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September 2009 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.

Corn and wheat rally; soybeans struggle 9/24/09

Sep 25, 2009





















 

SETTLEMENTS 9/24
         
 
Dec 09 Corn
336 ¼  
+ 6 
Nov 09 Beans
918 ½  
- 2  
Dec 09 Wheat
473
+ 13 
Dec 09 KC Wheat
485
+ 15 ½ 
Dec 09 Min Wheat
500 ¼    
+ 10 ¾
Dec 09 Meal
278.8
- 1.7
Dec 09 Oil
34.41
- 0.15
 
 
 
 
 
 
 
 
 


  

 
 
Corn and wheat closed higher and soybeans closed lower. Wheat and corn were strong for the majority of the day and soybeans were weak. Overall, all three markets held up well despite very weak outside markets and a strong dollar. Stories of disease problems in Central Illinois corn fields and concerns over frost fears in Argentina wheat were popular “reasons” for the rally in those markets. The bigger reason is probably the fact that the market has been short corn and wheat and long soybeans and now we are seeing these positions unwind. Weather models continue to flip flop with frost ideas next week. The latest run is indicating a frost at the end of next week with warmer weather at the beginning of next week.   So far temps do not look too threatening, with only the northernmost areas receiving temps in the low to mid 30’s. Unless the outlook changes, this scenario would not cause too much damage.   With harvest picking up for soybeans and not yet for corn, we are also seeing more hedge pressure in the soybeans than in corn. I expect to see corn run into decent selling pressure if prices rally another 5-10 cents from here.   Concerns over the U.S. dollar and the fact that interest rates are being held at extremely low levels continues to draw money into commodities. We continue to see a strong surge of “new money” enter our markets as we head into the end of the month. This month should be the same. For those of you who need to get caught up on sales ahead of harvest, I would use a rally in corn and soybeans to start catching up. We have a Sep. stocks report at the end of the month, and the Chinese holidays start on the first of October. I would make sure you are completely caught up on sales by Oct.1. It should be hard for corn and soybeans to maintain large rallies especially over the next 30 days. If you have storage, I still like making sales in the July corn as futures are over $3.50. I would make soybean sales as November futures rally above $9.25 to $9.50. Even if prices have put in a bottom (I don’t think they have), the market may have a very difficult time rallying from here. So, trying to make some sales on these 3-4 day rallies will keep you from felling like you have to make sales on the large breaks. Remember that we are recommending… Make sure you have your orders placed and call if you have any questions. 
 
 
 
 
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Our commentaries are just one part of our whole risk management service. Please go to http://www.ehedger.com/sign-up/ for a free two-week trial of our full member website that gives you access to all our hedge and marketing recommendations, educational tools, market snapshots and much more.
Also learn about our acclaimed AMMO Program that helps producers optimize their marketing strategies using the premier tools and insights in the industry.
 
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Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. The market information contained in this message has been obtained from sources believed to be reliable, but is not guaranteed as to its accuracy or completeness. Market information may not be consistent with current or future market positions of E Hedger, its affiliates, officers, directors, employees, or agents. Recipients assume the risk of reliance on and indemnify and hold E Hedger harmless for any and all losses, costs, or tax consequences incurred as a result of their use of market information.

EHedger Closing Grains Commentary 9/23/09

Sep 23, 2009
 
SETTLEMENTS 9/23
         
 
Dec 09 Corn
331
+ 5 ¼  
Nov 09 Beans
923 ¾  
+ 1 ¾   
Dec 09 Wheat
459
+ 3 ¼  
Dec 09 KC Wheat
469 ½
+ 1 ¼ 
Dec 09 Min Wheat
488 ¼    
- 2 ½   
Dec 09 Meal
280.2
+ 1.5
Dec 09 Oil
34.60
- 0.32
 
 
 
 
 
 
 
 
 





 
Corn and wheat closed higher and soybeans closed lower. Wheat and corn were strong for the majority of the day and soybeans were weak. Late in the day, buying entered the soybean market and selling entered the corn and wheat markets. Weather models continue to flip flop with frost ideas next week. The latest run is indicating a frost at the end of next week with warmer weather at the beginning of next week.   So far temps do not look too threatening, with only the northernmost areas receiving temps in the low to mid 30’s. Unless the outlook changes, this scenario would not cause too much damage. Concerns over the U.S. dollar and the fact that interest rates are being held at extremely low levels continues to draw money into commodities. We continue to see a strong surge of “new money” enter our markets as we head into the end of the month. This month should be the same. For those of you who need to get caught up on sales ahead of harvest, I would use a rally in corn and soybeans to start catching up. We have a Sep. stocks report at the end of the month, and the Chinese holidays start on the first. I would make sure you are completely caught up on sales by Oct.1. It should be hard for corn and soybeans to maintain large rallies especially over the next 30 days. If you have storage, I still… Even if prices have put in a bottom (I don’t think they have), the market may have a very difficult time rallying from here. So, trying to make some sales on these 3-4 day rallies will keep you from feeling like you have to make sales on the large breaks. 
 
 
 
 
Get More From EHedger.
 
Our commentaries are just one part of our whole risk management service. Please go to http://www.ehedger.com/sign-up/ for a free two-week trial of our full member website that gives you access to all our hedge and marketing recommendations, educational tools, market snapshots and much more.
Also learn about our acclaimed AMMO Program that helps producers optimize their marketing strategies using the premier tools and insights in the industry.
 
Get Organized. Get Ahead. Get EHedger
 
Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. The market information contained in this message has been obtained from sources believed to be reliable, but is not guaranteed as to its accuracy or completeness. Market information may not be consistent with current or future market positions of E Hedger, its affiliates, officers, directors, employees, or agents. Recipients assume the risk of reliance on and indemnify and hold E Hedger harmless for any and all losses, costs, or tax consequences incurred as a result of their use of market information.

