has had a very orderly departure from the highs.  There are three major technical targets between $6.76 and $6.84 – the 4th of July gap, the 100 day moving average, and the 50% retracement.  We have the stocks report on Friday as well as end of the month, end of the quarter.  It may seem like a long way off to see these levels but we just broke December corn by $1.24 ¼ from the highs to reach today’s settlement. Another 48 ¾ cents to fill the gap isn’t necessarily out of the question.

December Corn ChartDecember Corn

Average analyst estimates for Weekly Export Sales source: Reuter’s Poll

Corn:                 150,000 – 250,000 MTs

Soybeans:         650,000 – 800,000 MTs

Wheat:              400,000 – 550,000 MTs

 

The Quarterly Stocks report is out this Friday.  I have included the average estimates as well as the EHedger estimates in the chart below.  For now we want to remain with sustainable hedges as we progress through harvest.  To sign up for a free EHedger trial please click on the link below.

Wheat Production Estimates (Report Friday)Wheat Estimates

Quarterly Stocks Estimates (Report Friday)Quarterly Stocks Estimates

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 9/25/12

Sep 25, 2012

It was another choppy day at the CBOT but prices settled near their unchanged levels.  December corn closed at $7.43 ¾ (-1), November Soybeans at $16.11 ½ (+1 ½), and December wheat at $8.86 ½ (-5 ½).

The market is having a hard time sustaining any meaningful rebounds as it continues its September slump.  We do have a couple of major reports coming up that could be game-changers.  On Friday at 7:30am they will release the September Quarterly Stocks Report as well as the Small Grains Summary.  At 2:00pm the Hogs and Pigs report will be released.  The corn stocks number will be extremely difficult to guess even if the commercials do an excellent job reporting what’s "old" and "new".  In the past few years we have seen major surprises on this report due to this very problem (typically bearish).  Can we expect a year like this to be any better when many areas have started harvest weeks ahead of schedule?  Nonetheless we still have our estimates released in the charts below:

Wheat Production Estimates (Report Friday)

Wheat Production Estimate

Quarterly Stocks Report (Report Friday)

Quarterly Stocks

The market is still in a technical selloff which may be fueled by typical harvest pressure.  The Crop Progress Report shows that we are on a record harvest pace for both corn and soybeans.  What is most surprising is the pace some of the northern states have set for soybeans. Minnesota is 45% harvested compared to 5% on average at this time! North Dakota – 56% harvested compared to 4% on average!

A rising soy crop rating has also played a part in the soybean sell-off.  We have started to see some better-than-expected soybean yields come in but it is still too early to tell if this trend will substantially improve the current USDA national average yield estimate.  In our opinion even if you added 100-150 million bushels to this year’s production we could easily see this picked off in additional export demand.  This would still leave us with an extremely tight carryout and a high level of sensitivity to any unfavorable weather forecasts in South America this winter.  One major technical level to watch out for is $15.81 (the 38.2% retracement).

Chart: November SoybeansNovember Soybeans

Fund Activity: Friday’s Commitment of Traders reports that from Wednesday the 12th through Tuesday the 26th the "managed money" was reducing their net long positions in corn, soybeans, and wheat.  They decreased their longs by 14,870 contracts while increasing their short positions by 11,434 (they still hold a net long position of 270,162 of corn using futures and options).  The "managed money" also reduced their net long soybean position by dropping 15,185 longs and increasing 3,760 shorts (they still hold a net long position of 209,875 of soybeans using futures and options).

These are still very large positions which begs the question – when and will they liquidate?  We are in harvest but haven’t got a clear picture of how good or bad the production is compared to market expectations.  In fact it may not be until the January stocks number until the market is truly convinced one way or the other about crop size.  This latest break may have been from typical early harvest pressure during an overcooked market.  That doesn’t mean I would get out of hedges.  Another drop before/during the October timeframe will be the worst case scenario for the crop insurance payouts.  There is a major technical gap for corn down at $6.76 and export sales have been extremely poor for corn as of late.  For now we want to remain with sustainable hedges as we progress through harvest.  To sign up for a free EHedger trial please click on the link below.

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 9/21/12

Sep 21, 2012

Grains traded both sides of the market but had a last minute rally to close higher.  December corn settled up 2 ¼ cents at $7.48 ¼, November soybeans up 3 cents at $16.21 ¾, and December wheat up 17 ¾ cents at $8.97 ¼.  The daily closes were strong but corn and soybeans are still sharply lower for the week.  December corn dropped a total of 29 ¼ cents while November beans fell by $1.14 ¾.  December wheat closed ¼ cent lower than it did last Friday.

