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July 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 Afternoon Grain Commentary 7-28-2011

Jul 28, 2011

Low corn and soybean export sales as well as weak crush numbers spurred a small selloff in grains today.  December corn ended 5 ¼ cents lower at $6.86 ¼, December wheat down 10 ¼ cents at $7.35, and November soybeans down 9 cents at $13.71 ½.

Weekly export sales came in below the estimated ranges for corn, and beans, but were decent for wheat:

Estimates for weekly exports sales are as follows:

                                  Estimated Range                     Actual

Corn:                           550,000-950,000 MTs             484,900 MTs

Soybeans:                    550,000-850,000 MTs             372,700 MTs

Wheat:                        300,000-500,000 MTs             473,800 MTs

June crushings came in at 124.318, which is below the estimated range of 124.5-125.4.

There is a big difference of opinion on crop size, and a big difference of opinion on demand size.  We won’t argue that if weather stays hot and dry in August, we can get to the yield estimates that some of these analysts are talking about.

As we all know we don’t have to have record yields everywhere in the Midwest to get to trendline.  Right now trendline for corn is sitting at 164. We have to mark down some of the bushels from the inclement weather. We are bringing our estimate down from trend by 4 bushels to 160. Analysts who are trading a 152-155 yield are predicting there will be a 10+ bushel drop from trend, and this is what is factored into today’s price. 

Crop condition ratings are almost at the 10 year average for the good-to-excellent categories.  From what we are seeing right now, it doesn’t seem likely that we are going to get a massive bushel reduction from trendline. What will happen to the price of Dec corn if we end up with a 158-161 yield? And what will happen if demand is overstated?

Right now the strongest demand we have seems to be in the futures.  We have witnessed demand destruction in the weekly ethanol numbers, as well as the livestock.  For us to remain priced where we are in the global market I believe we will have to end up seeing another sharp break in the dollar, or further weather events to lower yields.

It is a good idea to go over your hedges again to make sure your operation has adequate coverage.  If you want extra protection on bushels expected over and on top of your guaranteed production, please call your broker to go over some put strategies.

Best Regards,

EHedger

 

For a free trial of EHedger services including the morning automated phone call, daily afternoon market commentary, and/or a free consultation, please contact EHedger at 866-433-4371. You can also visit us at 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 7-27-2011

Jul 27, 2011

After a more favorable weather market coming into this morning, as well as a sharp break in the outside markets had corn down over 10 cents on the open.  Throughout the morning the market started making its way back higher until it finished on the highs of the day.  December corn finished 4 ¾ cents higher at $6.91 ½.  November beans finished 8 ¼ cents lower at $13.80 ½, and December wheat was up 10 ¾ cents at $7.45 ¼.

Tomorrow we have census crush and weekly export sales coming out in the morning.  Crush is estimated to be approximately 124.97 with a range of 124.5-125.4.  Meal stocks are estimated to be 370,600.

Estimates for weekly exports sales are as follows:

Corn:                           550,000-950,000 MTs

Soybeans:                    550,000-850,000 MTs

Wheat:                       300,000-500,000 MTs

Our opinion hasn’t changed much, especially with a better forecast this morning.  Overall I think the rains we have had combined with the forecast could turn out to put more downward pressure on the market.  Right now the strongest demand we have seems to be in the futures.  We have witnessed demand destruction in the ethanol numbers, as well as the livestock.  For us to remain priced where we are in the global market I believe we will have to end up seeing another sharp break in the dollar, or further weather events to lower yields. 

The rally has been hinged on money coming into the market from a dollar collapse, or adverse weather events, and if neither of these happen we could see the market start to correct.  We are coming to a point where producers will be thinking about what they are going to have for bushels over and on top of what they already have sold.  And this is the first time in a long time we have willing sellers starting to enter the market again. Will the bulls be able to continue to provide this support?

It is a good idea to go over your hedges again to make sure your operation has adequate coverage.  If you want extra protection on bushels expected over and on top of your guaranteed production, please call your broker to go over some put strategies.


Best Regards,

EHedger

 

For a free trial of EHedger services including the morning automated phone call, daily afternoon market commentary, and/or a free consultation, please contact EHedger at 866-433-4371. You can also visit us at 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 7-26-2011

Jul 26, 2011

Corn started the day weaker before making its way back to double digit gains.  December corn ended up 12 ¼ cents at $6.86 ¾, November beans up 16 ¾ cents at $13.88 ¾, and December wheat up 5 ½ cents at $7.34 ½. 

Crop ratings were down as expected yesterday and ultimately proved not to be a major factor given the market ended up starting out on the weak side this morning.  As the day progressed, the US dollar fell sharply making its way towards the low.  This helped spur commodity rallies across the board, crude oil, cotton, grains, etc.   Overall I think the rains we have had combined with the forecast could turn out to put more downward pressure on the market.  Right now the strongest demand we have seems to be in the futures.  We have witnessed demand destruction in the ethanol numbers, as well as the livestock.  For us to remain priced where we are in the global market I believe we will have to end up seeing another sharp break in the dollar, or further weather events to lower yields. 