Weak Dollar, colder outlook helps grains rally 9/22/09

Sep 22, 2009
 
SETTLEMENTS 9/22
         
 
Dec 09 Corn
325 ½   
+ 9 ½  
Nov 09 Beans
922 ½  
+ 9  
Dec 09 Wheat
455
- 1
Dec 09 KC Wheat
468
- 1
Dec 09 Min Wheat
490 ½    
- 2 ¾   
Dec 09 Meal
277.9
+ 1.7
Dec 09 Oil
34.85
+ 0.66
 
 
 
 
 
 
 
 
 
 




 
 
Corn and soybeans closed higher and wheat closed slightly lower. Corn remained higher throughout the day and pulled soybeans and wheat higher late in the day. Sharply higher energy prices, fresh lows in the U.S. dollar and a colder weather outlook for early next week all helped prices rally. The latest GFS weather model indicates a frost chance for the northern belt early next week. This would be around Sept. 30th. This would be at or later than normal for most of these areas. However, with crop maturity lagging this is keeping the markets nervous. A frost could certainly hurt some of the areas in the northern belt, but the actual damage will likely be minimal at this point. For those of you who need to get caught up on sales ahead of harvest, I would use this recent rally in corn to start catching up.   It should be hard for corn and soybeans to maintain large rallies especially over the next 30 days. If you have storage, I still like... Even if prices have put in a bottom (I don’t think they have), the market may have a very difficult time rallying from here. So, trying to make some sales on these 3-4 day rallies will keep you from feeling like you have to make sales on the large breaks. 
 
 
 
Get More From EHedger.
 
Our commentaries are just one part of our whole risk management service. Please go to http://www.ehedger.com/sign-up/ for a free two-week trial of our full member website that gives you access to all our hedge and marketing recommendations, educational tools, market snapshots and much more.
Also learn about our acclaimed AMMO Program that helps producers optimize their marketing strategies using the premier tools and insights in the industry.
 
Get Organized. Get Ahead. Get EHedger
 
Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. The market information contained in this message has been obtained from sources believed to be reliable, but is not guaranteed as to its accuracy or completeness. Market information may not be consistent with current or future market positions of E Hedger, its affiliates, officers, directors, employees, or agents. Recipients assume the risk of reliance on and indemnify and hold E Hedger harmless for any and all losses, costs, or tax consequences incurred as a result of their use of market information.

Soybeans lead grains lower 9/21/09

Sep 21, 2009
 
SETTLEMENTS 9/21
         
 
Dec 09 Corn
315 ¾ 
- 2 ¼  
Nov 09 Beans
910 
- 31
Dec 09 Wheat
454 ¾ 
- 2 ½  
Dec 09 KC Wheat
469
- 3
Dec 09 Min Wheat
492 ½    
- 4 ¼   
Dec 09 Meal
276.2
- 8.6
Dec 09 Oil
34.21
- 0.89
 
 
 
 
 
 
 
 
 
 



 
 
Corn, soybeans and wheat all closed lower. The soybean complex led the grains lower with soybeans, soybean meal and soybean oil all closing near the lows of the day. The weather looks to cooperate for the next two weeks and keep the Midwest warm and frost-free. This outlook is taking the frost premium back out of the market. Soybeans yields continue to come in better than expected in the western belt and Delta and if this trend continues, we should see national yield estimates continue to increase. Corn harvest shouldn’t pick up completely for at least another week in most areas. Early reports are good in the Delta, but it is still too early for enough reliable data out of the Midwest. The outside markets also weighed on prices with crude oil down around $3/barrel and the U.S. dollar higher. Weekly exports were very weak for soybeans at only 200,000 bushels. This is the second week of poor exports and is especially disappointing considering that the Chinese holidays begin Oct. 1st (usually we see strong Chinese imports leading up to holidays). 
There isn’t much new to talk about. With the Midwest now looking at a LATE FROST, the risk premium is quickly leaving our markets. We will have to see how actual yields turn out. So far, (actual) yield reports are very good with many 60+ bushels soybeans coming out of the western belt. This is still very early, and we will have to see if this trend continues. Early corn yields are also coming in good, but we have even less data than in soybeans so far. So, as with soybeans we will have to see how actual yields end up in the coming weeks. If the final crop size does end up larger as we expect, we should continue to see prices decline through harvest. Without the threat of a frost, we should see farmer selling continue to pick up. After the farmer sells whatever bushels he HAS TO, we should see a large percentage of the corn crop put in storage. This could help basis levels improve after harvest, but it should also keep a lid on prices. A lot will depend on demand. The USDA already has some very generous demand estimates written down. As I have said before, soybean demand looks too high and I think corn demand actually looks okay. These demand figures could certainly be met, but for that to happen we will need to see prices remain cheap for soybean meal and corn and/or prices for hogs, cattle, crude, etc. to increase.     
 
 











 
 
Get More From EHedger.
 
Our commentaries are just one part of our whole risk management service. Please go to http://www.ehedger.com/sign-up/ for a free two-week trial of our full member website that gives you access to all our hedge and marketing recommendations, educational tools, market snapshots and much more.
Also learn about our acclaimed AMMO Program that helps producers optimize their marketing strategies using the premier tools and insights in the industry.
 
Get Organized. Get Ahead. Get EHedger
 
Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. The market information contained in this message has been obtained from sources believed to be reliable, but is not guaranteed as to its accuracy or completeness. Market information may not be consistent with current or future market positions of E Hedger, its affiliates, officers, directors, employees, or agents. Recipients assume the risk of reliance on and indemnify and hold E Hedger harmless for any and all losses, costs, or tax consequences incurred as a result of their use of market information.

EHedger Weekly Grain Wrap-Up 9/18/09

Sep 18, 2009
 
SETTLEMENTS 9/18
         
 
Dec 09 Corn
317 ¼
- 11 ¾  
Nov 09 Beans
937 ¼  
- 15 ¾   
Dec 09 Wheat
457
- 4 ¾
Dec 09 KC Wheat
472
- 2 ¼
Dec 09 Min Wheat
496 ¾    
- 3 ¾   
Dec 09 Meal
285.5
- 7.8
Dec 09 Oil
35.04
+ 0.08
 
 
 
 
 
 
 
 
 




 
        Corn, wheat, and beans all closed lower on the session. On the week corn closed 1 ¾ lower (despite going limit up on Tuesday), wheat closed 10 lower, beans closed 40 higher. The weather was the major focus this week. Early in the week the weather models had a chance for freezing temps in the Midwest for late next week. However, by the end the week all the models had taken out any threat for a freeze in the Midwest over the next two weeks. This week the outside markets were supportive to the grains. Crude oil, metals, and the stock market where all higher on the week while the dollar continued to move lower. Also, early in the week there was talk of a trade dispute with China over tire imports, which had many people nervous. If the trade disputes escalate this could be a big deal but at this point it does not look like a major issue.

