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March 2014 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.

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Mar 26, 2014

Old crop soybeans were sharply higher on Wednesday while wheat and corn were lower.  May beans settled 12 cents higher at $14.40 while November beans were 4 ½ cents higher at $11.93 ¼.  Today’s corn weakness was related to lower ethanol production and higher ethanol stocks from the EIA report.  Every other day we seem to see profit taking in one product while positions are added to another.  Overall we are still near the high end of the range for corn, wheat, and soybeans heading into one of the largest reports of the year.  The Reuters poll of analyst estimates was released yesterday afternoon.  The full "cheat sheet" is located below:

ANALYST ESTIMATES FOR USDA REPORTS – MARCH 31st (Reuters Poll)

US Corn, Soybean and Wheat Plantings

 

Avg Estimate

Range

USDA 2013 Plantings Final

Corn

92.748

90.500 - 94.000

95.365

Soybeans

81.075

78.500 - 83.600

76.533

All Wheat

56.277

54.800 - 57.711

56.156

Winter Wheat

42.157

41.800 - 44.000

43.090

Other Spring

12.270

11.000 - 13.500

11.596

Durum

1.794

1.390 - 2.200

1.470

 

 

 

 

US Quarterly Stocks on March 1, 2014

 

Avg Estimate

Range

USDA 2013 Plantings Final

Wheat

1.042

0.985 - 1.115

1.235

Corn

7.099

6.861 - 7.540

5.400

Soybeans

0.989

0.955 - 1.087

0.998

These estimates have total corn and soybean acres up almost 3 million from 2013, much of those coming from prevent plant of course.  Although the soybean acreage estimate is sharply above last year’s number, we still think the average guess is a little conservative.  We wouldn’t be surprised to see up to 83 million acres of soybeans (the highest estimate in the poll was 83.6 million). This would suggest total carryout above 350 million bushels of soybeans which leaves a lot of downside risk in the market if we have a normal growing year.  We can’t rule out a large stocks surprise which we seem to get on almost every report.  For now we are remaining with hedges that allow for reasonable fluctuation so that prices are protected in a falling market but upside potential remains. We recommend running any strategy through the AgYield software especially before reports like these.  If you are looking for additional downside protection just for the report look at the May Short-Dated New Crop options.  These expire with the rest of the May CBOT options but derive their value from the new crop futures.  This way you don’t pay for the whole year of time value if it is just short term coverage you’re after.  For more information please give us a call and have a great week!

CORN, BEANS, WHEAT COMBINED CHART – substantial rally since the last quarterly stocks report puts the market at risk of a corrective move

Corn, Beans, Wheat Combined Chart

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EHedger | 866.433.4371

Premier full service commodity brokerage offering risk management services for the agricultural sector as well as professional traders.

45+ Years of Ag Brokerage Expertise

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.


Funds Adding to Their Corn Longs

Mar 21, 2014

Soybeans and wheat closed with double digit losses on Friday while corn stayed near unchanged.  This appears to be a liquation of the inter-commodity spreads ahead of the weekend.  Ever since the January report there has been a noticeable change in fund positions in corn, wheat, and soybeans.  This can be viewed in the following chart which includes one long wheat, one long soybean, and two short corn all in the front month contracts.

Daily Continuous Chart

Daily Continuous Chart

Corn’s strength was likely derived from the large purchase by Egypt on this morning’s 8:00am announcements.  They bought 340,000 MTs of corn for old crop delivery.  Our export sales pace has remained rather strong for corn and probably makes up for the expected decline in feed/residual from the current lofty USDA demand estimates.  The Reuters and Dow Jones poll will not be released until next week. Until the reports are released on the 31st we expect markets to remain in their current ranges.  If you have any questions please give us a call.  Have a great March Madness weekend!

Managed Money Position Changes through Tuesday, March 18th (futures and options combined):

                      Net Position Change                                   Net Position

Corn:                  +18,299                                      +227,860 contracts (1.14 billion bushels)

Soybeans:           +52                                             +198,672 (0.99 billion bushels)

Wheat:               +13,521                                       +24,036 (0.120 billion bushels)

Sign up for our Market Commentary for our hedge recommendations.

EHedger | 866.433.4371

Premier full service commodity brokerage offering risk management services for the agricultural sector as well as professional traders.

45+ Years of Ag Brokerage Expertise

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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