The rally has been hinged on money coming into the market from a dollar collapse, or adverse weather events, and if neither of these happen we could see the market start to correct.  We are coming to a point where producers will be thinking about what they are going to have for bushels over and on top of what they already have sold.  And this is the first time in a long time we have willing sellers starting to enter the market again. Will the bulls be able to continue to provide this support?

It is a good idea to go over your hedges again to make sure your operation has adequate coverage.  If you want extra protection on bushels expected over and on top of your guaranteed production, please call your broker to go over some put strategies.

Best Regards,

 

EHedger

 

For a free trial of EHedger services including the morning automated phone call, daily afternoon market commentary, and/or a free consultation, please contact EHedger at 866-433-4371. You can also visit us at 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 7-25-2011

Jul 25, 2011

Grains sold off today after the long weekend brought more rain than was expected for much of the Midwest.  December corn ended up finishing 11 cents lower at $6.74 ½, November beans 16 ¼ lower at $13.72, and December wheat 2 cents lower at $7.29.

The 10 day outlook has turned more favorable for parts of the Midwest and has caused some of the weather premium to be worked out of the market.  With crop conditions coming in today at 3pm, the market found some support on the chance these would come in below expectations.  Crop conditions ended up coming in lower for corn and beans and are as follows:

Corn silking: 65%                                69% is the 5-year average

Corn doughing: 9%                              12% is the 5-year average

Corn good-excellent condition: down 4% from last week at 62%

Soybeans blooming: 60%                    68% is the 5-year average

Soybeans setting pods: 16%                27% is the 5-year average

Soybean good-excellent condition: down 2% from last week at 62%

Winter wheat harvested 75% compared to 80% on average

Spring wheat headed: 83%

Spring wheat crop condition: up 1% from last week at 74%

*This was a slightly bullish report and we may see the market try to buy corn and beans on the overnight trade.

Outside markets seem to be most heavily affected by the debt ceiling negotiations currently going on. Obviously the market is going to be tense when we are coming down to the wire like this.  Any heavy selloffs in the equities could trigger weakness in the grains and is something to keep in mind.

Now that we have had extra moisture added over the weekend, and the near term forecast is much better than before, we may have turned the corner on this weather market.  Obviously there are still some chances for problems during the month of August, but it looks like we are getting through a major risk period for grains.  We think the market still has considerable downside risk from here and we should remain adequately hedged.  If you want extra protection on bushels expected over and on top of your guaranteed production, please call your broker to go over some put strategies.

Best Regards,

 

EHedger

 

For a free trial of EHedger services including the morning automated phone call, daily afternoon market commentary, and/or a free consultation, please contact EHedger at 866-433-4371. You can also visit us at 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 7-21-2011

Jul 21, 2011

Weather changes have again created another volatile two sided trade today.  December corn ended up finishing 4 ¾ cents lower at $6.73, November soybeans finished 4 cents higher at $13.88, and December wheat down 18 ½ cents at $7.16 ¾. 

This morning’s forecast called for less heat with more chances of rain next week.  This combined with low export sales immediately put corn on the defensive.  At midday, we are again getting conflicting weather reports about how hot and how dry it actually will be next week.  This combined with a sharply lower US Dollar the market was able to come sharply off its lows today.

US Weekly export sales were lower than expected today for corn, wheat and soybeans.  Here are the following actual vs expected (in 1000’s of MTs):

                                                Expected Range                               Actual

Corn                                      900-1400                              901.5

Soybeans                               400-550                                445.9

Wheat                                   300-500                                403.5

Source: Reuters

One more thing to mention that many aren’t talking about is the feed wheat situation.  Right now Russian feed wheat is almost $80 per ton cheaper to feed than corn is, almost $2 per bushel.  If corn tries to stay where it is now, we could see much of this demand shift to cheaper feed grade wheat.  This is one more factor for corn that could end up bringing the overall price down.

If weather continues to come in with problems in the extended forecasts, or they take out rain we could easily see corn/beans go after their contract highs for new crop.  If they end up reducing the ridge or increasing precipitation, we could just as easily see this extra risk premium come right out of the market.  We like to remain with current hedges, and look to be long Sept calls if you want more upside coverage to take you through the rest of the summer.  Please call your broker for details on the Sept options.

Best Regards,

 

EHedger

 

For a free trial of EHedger services including the morning automated phone call, daily afternoon market commentary, and/or a free consultation, please contact EHedger at 866-433-4371. You can also visit us at 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 7-20-2011

Jul 20, 2011

Despite the weather forecast still calling for hot and dry conditions throughout the Midwest, December corn ended up settling 9 ½ cents lower.  November soybeans were 2 cents higher, and December wheat 8 ½ cents higher.