            Looking forward, obviously at this point it is very difficult to estimate what the final yields or going to be. However, many of the producers we talk to are getting better yields than they expected and overall the crops are looking good in most areas. Sure a hard freeze could hurt the yields in some areas, but this window is quickly closing. If the crop finishes up well we could see a very large corn and bean crop. It looks like in many areas producers are realizing that they are probably going to have even more grain to sell than they originally thought. This large amount of grain that has to be moved should keep pressure on the corn market (Obviously a freeze or some unforeseen outside event could change this). I realize that many producers are below breakeven levels and refuse to sell their crop, even on rallies like we saw last Tuesday. It is a perfectly natural response not to want to sell at a loss and I realize that most farmers will be probably be helped out by crop insurance payments. However, there is a big difference to a farmers bottom line (even if it is a loss) if they sell Dec corn above 3.40 on the board (which you could do the a number of times this week) compared to having to sell it below 3.00 which is a potential risk if we see the crop finish up well. In addition, beans at these levels have even more potential downside risk if things finish up well. Strong sales, positive technical and the outside markets continue to support the beans. Sure beans could keep going higher because of any of these factors or maybe because once we get into the fields we find the yields are just not there. However, just remember that we are still over 1.50 off the lows back in March. If we do see a big crop and the outside markets really turned down, going back to these lows is not out of the question. As I have said I would love prices take off to the upside and see farmer make a lot of money on all their unsold grain. However, producers still have some real downside risk at these levels. If you are still holding a large amount of unsold grain use the rallies (like we saw this week) to make some sales (or at least put some protection in place). You don’t have to go sell your entire crop but at least make some sales on rallies and hope prices continues to go higher so you can sell more. You never know when your going to see a rally like we saw Tuesday so just go put some orders in above the market, you might just get filled. What I really don’t want to see is the situation set up where farmers are still holding a large amount of unsold grain with corn prices below 3 dollars and beans prices at eight dollars. In addition, those of you that are caught up on 2009 crop should... With the current input cost and a solid crop, these are levels that should make producers good money next year. Please give us a call if you have any questions.
  
 
 
 
 
 
 
Get More From EHedger.
 
Our commentaries are just one part of our whole risk management service. Please go to http://www.ehedger.com/sign-up/ for a free two-week trial of our full member website that gives you access to all our hedge and marketing recommendations, educational tools, market snapshots and much more.
Also learn about our acclaimed AMMO Program that helps producers optimize their marketing strategies using the premier tools and insights in the industry.
 
Get Organized. Get Ahead. Get EHedger
 
Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. The market information contained in this message has been obtained from sources believed to be reliable, but is not guaranteed as to its accuracy or completeness. Market information may not be consistent with current or future market positions of E Hedger, its affiliates, officers, directors, employees, or agents. Recipients assume the risk of reliance on and indemnify and hold E Hedger harmless for any and all losses, costs, or tax consequences incurred as a result of their use of market information.

EHedger Closing Grains Commentary 9/17/09

Sep 17, 2009
 
SETTLEMENTS 9/17
         
 
Dec 09 Corn
328
- 8 ¼
Nov 09 Beans
951 ½  
+ 1
Dec 09 Wheat
461 ¾ 
- 5 ½
Dec 09 KC Wheat
474 ¼
- 5 ¾ 
Dec 09 Min Wheat
500 ½   
+ ¾  
Dec 09 Meal
293.2
- 0.8
Dec 09 Oil
34.86
+ 0.08
 
 
 
 
 
 
 
 
 
 




         Corn, and wheat closed lower while beans managed to work their way back and close higher on the day. This morning’s export sales came in a bit over the estimates for corn and as expected for beans and wheat. Early this week the market saw a strong rally after the forecast put a chance for threatening temps in the Midwest late next week. However, the latest weather models have taken the threatening temps late next week out of the forecast. In addition, the forecast does not see any cold weather threats during the 11-16 day forecast.

            Obviously, there is still time for a freeze to hurt the crop and it is very difficult to estimate what the final yields are going to be. However, many of the producers we talk to are getting better yields than they expected and overall the crops are looking good in most areas. If the crop finishes up well we could see a very large corn and bean crop. It looks like in many areas producers are realizing that they are probably going to have even more grain to sell than they thought. This large amount of grain that has to be moved should keep pressure on the corn market (obviously a freeze or some unforeseen outside event could change this). I realize that many producers are below breakeven levels and refuse to sell their crop, even on rallies like we saw last Tuesday. It is a perfectly natural response not to want to sell at a loss and I realize that most farmers will be probably be helped out by crop insurance payments. However, there is a big difference to a farmers bottom line (even if it is a loss) if they sell Dec corn above 3.40 on the board,(which you could do the last three sessions) compared to having to sell it below 3.00 which is a potential risk if we see the crop finish up well. In addition, beans at 940 have even more potential downside risk if things finish up well. As I have said I would love prices to take off to the upside and see farmers make a lot of money on all their unsold grain. However, producers still have some real downside risk at these levels. If you are still holding a large amount of unsold grain use the rallies (like we saw Tuesday) to make some sales (or at least put some protection in place). You don’t have to go sell your entire crop but at least make some sales on rallies and hope prices continue to go higher so you can sell more. What I really don’t want to see is the situation set up where farmers are still holding a large amount of unsold grain with corn prices below 3 dollars and beans prices at eight dollars. In addition, those of you that are caught up on 2009 crop should…  Please give us a call if you have any questions.  
 
 
 
 
 
Get More From EHedger.
 
Our commentaries are just one part of our whole risk management service. Please go to http://www.ehedger.com/sign-up/ for a free two-week trial of our full member website that gives you access to all our hedge and marketing recommendations, educational tools, market snapshots and much more.
Also learn about our acclaimed AMMO Program that helps producers optimize their marketing strategies using the premier tools and insights in the industry.
 
Get Organized. Get Ahead. Get EHedger
 
Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. The market information contained in this message has been obtained from sources believed to be reliable, but is not guaranteed as to its accuracy or completeness. Market information may not be consistent with current or future market positions of E Hedger, its affiliates, officers, directors, employees, or agents. Recipients assume the risk of reliance on and indemnify and hold E Hedger harmless for any and all losses, costs, or tax consequences incurred as a result of their use of market information.

