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April 2011 Archive for EHedger Report

RSS By: Dustin Johnson

Dustin works with a wide net of large producers throughout the Midwest. His analytical market approach and objective hedge strategy development is specific to the needs of every individual.

EHedger Closing Grain Commentary 4/25/11

Apr 25, 2011

Wet and cold weather has put corn back near the highs again.  May corn finished 25 ¼ cents higher at $7.62 ½, May beans finished 9 cents higher at $13.89 ½, and May wheat finished 26 ½ cents higher at $8.26.
 
The market is still watching the forecast and planting progress reports very closely for direction.  Just like last week, when the extended forecast improves we could see a quick drop from profit taking.  Currently we are at 9 percent planted for corn and 6 percent planted in spring wheat.  The average estimate for corn's planting progress was at 13% so the market may view this as favorable on tonight's session since we came in below expectations.  The 5 year average planting pace for corn at this time is 23 percent and 25 percent for spring wheat.
 
The winter wheat crop condition has continued to come in poorly.  This week the very poor category gained 2 percent taking away from average/good.  The KC contract was up 26 ½ cents today.  May KC Wheat has now rallied a dollar since April 15th and continued crop deterioration has fueled the fire.
 
Tuesday morning at 7:30am Stats Canada will release their planted acreage report. The expectations are to see an increase in overall acreage from last year. 
 
For now we will be watching the forecast for any major changes.  I wouldn't be surprised to see more upside potential until the weather turns.  The Fed is hosting a news conference on Wednesday afternoon and may create some volatility in the outside markets.  This is something to watch but weather will still be the most likely market mover.
 

 

 

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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 4/20/11

Apr 20, 2011
It was a large turnaround for grains today with new crop corn taking a major setback after making new highs.  May corn finished 16 ¼ cents lower at $7.32 ¾ and December corn finished 20 ½ cents lower at $6.55 ½.  Soybeans held support but traded well of the highs at 15 ¾ cents higher in the May contract.  November beans finished 12 cents higher at $13.66.  May Chicago wheat finished ¾ of a cent lower at $7.85.
 
We started out the day strong with most commodities sharply higher and the US dollar lower.  The weekly Ethanol Production Report was surprisingly negative down 42 thousand barrels a day vs last week.  This put a little pressure on the corn market but the larger break came after the Mid-day weather model took some moisture out of the 11-14 day range.  Once the market turned below yesterday's lows stops were triggered and we were sharply lower.  Wheat and soybeans followed corn's weakness and came off their highs.  Inter-commodity spreading was also part of the reason beans kept strong and corn sold off as many traders were exiting that spread.
 
This setback in December corn completes a key reversal and may attract more technical sell pressure.  If the forecast continues to come in more favorable we could see a much larger setback than the one today.
 
Weekly export sales expectations for tomorrow morning (in 1000 MTs):
 
Corn:              800 - 1,100
Wheat:           400 - 800
Beans:           200 - 400
  
Tomorrow is option expiration day for May grain options.  Friday the markets will be closed for the holiday.  If you would like to go over your current sales/positions please be sure to check with your broker before things get too busy in the coming weeks.
 

 

Stop Guessing & Start Marketing

 

 Free trial 1[1]

Click icon above for a Free Trial of EHedger Premium Research package and watch the AMMO Demo video.

 

 

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 4/11/11

Apr 11, 2011

Corn rallied to new contract highs on Monday while beans and wheat couldn't derive the same support.  May corn finished 8 cents higher at $7.76, May soybeans finished 23 ¾ cents lower at $13.68 ½, and May wheat finished ¾ cents higher at $7.98 ¼.
 
It looks like the market is still brushing off April's Supply and Demand report which shows corn and soybean ending stocks unchanged from the March S&D report.  The market is doing its job to try and ration off demand, the question is how far do we go? We have talked about where the blender could inevitably end up cutting off the discretionary blending.  From here we think the new crop is the place to be for the bulls so the December and November call spreads we have on are still the ones we would stick with.  It is the new crop corn that will have to make up for the low stocks to usage ratio and if there are any major weather problems we may end up getting a continuation of the rally. 
 
For soybeans, the spreads have been very weak in prior weeks, and for the first time since 2009, the July 11-November 11 soybean spread settled at a carry.  This is a big deal given the USDA projects a 140 carryout.  But we have had another record year in Brazil, and world carryout is expected to be higher than original projections.  Today we also had Cofco lowering the expected Chinese bean imports to 53-54.  They also said they may defer or even cancel soybean cargoes due to poor crush margins.  This certainly explains the heavy selloff today in soybeans. 
 
The CFTC's Commitment of Traders report confirms that the funds have came back strong into this market.  They increased their net long positions by over 40,000 contracts of corn, 3,000 contracts of soybeans, and 19,800 contracts of all wheat.
 
Poor weather and poor crop ratings could keep wheat prices supported with corn.  The latest crop conditions show winter wheat at only 36 percent good to excellent.  This compares to 65 percent last year and 50 percent 10 year average.  The variable rate storage charge still has the wheat spreads at a very large carry.  We have seen wheat being fed in the global market, and eventually we could see wheat fed here in the United States.  This would mean we could see wheat supported on any further corn rallies.
 
Having good sales on the books and having lots of upside potential with the call spreads is still a great strategy.  If you would like to go over your current sales/positions please be sure to check with your broker before things get too busy in the coming weeks.

 

Stop Guessing & Start Marketing

 

 Free trial 1[1]

 

Click icon above for a Free Trial of EHedger Premium Research package and watch the AMMO Demo video.

 

 

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.

 

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