With such a large setback in price and no change to open interest the market was wondering "who was selling?" Today’s Commitment of Traders reports that from Wednesday the 12th through Tuesday the 26th the "managed money" was reducing their net long positions in corn, soybeans, and wheat.  They decreased their longs by 14,870 contracts while increasing their short positions by 11,434 (they still hold a net long position of 270,162 of corn using futures and options).  The managed money also reduced their net long soybean position by dropping 15,185 longs and increasing 3,760 shorts (they still hold a net long position of 209,875 of soybeans using futures and options).

These are still very large positions and it begs the question – when and will they liquidate?  We are in harvest but haven’t got a clear picture of how good or bad the production is compared to market expectations.  In fact it may not be until the January stocks number until the market is convinced one way or the other about crop size.  This latest break may have been from typical early harvest pressure during an overcooked market.  That doesn’t mean I would get out of hedges.  Another drop before/during the October timeframe will be the worst case scenario for the crop insurance payouts.  There is a major technical gap for corn down at $6.76 and exports were extremely poor for corn recently. 

For now we want to remain with sustainable hedges as we progress through harvest.  To sign up for a free EHedger trial please click on the link below.

Chart: December CornDecember Corn

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 9/20/12

Sep 20, 2012

The recent downtrend has resumed with December corn falling 10 ½ cents, December wheat down 2 cents, and November soybeans down 50 ¾ cents.

The Weekly Export Sales Report was very negative for corn at 69,900 MTs (300-400 expected).  Obviously we have seen a lot of export demand rationing for corn.  Soybeans sales were 717,000 MTs the majority of which was going to China and "unknown destinations" (expectations were calling for 600-800).  Wheat came in above estimates at 488,900 MTs (expectations for 300-400).

Wheat held the most support today which we can partly attribute to the strong sales.  On the other hand soybean sales were at the high end of estimates yet they had the largest selloff.  Open interest hardly changed for beans over the past couple of days but I would be surprised if we didn’t see a sharp drop in open contracts after today’s trade.  We will see that on the Volume and Open Interest reports tomorrow morning.

There are clearly market fears dictating these massive price swings as every new low seems to be met with heavy sell stops.  We know that the "managed money" is still holding an enormous net long corn and soybean position.  Liquidation from that group would be concerning for the bulls but we still haven’t seen a major drop in open interest to give us that signal.  Tomorrow’s Commitment of Traders report should also shed some light on this.

Yield reports continue to flow in with ultra-high variability.   The September Stocks Report will also be difficult for the market to estimate due to the large amount of new crop that may be included in the stocks count.  The stocks report will be released Friday, September 28th.

The USDA announced that starting January they will be releasing their NASS and WAOB reports at 11:00am CST.  This shouldn’t change much from how it stands now since we already have live markets during report releases.

For now we want to remain with sustainable hedges as we progress through harvest.  To sign up for a free EHedger trial 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 9/17/12

Sep 17, 2012

Monday was an extremely weak day at the Chicago Board of Trade with soybeans closing "lock-limit down" for the first time since March 2011!  December corn closed 34 cents lower at $7.48, November beans down 70 cents at $16.69, and December wheat down 46 ¼ cents at $8.78.

The fact that we finished 70 cents lower means that trading limits will expand to $1.05 for soybeans tonight/tomorrow.  The weakness wasn’t particularly associated with any specific news.  We did see a USDA sale announcement of 210,000 MTs of US Soybeans to "unknown destinations" for 2012-2013 delivery.  Export inspections were below estimates for beans but this was announced after soybeans had already made the majority of the move lower.  Moreover it was on very heavy volume at 160,103 electronic November contracts trading.

Corn and wheat export inspections were both above their market estimates but didn’t seem to provide any support as they followed soybeans lower.

Weekly Crop Progress shows corn at 26% harvested compared to 9% on average.  Soybeans are 10% harvested compared to 4% on average.  Corn’s good-excellent rating went up 2 points from last week and is now at 24%.  Soybeans good-excellent rating gained 1% and is now at 33%.

Will this selloff continue?  We are starting to approach some major technical levels for corn and soybeans and will have to see if those hold. The first major number for corn is at $7.45 ½ and then below there - $6.76 would fill the 4th of July gap.