EHedger Closing Grains Commentary 9/16/09

Sep 16, 2009
 
SETTLEMENTS 9/16
         
 
Dec 09 Corn
336  
- 10 ½ 
Nov 09 Beans
951 ¼ 
- 8 ¾  
Dec 09 Wheat
468 ½
- 2 
Dec 09 KC Wheat
480
- 2 ¼
Dec 09 Min Wheat
500 ¼   
+ ¾  
Dec 09 Meal
294
- 4.3
Dec 09 Oil
34.66
- 0.16
 
 
 
 
 
 
 
 
 





 
              Corn, beans and wheat all closed lower. However, late day buying did move prices significantly off the lows by the close. The frost concern late next week continues to be the main focus of the market. The morning weather models had “a strong front that looks to bring chances for some frost and even some freezing temps in the northern Midwest by the second half of next week.” However, in the midday run the GFS took the cold air out of the forecast for the Midwest at the end of next week. In addition, the forecast does not see any cold weather threats during the 11-16 day forecast.
 
Obviously, the frost forecast is still a long way off. Eight days away is an eternity in terms of an accurate weather forecast. In between now and then there is a good chance the frost will be put in and taken out of the forecast numerous times. Overall, to see what type of damage, if any, the weather will actually do we will have to wait and see exactly how cold the weather gets and how far south the cold temps actually reach. Until that time, the market will probably continue to chop around and overreact to every model run. Either way producers need to remember that just last week December corn was trading 302 and November beans 892. Sure if we do have a hard freeze prices could go much higher. However, if this frost misses and farmers wait until they are sure the crop is going to finish up without a frost, corn and beans could easily be at new lows. Don't get me wrong, we would love to see corn and bean prices take off from these levels, but even more than that what we don't want to see is corn and bean prices take out the lows with farmers still holding large amounts of unsold grain. Therefore, we recommend… Please give us a call to discuss different strategies.  
 
 
 
 
 
Get More From EHedger.
 
Our commentaries are just one part of our whole risk management service. Please go to http://www.ehedger.com/sign-up/ for a free two-week trial of our full member website that gives you access to all our hedge and marketing recommendations, educational tools, market snapshots and much more.
Also learn about our acclaimed AMMO Program that helps producers optimize their marketing strategies using the premier tools and insights in the industry.
 
Get Organized. Get Ahead. Get EHedger
 
Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. The market information contained in this message has been obtained from sources believed to be reliable, but is not guaranteed as to its accuracy or completeness. Market information may not be consistent with current or future market positions of E Hedger, its affiliates, officers, directors, employees, or agents. Recipients assume the risk of reliance on and indemnify and hold E Hedger harmless for any and all losses, costs, or tax consequences incurred as a result of their use of market information.

EHedger Closing Grains Commentary 9/15/09

Sep 15, 2009
 
SETTLEMENTS 9/15
         
 
Dec 09 Corn
346 ½   
+ 28 ¾
Nov 09 Beans
960
+ 51 
Dec 09 Wheat
470 ½
+ 16 ½
Dec 09 KC Wheat
482 ¼
+ 14 ¾ 
Dec 09 Min Wheat
498  
+ 13 ¼  
Dec 09 Meal
298.3
+ 19.5
Dec 09 Oil
34.82
+ 1.03
 
 
 
 
 
 
 
 
 




 
Corn, beans and wheat were all sharply higher during the session. A frost forecast for the northern Midwest at the end of next week appears to be the main factor behind today’s strength. However, the frost forecast was out Sunday night and yet the market waited until today to react. Along with the frost, general commodity strength and technical buying added to today’s strength.

              At this point the frost forecast is still a long way off. In between now and the end of next week we will have over 20 model runs to watch before we get to the frost. To see what type of damage the weather will actually do, we will have to wait and see exactly how cold the weather gets and how far south the cold temps actually reach. No matter how the forecast comes out what we do know is that prices are over 44 cents off the lows we made last Tuesday. There are lots of producers that are way behind on sales and have grain they have to move in the next 60 days no matter what prices do. We recommend... In addition, those of you that are caught up on 2009 crop should be looking forward at the 2010. Dec 2010 got up to 397 ½ today. With the current input cost and a solid crop, these are levels that should make producers good money next year. Please give us a call to discuss the different strategies.  
 
 
Get More From EHedger.
 
Our commentaries are just one part of our whole risk management service. Please go to http://www.ehedger.com/sign-up/ for a free two-week trial of our full member website that gives you access to all our hedge and marketing recommendations, educational tools, market snapshots and much more.
Also learn about our acclaimed AMMO Program that helps producers optimize their marketing strategies using the premier tools and insights in the industry.
 
Get Organized. Get Ahead. Get EHedger
 
Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. The market information contained in this message has been obtained from sources believed to be reliable, but is not guaranteed as to its accuracy or completeness. Market information may not be consistent with current or future market positions of E Hedger, its affiliates, officers, directors, employees, or agents. Recipients assume the risk of reliance on and indemnify and hold E Hedger harmless for any and all losses, costs, or tax consequences incurred as a result of their use of market information.

EHedger Closing Grains Commentary 9/14/09

Sep 14, 2009
 
SETTLEMENTS 9/14
         
 
Sep 09 Corn
305 ¾     
- 8 ¾ 
Dec 09 Corn
317 ½   
- 2 ¼ 
Sep 09 Beans
920
- 64 ½
Nov 09 Beans
906
+ 3 
Dec 09 Wheat
453
- 14 ¼  
Dec 09 KC Wheat
467 ½
- 10 ¼ 
Dec 09 Min Wheat
483  
- 11
Dec 09 Meal
278.1
+ 2.6
Dec 09 Oil
33.85
- 0.05
 
 
 
 
 
 
 
 
 
 
 
 
 
 




Corn, Soybeans End Mixed; Weather Forecasts Fail To Excite
 
Corn and beans saw a two-sided trade while wheat continued to sell off. Over the weekend we finally got the possible freeze forecast that everyone has been waiting for. However, the market did not rally off of this news. I think there are a number of possible reasons for this. There are a lot of traders that are long beans and under water in their trades. Also, producers are still holding a large amount of grain that must be priced and moved. In addition, stories about possible trade disputes with China and more talk about tighter regulation on position limits put pressure on commodities in general.
 
We will continue to watch the weather closely, but it looks like there is a good chance that we have a big corn crop on the way and producers are still holding a large amount of un-priced grain. In our opinion, this will cause corn to have another sharp break as we head into December. Demand is picking up, and there are some real positive signs ahead for the corn market. These things will matter eventually, but for the next 60 days corn prices could come under a lot of pressure. In the meantime, I would look to...
 
Looking at the soybean complex, the market is still very "long" soybeans and soybean meal. In addition, pod counts were high on the USDA repot and with plenty of precipitation the potential is there for a big national bean yield average. Without any frost problems, we should see soybeans and soymeal prices continue to soften. 





 



 
 
Get More From EHedger.
 
Our commentaries are just one part of our whole risk management service. Please go to http://www.ehedger.com/sign-up/ for a free two-week trial of our full member website that gives you access to all our hedge and marketing recommendations, educational tools, market snapshots and much more.
Also learn about our acclaimed AMMO Program that helps producers optimize their marketing strategies using the premier tools and insights in the industry.
 
Get Organized. Get Ahead. Get EHedger
 
Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. The market information contained in this message has been obtained from sources believed to be reliable, but is not guaranteed as to its accuracy or completeness. Market information may not be consistent with current or future market positions of E Hedger, its affiliates, officers, directors, employees, or agents. Recipients assume the risk of reliance on and indemnify and hold E Hedger harmless for any and all losses, costs, or tax consequences incurred as a result of their use of market information.

EHedger Weekly Grain Wrap-Up 9/11/09

Sep 11, 2009
 
SETTLEMENTS 9/11
         
 
Sep 09 Corn
314 ¾     
+ 5 ¼
Dec 09 Corn
319 ¾  
+ 4 ½
Sep 09 Beans
984
+ 10 ½
Nov 09 Beans
899
- 27 ½
Dec 09 Wheat
465 ½ 
+ 6 ¾
Dec 09 KC Wheat
477
+ 3 ½
Dec 09 Min Wheat
492 ½  
+ 8
Dec 09 Meal
274.5
- 11
Dec 09 Oil
33.90
- 0.35
 
 
 
 
 
 
 
 
 
 
 
 
 
 



Corn closed 4 ½ cents higher on the day and 13 ½ cents higher on the week. Reports of record yields over the past couple of weeks were confirmed today by the USDA’s national yield estimate of 161.9 bushels per acre. This was expected however, and was actually lower than many private estimates this week. An increase in the USDA’s demand estimate mostly offset the increase in production and ending stocks for the ’09-10 crop increased only slightly. Corn remained lower throughout most of the day, but short covering late helped rally prices to the highs of the day. Overall, I still think that corn has the best fundamentals going forward. However, corn will still have a difficult time rallying from here. Big crops usually get bigger, and all signs point to the same this year. We should continue to see the crop size grow until we get the final estimates in Feb. More important than the large crop that is about to be harvested is the fact that most of those bushels and some from the ’08-09 crop still need to be priced and moved. Many producers chose to wait and see how the crop finished out. As the risk of a frost is quickly eroding, producers will soon be forced to sell whatever bushels cannot be stored... regardless of price. With a big wheat crop already harvested and big corn and soybean crops on the way, there will certainly be storage issues this fall. This will cause corn to have another sharp break as we head into December (in my opinion). Demand is picking up and there are some real positive signs ahead for the corn market. Those things will matter eventually, but for the next 60 days corn prices could come under a lot of pressure. Corn is nearly 20-cents off of its lows and I would make some sales here and again at the beginning of the week.  
 
Soybeans closed 24-cents lower on the day and 19-cents lower on the week. This is the lowest weekly close since March 27th. Many analysts have been forecasting bad soybean yields due to aphids, white mold, SDS and cool temps. The attitude has been that cool temps are good for corn yields but not good for soybean yields. We have openly disagreed with this all along and point out that cool and wet years that ended in record corn yields (’92, ’94, ’04) also ended in record soybean yields. The USDA’s national soybean yield estimate of 42.3-bushels/ acre will likely increase as we head through harvest. Early yield reports are running much higher than year ago levels, especially in traditionally low yielding areas. It is still very early and we will have to continue to monitor yield reports. However, when we get big August rains, we get big bean yields. I know that EVERYONE didn’t get big rains, but almost everyone did. Pod counts were high on the USDA report and with plenty of precipitation we should see big beans and big yields. Unlike corn, very few people were even considering a record yield for soybeans a week ago. At the Farm Progress Show, most analysts were talking about good corn yields and bad bean yields. The market is still very “long” soybeans and soybean meal. There are not any frost threats until the end of September for the Midwest, and if this forecast remains intact next week, we should see soybeans continue to sell-off. 
 
Wheat closed 8 ½ cents higher on the day and 4 cents lower on the week. Wheat had a “key reversal” today, meaning it made new contract lows and then closed above the previous trading day’s highs. Wheat is on a nearly $3/bushel break since harvest began in June. The funds are large shorts and the market is way overdue for a rally. Today’s rally looked more like liquidation of short corn and wheat positions against long soybean positions. Fundamentally, there aren’t a lot of bullish arguments for wheat. Global stocks increased once again after global crops look to swell even further. IF prices want to “converge” with cash prices, we could see futures break another 50-cents or so especially if corn prices continue to break. Going forward, wheat looks to lose acres to soybeans across the globe and this could eventually support wheat prices. We are currently setting crop insurance prices for winter wheat. With wheat at multi-year lows, we will likely lose acres here in the U.S. The wheat market typically bottoms around Labor Day, so I would look for a rally back to $4.85-$5.20 in the December futures to get caught up on sales.    
 