Chart: December CornDecember Corn

For Soybeans first support may be found at the 50 Day Moving Average at $16.54.  The 4th of July gap is all the way down at $14.78.  This is obviously well below where we are currently trading but if for some reason we see an all out liquidation from the funds this is not unbelievable.  We have never seen a long soybean position held by the managed money this large.  With so much conflict in the Middle East, today may have been a general RISK OFF trade in light of potentially more serious conflict. 

Chart: November SoybeansNovember Soybeans

Another sign of a very obscure trading day was crude oil’s intraday break.  There were no major news stories associated with this collapse, and it happened all at once. The Nymex claims that they do not believe there was a technical problem at this time.

Chart: 5 Minute October Crude OilOctober Crude Oil

For now we want to remain with sustainable hedges as we progress through harvest.  To sign up for a free EHedger trial 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 9/14/12

Sep 14, 2012

Friday’s trade was generally supportive for grains but a profit taking selloff in the soybeans had the November contract 8 ¼ cents lower on the close.  December corn closed 8 ¼ cents higher at $7.82 and December wheat 22 ¼ cents higher at $9.24 ¼.

Follow through strength from the weak dollar and strong outside markets helped grains start the day sharply higher. The Fed’s decision to extend their QE program has undoubtedly been the catalyst for the falling dollar over the past two trading sessions.  Crude oil was also sharply higher partly from the weak dollar and partly from the unrest in the Middle East.

We can see from today’s Commitment of Traders Report that the managed have been lightly reducing their net long soybean and corn positions as of Tuesday.  Keep in mind this does not include numbers from Wednesday’s USDA report.

USDA REPORT:

The biggest surprise to the market was the new crop corn yield of 122.8 with unchanged harvested acres (87.4 million).  The average analyst estimate was 120.6 with 86.173 million acres.  Naturally this resulted in a much higher US Corn Ending Stocks number at 733 million bushels (market estimate was 592 million).

Not only was the US corn carryout above expectations, the world carryout was another 3 million MTs more than the average guess.  Even though these supply numbers are quite low, they were still above the expectations which is why we had a negative reaction on the report day.  The EIA ethanol report was also a little "bearish" with lower production and higher stocks.  Another aspect to consider is the negative technical formation December corn has right now.

Soybeans on the other hand obviously had a very positive reaction to the report.  The report wasn’t overly bullish from carryout as much as it was for US production.  The market was calling for yields to drop to 35.5 bpa and the USDA September estimate was 35.3.  The average analyst estimate for total US production was 2.657 billion bushels and the USDA came in at 2.634 billion.  The US Soybean data was slightly "bullish" while the World supply was a little more than the market had anticipated.  The USDA left South American production unchanged (Argentina at 55 MMTs and Brazil at 81 MMTs).

The USDA wheat supply estimates were generally higher than the market’s expectations.  The USDA did lower the Russian wheat crop by 4 MMTs but left the Australian and Canadian crops unchanged.

This report was not far-enough away from market expectations to create a large change of opinion going forward.  The final stocks report for corn and soybeans may be the next major market mover at the end of the month.

 

Please contact EHedger at 866-433-4371 if you would like to try our proprietary farm management software called AMMO.  To learn more please visit www.ammoag.com.


December Corn ChartDecember Corn

USDA REPORT

USDA Report

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 9/13/12

Sep 13, 2012

Thursday grains finished higher along with most commodities after the Fed Decision for more quantitative easing.  December corn settled 4 ¼ cents higher at $7.73 ¾, November soybeans 1 ½ cents higher at $17.47 ¼, and December wheat 12 cents higher at $9.02.

Export sales were strong for corn and meal and in-line with estimates for the other products.  Wheat was also supported from the fact that Egypt’s GASC bought a total of 235,000 MTs of wheat for late November sourced between Russia and France.  Besides exports, the main market talk revolved around the reaction to the FOMC’s decision for QE3.

The Fed will now purchase $40 Billion of mortgage backed securities every month with NO defined end date.  Operation Twist will continue through the end of this year.  Furthermore, they extended their forward guidance to keep rates exceptionally low through mid 2015.  What does this mean?  The Fed is doing everything it can to keep rates low and pump liquidity.  When you create a situation of excess dollars they become more abundant and worth less, thus requiring more of them to purchase hard assets like commodities.  We saw a notable increase in the price of precious metals with gold trading $40+ an ounce higher on the day and silver $1.50+ an ounce higher.  We also saw a notable increase in the grain markets as the dollar fell to new lows not seen since May.  If the US Dollar Index continues to head lower, we may see an overall supportive tone continue in the commodity markets.