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Grains choppy ahead of report 9/10/09

Sep 10, 2009
 
SETTLEMENTS 9/10
         
 
Sep 09 Corn
308 ¾  
+ 3 ¼
Dec 09 Corn
315 ¾   
+ 6
Sep 09 Beans
973
+ 11 ½
Nov 09 Beans
925 ¾ 
- 2 ¾  
Dec 09 Wheat
457 ½
+ 1 ¼  
Dec 09 KC Wheat
473 ½
+ 1
Dec 09 Min Wheat
484  
- 2 ½  
Dec 09 Meal
285.5
+ 0.2
Dec 09 Oil
34.22
- 0.06
 
 
 
 
 
 
 
 
 
 
 
 
 


 
 
Corn and wheat closed higher and soybeans closed lower. The “trade” is short corn and wheat and long soybeans, so today felt like evening up before tomorrow’s report. Early yield reports continue to come in better than expected for corn and soybeans. This is obviously very early and there hasn’t been nearly enough data collected to give us a good feel for the overall crop size. The USDA report is tomorrow and we will have to see what the USDA says. There haven’t been a lot of bushels harvested yet, so tomorrow’s number may not be as reliable as we may hope. Either way, I will comment on the numbers in more detail in the Weekend wrap-up letter. Please give us a call before or after the report if you have any questions. We are always in the office early talking to customers, so feel free to call in. 
 
 
The average trade guess for US corn production 12.932 vs 12.761 Aug; avg yld 161.5 vs 159.5.  The average trade guess for '08-09 corn carryout 1.712 vs 1.720 Aug; '09-10 1.768 vs 1.621 Aug.
 
The average trade guess for US bean production 3.256 vs 3.199 Aug; avg yld 42.4 vs 41.7. The average trade guess for '08-09 soybean carryout 102 vs 110 Aug; '09-10 226 vs 210 Aug.

 
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EHedger Closing Grains Commentary 9/09/09

Sep 09, 2009
 
SETTLEMENTS 9/09
         
 
Sep 09 Corn
305 ½     
+ 2 ¾
Dec 09 Corn
309 ¾   
+ 2 ¼
Sep 09 Beans
961 ½
- 7 ½ 
Nov 09 Beans
928 ½ 
- 8 
Dec 09 Wheat
456 ¼ 
- 2 ¾  
Dec 09 KC Wheat
472 ½
- 5 ½
Dec 09 Min Wheat
486 ½   
- 1 ¾  
Dec 09 Meal
285.3
+ 0.8
Dec 09 Oil
34.28
- 0.52
 
 
 
 
 
 
 
 
 
 
 
 
 






 
Soybeans and wheat closed lower, while corn closed higher. The continued weakness in the U.S. dollar provided some support during the session, but it was not enough for the grains to hold strength into the close. Overall, at this point the yield outlooks appear promising for corn and soybeans. Early soybeans being harvested out of the delta are better than thought, with many reports of 50+ bushels/acre. Obviously it is still early, but with many fields "turning" we should get more and more yield reports in the coming weeks. A frost could still damage the corn and soybean crops, but this threat is eroding quickly. Obviously the weather is the main focus for the markets at this point, but we do have a USDA report this Friday. 
 
The average trade guess for US corn production 12.932 vs 12.761 Aug; avg yld 161.5 vs 159.5. The average trade guess for US bean production 3.256 vs 3.199 Aug; avg yld 42.4 vs 41.7. The average trade guess for '08-09 corn carryout 1.712 vs 1.720 Aug; '09-10 1.768 vs 1.621 Aug. The average trade guess for '08-09 soybean carryout 102 vs 110 Aug; '09-10 226 vs 210 Aug.
 
If you have deep in the money corn puts, please give us a call so we can roll them down and take some money off the table. Also, you can still get downside protection in beans for fairly cheap going into the report. 
 
 
 
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Soybeans and corn follow outside markets higher, wheat makes new 2-1/2 year lows 9/08/09

Sep 08, 2009
 
SETTLEMENTS 9/08
         
 
Sep 09 Corn
302 ¾    
+ 2 ¼
Dec 09 Corn
307 ½  
+ 1 ¼
Sep 09 Beans
969
+ 8
Nov 09 Beans
936 ½
+ 14 ½ 
Dec 09 Wheat
459 
- 12 ¾ 
Dec 09 KC Wheat
478
- 12
Dec 09 Min Wheat
488 ¼  
- 10 ¼ 
Dec 09 Meal
284.5
+ 3.4
Dec 09 Oil
34.80
+ 0.57
 
 
 
 
 
 
 
 
 
 
 
 
 





 
Corn and soybeans closed higher and wheat closed lower. Mostly favorable weather outlooks (lack of frost and warmer weather) pushed prices lower overnight. However, the U.S. dollar Index broke to fresh 1-year lows overnight. This helped all commodities rally early in the day. The soybean complex was able to remain higher throughout the day while corn and wheat struggled. Wheat remained in negative territory throughout the day and this helped weigh on corn prices. Wheat made new lows for the move and are now $1.25 off of their August highs! Wheat is a great example of what a market can do with bearish fundamentals. The wheat market has ignored any bullish outside factors and is only concerned with its own fundamentals. The wheat market could be a pre-cursor to how the corn and soybean markets will look after their harvests. If you remember, analysts tried to “kill” the wheat crop last spring. Talks of disease and frost damage flooded the news wires, similar to the stories that circulated about corn this summer and to the stories currently circulating about soybeans. Some of these stories were probably accurate, but in the end it was evident that these stories were not good representations of the national crop. This could very well end up being the case for corn and soybeans. Without a September frost, this looks to be the case. So far, yield outlooks look promising for corn and soybeans. Early soybeans being harvested out of the delta are better than thought with many reports of 50+ bushels/acre. Obviously it is still early, but with many fields “turning” we should get more and more yield reports in the coming weeks. A frost could still damage the corn and soybean crops, but this threat is eroding quickly. 
                 The wild card in my opinion has always been Illinois. Illinois remained behind the entire year and many areas looked “rough” throughout the summer. Good rains helped many areas recover and it will be important to see how these areas end up. Corn and soybeans throughout Northern Illinois look much better than I thought they would back in June. We do have some white mold and aphids around, but overall the soybeans look good. Pod counts are high and ample moisture should fill pods in nicely. Corn also looks good. If we can have a late summer our area could end up with record production. There are still low spots and some bad corn around, but the rest of the crop looks outstanding. Many producers in the area are seeing yield checks running in the 260+ range. Now, I don’t expect any producers to average that high but we could see many average over 210 this year. Populations are the highest I have seen with most running in the 37K-40K range. Plenty of moisture and cool temps have allowed for heavy ear weights and this could push yields higher than expected. The problem in our area could be how fast we are able to dry down the corn. We had problems drying down the corn last year and we could see the same problem this year. We will still end up with a lot of bushels, but the drying expense could be a real pain in the neck. Hopefully we will see this warm weather last into November! 
 
 
 
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Soybeans, Corn Continue Slump As Weather Stays Friendly 9/4

Sep 04, 2009
SETTLEMENTS 9/04
         
 
Dec 09 Corn
306 ¼
-9 ½
Nov 09 Beans
922
-19 ½
Dec 09 Wheat
471 ¾
-7
Dec 09 KC Wheat
490
-9 ¼
Dec 09 Min Wheat
498 ½
-7 ¼
Dec 09 Meal
281.1
-5.6
Dec 09 Oil
34.23
-0.42
  


Soybeans, Corn Continue Slump As Weather Stays Friendly
 
  • Nov Soybeans End Week 89c Lower, Dec Corn 22 ¾ c Lower
  • Weather Outlook Friendly For Next 7 Days
  • Dec Corn Hits Fresh 3-Year Lows, Eying Break Below $3
  • Nov Beans Set To Slip Below $9 If Weather Stays Benign


Soybeans:
 
November soybeans continued to bleed lower on long liquidation and short selling, and closed out the week at their lowest level in more than a month. The absence of threatening weather combined with the prospect of a record amount of planted acres coming within weeks of harvest has wiped nearly $1.50 a bushel off November futures in just 16 trading sessions.
 
Weather forecasts remain a major driver of this market, and any fresh forecasts for crop-threatening frost will certainly give prices a boost. The problem is, conditions for the next week look set to remain very friendly so in the interim prices may continue to grind lower. The next key downside target is $9.00, followed by the $8.80 area in Nov futures.
 
Nov soybeans at $8.80 sounds cheap, but it must be remembered that that’s still nearly $1 above this year’s low of $7.84 seen in early March, so producers need to be mindful that there’s still ample downside room if the weather stays perfect for the next several days and aggressive buyers stay away. Of course, it will just take one forecast of a frost in a key area to change this market’s tune, but until then we’re likely to struggle holding on to any gains in this market. And even if we do get the odd scare, we may not get a lasting or large rally given the impressive scale of this year’s crop and the fact that the tightness in the old crop has now nearly dissipated as we get closer and closer to having new crop supplies to fill the pipeline.
 
This all means that producers who are behind on sales need to look for opportunities to catch up. Give us a call early next week to discuss your options if you are indeed undersold, or want to chat about your positions over the coming weeks.
 
Corn:
 
December corn futures took a significant step lower Friday and settled below $3.10 a bushel for the first time since 2006. The $3.06 ¼ settlement is 35% off the June highs of above $4.70, and compares drastically to the $6.00 settlement this contract recorded a year ago today.
 
It’s easy to think that we’re having a 50% sale tight now, but in reality we are just responding to last year’s price excesses with a more subdued demand landscape. There are some bright spots emerging on the consumption side of the equation that suggest the current price of corn is starting to evoke a positive response, but we need more than good demand from the ethanol industry to turn this ship around. Until we see real consumption pick up from the feeding industry and on the export market, corn will struggle to avoid further losses and will have only short-lived bouts of strength. Cheap DDG’s peddled by ethanol producers and millions of tons of feed wheat continue to compete for feed business both domestically and abroad, so we need to either chew through those substitutes or get much cheaper than them before we can expect a meaningful increase in corn demand that will send this market notably higher. 
 
That may take some time, and in the meantime this market may dip deep into the $2’s as the remains of the 2008 crop gets sold to make way for what is potentially 13+ billion bushels of fresh supplies here in the US. There’s no doubt that those producers who have private storage will store their crop, but there are still several billion bushels that will be sold off the combine, so watch out for another wash out in the corn price as harvest gets cranked up.
 
As in soybeans, those producers who have not yet actively marketed or protected a majority of their crop need to think about their options. If you have insurance, you have a floor above here on your guaranteed bushels and so should opt to keep your corn off the market right now and look for rallies to offload additional bushels. If you do not have insurance, please give us a call to discuss your options with regard to your breakeven price levels and cash flow requirements.
 
Wheat:

Chicago Dec wheat resumed its downward trend and closed out the 23 1/2 cents lower - a contract low close.  Global supplies of wheat keep climbing, so what's needed here to improve this market's health is cheap enough prices that stimulate real, lasting demand.  Are we there yet?  Not quite, and that has a lot to do with corn, but look for our exports to pick up if we down to $4.50, which could help us start to bottom out.

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Soybeans lead grain lower 9/03/09

Sep 03, 2009
 
SETTLEMENTS 9/03
         
 
Sep 09 Corn
311    
- 2 ¼
Dec 09 Corn
315 ¾  
- 3 ½
Sep 09 Beans
982
- 27 ¼
Nov 09 Beans
941 ½
- 9 ½
Sep 09 Wheat
478 ¾ 
- 7
Sep 09 KC Wheat
499 ¼
- 7 ¾
Sep 09 Min Wheat
505 ¾  
- 10 ½
Dec 09 Meal
286.7
- 5.8
Dec 09 Oil
34.65
- 0.05
 
 
 
 
 
 
 
 
 
 
 
 
 
       




         
Corn, soybeans and wheat all closed lower today. Good sales this morning helped corn and soybeans open higher, but the market quickly broke into negative territory. Old crop soybeans and soybean meal led the way down again today. With harvest underway in the Delta, people are no longer willing to pay high premiums for “old crop” supplies with “new crop” supplies now arriving. Interior basis levels broke as much as $1.30/bushel is some areas…today! To add insult to injury, Informa Economics estimated the national corn yield to end up between 165 and 168 bushels/acre and soybeans between 43 and 44 bu./acre. After attending the Farm Progress show this week, it is evident that most people are expecting soybeans yields to decline. So, as more people start to expect the national yield to increase, we should see more pressure on the soybean market. Most analysts that I heard were very bullish soybeans and neutral to slightly bearish corn. Unfortunately, it was also evident that there are a lot of farmers holding on to un-priced grain “hoping” for some higher prices. I even heard one analyst tell the audience to “write your Congressman and tell them to start building a national corn reserve… because $3 corn is a crime”. Well, hoping the government is going to bailout the corn farmer is not a good marketing strategy. The threat of an early frost has delayed the farmer from making sales ahead of harvest. With such a large amount of un-priced grain out there, we could see a larger break than we might expect this fall/winter. I don’t know what the national yield will end up being, but all signs point to a big crop. If Informa’s numbers are correct, (and without an early frost I think they could be), the market has not yet priced in these yields.   As I have said before, people are talking about a record corn crop, but very few have even considered a record soybean yield. There is another “frost threat” that came out on the Midday run. The soybean market has broken 87-cents since Monday morning, so it is due for a rally. If the market gives you another rally tomorrow, producers should at least get some downside protection ahead of the weekend.   If you have not done anything, at least have downside protection on the bushels that are not protected with crop insurance. Please give us a call if you have any questions. 
 