USDA REPORT:

The biggest surprise to the market was the new crop corn yield of 122.8 with unchanged harvested acres (87.4 million).  The average analyst estimate was 120.6 with 86.173 million acres.  Naturally this resulted in a much higher US Corn Ending Stocks number at 733 million bushels (market estimate was 592 million).

Not only was the US corn carryout above expectations, the world carryout was another 3 million MTs more than the average guess.  Even though these supply numbers are quite low, they were still above the expectations which is why we had a negative reaction on the report day.  The EIA ethanol report was also a little "bearish" with lower production and higher stocks.  Another aspect to consider is the negative technical formation December corn has right now.

Soybeans on the other hand obviously had a very positive reaction to the report.  The report wasn’t overly bullish from carryout as much as it was for US production.  The market was calling for yields to drop to 35.5 bpa and the USDA September estimate was 35.3.  The average analyst estimate for total US production was 2.657 billion bushels and the USDA came in at 2.634 billion.  The US Soybean data was slightly "bullish" while the World supply was a little more than the market had anticipated.  The USDA left South American production unchanged (Argentina at 55 MMTs and Brazil at 81 MMTs).

The USDA wheat supply estimates were generally higher than the market’s expectations.  The USDA did lower the Russian wheat crop by 4 MMTs but left the Australian and Canadian crops unchanged.

This report was not far-enough away from market expectations to create a large change of opinion going forward.  The final stocks report for corn and soybeans may be the next major market mover at the end of the month. 

Please contact EHedger at 866-433-4371 if you would like to try our proprietary farm management software called AMMO.  To learn more please visit www.ammoag.com.

 

September USDA Report

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 9/7/12

Sep 07, 2012

It was another mixed day at the Chicago Board of Trade with wheat being the upside leader.  December corn closed a penny higher at $7.99 ½, November soybeans 10 ½ cents lower at $17.36 ½, and December wheat up 13 ¼ cents at $9.05.

 

The Weekly Export Sales report was released this morning after being delayed a day due to the holiday.  Corn sales were extremely dismal at only 25,000 MTs.  Soybeans also came in below the estimated range at 526,000 MTs and wheat in-line at 554,000 MTs.

 

The highly anticipated Informa numbers were released shortly after 10:30 am this morning as two sets of estimates. They expect the September USDA corn yield to be 119.8 bpa with 10.310 billion bushels total production.  Although their guess is below the current USDA estimate for September, they are predicting 126.5 bpa yield and 11.030 for a final end-of-year total.  For beans they are projecting 35.4 bpa yield and 2.639 total production for September and a final production of 2.690 billion.

 

November soybeans rallied sharply immediately following the Informa release.

November Soybeans

 

Corn stayed within a relatively tight trading range.  I have discussed this range in the past few market letters and I don’t expect this to make any major changes prior to Wednesday’s WASDE report.

December Corn

 

The average market guesses for Wednesday are rather mixed.  They expect old crop carryout to fall between 0.971-1.176 billion bu for corn and 0.125-0.145 billion for soybeans. They expect next year’s carryout to fall between 0.458-0.658 billion bu for corn, 0.087-0.128 for soybeans.  Source: Reuter’s Poll

 

The Commitment of Traders report showed the Producer/Merchant/Processor liquidating longs while the managed money and other reportables adding to their net long positions.  This is significant because it was not investment liquidation as we had originally suspected.  As it stands from Tuesday, the "managed money" is holding a net long corn position of 323,629 contracts and 237,671 net long contracts of soybeans heading into harvest!

 

Please contact EHedger at 866-433-4371 if you would like to try our proprietary farm management software called AMMO.  To learn more please visit www.ammoag.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.

EHedger Afternoon Grain Commentary 9/6/12

Sep 06, 2012

Grains closed mixed after trading both sides of the market Thursday.  December corn finished 7 ¾ cents higher at $7.98 ½.  November soybeans closed a ½ cent lower at $17.47 after trading as low as $17.26 overnight.  December wheat held onto its sharp rally closing 24 cents higher at $8.91 ¾.