 
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Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. The market information contained in this message has been obtained from sources believed to be reliable, but is not guaranteed as to its accuracy or completeness. Market information may not be consistent with current or future market positions of E Hedger, its affiliates, officers, directors, employees, or agents. Recipients assume the risk of reliance on and indemnify and hold E Hedger harmless for any and all losses, costs, or tax consequences incurred as a result of their use of market information.

EHedger Closing Grain Commentary 9/02/09

Sep 02, 2009
 
SETTLEMENTS 9/02
         
 
Sep 09 Corn
313 ¼    
+ 1
Dec 09 Corn
319 ¼ 
unch
Sep 09 Beans
1009 ¼
- 4 ¾
Nov 09 Beans
951
- 4 ½
Sep 09 Wheat
485 ¾ 
- 1 ½
Sep 09 KC Wheat
507
- 3 ¼
Sep 09 Min Wheat
515  
- 6 ¾
Dec 09 Meal
292.5
+ 3.8
Dec 09 Oil
34.70
- 0.40
 
 
 
 
 
 
 
 
 
 
 
 
 
 




        Corn, soybeans and wheat all had a fairly quiet day. The market did not see the strong selling it has seen the last two sessions. However, the buying interest still remained soft. After last weekend’s failed frost the market quickly took some of the risk premium out of the market. At this point the forecast does not see any major chances for frost during the next two weeks. If we can continue to get favorable weather for a bit longer the market should continue to take risk premium out of the price. We realize it is natural to want to wait until you are positive there will not be a frost before you price any more grain. However, the problem is that if you wait until you "know" that you are going to have a good crop before you sell, it will likely be too late. I understand that there is still time to hurt the crop, but that time is quickly eroding away. I just feel like most farmers are going to be "heading for the doors" at the same time this fall. If you are unsold and still convinced that the market is going higher, at least look at getting some downside protection. This is a good article that I found that talks about soybean yields with cool and wet August weather.
http://www.iowafarmertoday.com/blog/?p=568 This goes along with what I was talking about on Monday. If we are both right, soybeans have a lot of downside potential this fall.
 
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Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. The market information contained in this message has been obtained from sources believed to be reliable, but is not guaranteed as to its accuracy or completeness. Market information may not be consistent with current or future market positions of E Hedger, its affiliates, officers, directors, employees, or agents. Recipients assume the risk of reliance on and indemnify and hold E Hedger harmless for any and all losses, costs, or tax consequences incurred as a result of their use of market information.

Good weather, weak outside markets weigh on grains 9/1/09

Sep 01, 2009
 
SETTLEMENTS 9/01
         
 
Sep 09 Corn
312 ¼    
- 14
Dec 09 Corn
319 ¼ 
- 10 ½
Nov 09 Beans
955 ½
- 24
Dec 09 Wheat
487 ¼
- 11 ½
Dec 09 KC Wheat
510 ¼ 
-10 ½
Dec 09 Min Wheat
521 ¾   
-16 ¼
Dec 09 Meal
288.7
- 8.8
Dec 09 Oil
35.10
- 0.50
 
 
 
 
 
 
 
 
 
 
 
 
 
            



               Corn, soybeans and wheat all closed sharply lower. Soybeans were the downside leaders with September down 86-cents and November down 24-cents. Corn and wheat were also down sharply and both closed at their lowest levels of the year. After last weekend’s frost failed to materialize, the market is now taking out some risk premium. The next two weeks look favorable and without a frost in the forecast, there isn’t a lot of bullish weather to talk about. Old crop soybeans and meal have led the new crop prices higher on this last rally. With soybeans now being harvested in the Delta, few people are willing to pay such high premiums for “old crop” supplies. A very sharp sell-off in the Chinese stock market has sent prices of stock and commodities to sell-off worldwide. The Chinese have pumped billions of dollars into the stock market and commodities markets since the first of the year. The Chinese have not only been stockpiling raw commodities (steel, oil, copper, soybeans, etc.), but billions of dollars have also been “invested” in over-the-counter markets. It is very likely that we are seeing some “forced liquidation” of some of these contracts. The U.S. dollar Index was also sharply higher today. The “short” dollar/ “long” commodities trade is a very popular one. You can barely turn on the T.V. without hearing someone talk about “investing” in commodities because of the falling dollar. Although I agree with this logic overall, I do not agree that all commodities will just continue to rally regardless of fundamentals. In the long run, commodities that are based in U.S. dollars will inflate as/if the U.S. dollar deflates. However, there is a large group of people that are trading commodities based on the day-to-day fluctuations in the price of the U.S. dollar. This can work in the short run, but eventually individual commodities will find the “path of least resistance” regardless of the dollar or the stock market or the crude oil market. There are a lot of “longs” still waiting for a frost before they exit the market. This includes the trader and the farmer. As I have said many times, the market will not wait around until it knows “for sure” that there is not production risk. If you wait until you “know” that you are going to have a good crop before you sell, it will likely be too late. I understand that there is still time to hurt the crop, but that time is quickly eroding away. I just feel like most farmers are going to be “heading for the doors” at the same time this fall. If you are unsold and still convinced that the market is going higher, at least look at getting some downside protection.   This is a good article that I found that talks about soybean yields with cool and wet August weather. http://www.iowafarmertoday.com/blog/?p=568  This goes along with what I was talking about yesterday. If we are both right, soybeans have a lot of downside potential this fall.
 
 
 
 
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