 

Volume was relatively low especially for December corn.  Corn open interest has been declining and December corn has been stuck in a range for the past 6 weeks.

December Corn

 

Soybeans remained weak for the majority of the trading session which may be a result of the "bearish" FC Stone soybean production estimate yesterday.  As you can see by the chart below, the lows of the session were made during the first few hours of the night session, immediately following their production estimate announcements.

November Soybeans

 

The EIA Weekly Report showed ethanol stocks and ethanol production marginally higher.  Crude oil stocks were down more than expected but the early gains in crude weren’t held throughout the day.  Outside markets were overall supportive with equity index futures leading the way.  The S&P 500 reached highs today not seen since January 2008!  The US Dollar Index remains low in anticipation of another round of Quantitative Easing expected on the next FOMC report one week from today.

 

Please contact EHedger at 866-433-4371 if you would like to try our proprietary farm management software called AMMO.  To learn more please visit www.ammoag.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.

EHedger Afternoon Grain Commentary 9/5/12

Sep 05, 2012

Grains finished sharply lower on profit taking.  December corn fell 14 ¼ cents to close at $7.90 ¾.  This has been the low end of the range for the past 6 weeks and a critical spot to hold support.  November soybeans slipped by 20 ¾ cents today but we are still only one day off an all-time record high.  December wheat closed 21 cents lower at $8.67 ¾.  Domestic cash basis had another significant drop for corn and soybeans today.

 

We may be seeing some long liquidation due to the fact that harvest is well underway and seasonal pressures are at work.  In the last 5 days corn open interest has dropped by 31,666 contracts.  This may not seem very significant, but those numbers don’t reflect the most recent Commitment of Traders report which showed long liquidation from the ‘managed money’.  These could both be signs of a massive position change by the biggest of the net long position holders.  Or it may just be profit taking ahead of harvest and the September WASDE report next week.  Either way the market is waiting for some fresh production estimates.  A ‘bullish’ USDA report may be needed to add fuel for the longs as corn demand has certainly shown signs of slowing down.

 

We have private crop estimates coming out in the mean time with many estimates below the August USDA numbers.  Informa will release their estimates this Friday.

 

Technically corn is still range-bound and we are at the low end of the range:Corn Chart

 

Look for support here but expect stops to be triggered on a breakout below $7.85 (Dec).

 

Though domestic basis for soybeans has dropped over the last couple of days, we have seen week after week of strong export demand.  This week export sales will be delayed until Friday, but will certainly be a major indicator for market direction.  The fact that the November:March spread came back to its 100 day for the first time since January may entice some longs to go back to the front months.

 

Soybean Spread Chart

 

Please contact EHedger at 866-433-4371 if you would like to try our proprietary farm management software called AMMO.  To learn more please visit www.ammoag.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.

EHedger Afternoon Grain Commentary 9/4/12

Sep 04, 2012

Grains finished higher but with heavy "bear-spreading".  December corn closed 5 ¼ cents higher at $8.05, November soybeans up 11 ¾ cents at $17.68 ¼, and December wheat down ¾ of a cent at 8.88 ¾.

 

In my opinion the most significant of today’s moves is the loss of premium November is seeing to the differed months.  Take for example the following chart of the November 2012 – March 2013 soybean spread:

 

Soybean Spread

 

Today November gave back 16 cents to March, 21.5 cents to May, and 25.75 cents to July.  The fundamentals seem to have turned as the market realizes most producers aren’t willing to store beans until March for a $1.52 less than they can get out of the field!  You also have the fund rolls coming up.  As producers contract to sell their soybeans off the combine and the managed money roll their long bean positions to the back months we have started to see that front month premium wither.  We also saw a drop in CIF soybean basis today which added to that pressure.

 

Export inspections were 6.37 million for corn (expected 13.5), beans at 15.12 million (expected 12.5), and wheat at 25.44 million (expected 12.5).

 

After the market closed the Crop Progress Report showed corn at 10% harvested and 41% mature.  Corn and soybeans had no change to their good-excellent crop ratings.  Soybeans are slightly ahead of schedule at 19% "dropping leaves" compared to 9% as the 5-year average.  Overall there was little change from expectations and shouldn’t cause much change of opinion for tonight’s opening trade.

 

Please contact EHedger at 866-433-4371 if you would like to try our proprietary farm management software called AMMO.  To learn more please visit www.ammoag.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.

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