The midday forecast was kept mostly unchanged today. As we finish up this week rains are expected for the weekend. Next week is still calling for another round heat/drying and it seems as though the market has already priced this risk premium in.

There was not a whole lot of fresh news for the market to react to today.  The Argentine food inspectors union called off their most recent strike, resuming export shipments. US Weekly export sales are expected tomorrow morning at 7:30 am.  Estimated sales are as follows (in 1000’s of MTs):

Corn                                      900-1400

Soybeans                               400-550

Wheat                                   300-500

Source: Reuters

If weather continues to come in with problems in the extended forecasts, or they take out rain we could easily see corn/beans go after their contract highs for new crop.  If they end up reducing the ridge or increasing precipitation, we could just as easily see this extra risk premium come right out of the market.  We like to remain with current hedges, and look to be long Sept calls if you want more upside coverage to take you through the rest of the summer.  Please call your broker for details on the Sept options.

Best Regards,

 

EHedger

 

For a free trial of EHedger services including the morning automated phone call, daily afternoon market commentary, and/or a free consultation, please contact EHedger at 866-433-4371. You can also visit us at 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 7-19-2011

Jul 19, 2011

It was a volatile two sided trade today at the Chicago Board of Trade.  Corn and wheat were called 20-25 cents higher on the open, but at mid-morning session the markets started to come off their highs.  September corn finished 1 ¾ cents higher on the day and September wheat finished only 4 cents higher.  November beans ended up closing 4 ¼ cents lower. 

Yesterday crop progress showed a decline in conditions for both corn and soybeans which immediately put upside pressure on the market overnight.  This morning’s weather models are putting a high pressure ridge back into the 11-15 day forecast.

The Brazilian President will decide whether to lower the ethanol blend rate from 25% down to 18-20% before August.  At one point this year Brazil was actually importing US ethanol.

Weather is still dictating this market.  We expect volatility to remain high as we go through pollination and during the morning/mid-day forecast updates.  We want to remain with the current hedge recommendations.  For anyone that wants more upside coverage on current hedges, we can look at September corn and soybean calls. 

Best Regards,

 

EHedger

 

For a free trial of EHedger services including the morning automated phone call, daily afternoon market commentary, and/or a free consultation, please contact EHedger at 866-433-4371. You can also visit us at 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 7-18-2011

Jul 19, 2011

Grains finished lower today led down by corn. December corn finished 8 cents lower at $6.77, November beans ¾ of a cent lower at $13.86 ¼, and December wheat 5 ¼ cents lower at $7.18 ¼.

Weather is still key for price action. Since the forecast hasn't really changed much for the worse over the weekend, traders seem to be liquidating some of their long positions. Sunday night when the market reopened many analysts were calling for a higher opening. The market quickly traded lower and came into the day on the lows.

Towards the end of the trading session grains found support possibly in anticipation of a "bullish" crop conditions report that would be out at 3pm today. Crop conditions did end of dropping. For corn, there was a 3 percent reduction in the good-to-excellent category while beans had a 2% reduction. Corn silking is at 35% compared to 47% for the 5 year average. Soybeans are 40% blooming compared to 52% for the 5 year average. Winter wheat is at 68% harvest compared to 72% on average. Crop conditions for spring wheat actually improved in the excellent category but between the good-to-excellent categories they were unchanged at 73%. We may see a small boost in corn prices at 6 pm tonight as this was a slightly "friendly" report. 

Something to also note: today grains didn't seem to be overly affected from the sharply lower trade in the outside markets. The global economic problems which have affected grains in the past have not been getting the same weight as usual, which is not so surprising in a weather market. On the other hand other commodities like gold seem to be getting a boost from the uncertainty, gold finished above $1600 today which is a new all time high.

Any morning or midday changes to the forecast can make for volatile intraday swings this week during pollination. We recommend staying with current hedge recommendations. If you would like to double-check your positions using AMMO, please call your broker to discuss.

Have a great week!

Best Regards,

 

EHedger

 

For a free trial of EHedger services including the morning automated phone call, daily afternoon market commentary, and/or a free consultation, please contact EHedger at 866-433-4371. You can also visit us at 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 7-15-2011

Jul 15, 2011

Grains finished stronger today as weather is still the main driving force.  December corn finished 6 ½ cents higher, November soybeans up 3 cents, and December wheat down 14 ½ cents.

We have had little change to the 2 week forecast.  The latest forecast is calling for a weaker ridge in the later part of next week.

Where is the market headed in the next couple of weeks?  This still highly depends on how the weather plays out.  From Saturday into the 11-16 day forecast there is a potential for Northwesterly winds coming in.  The question also is do we get up and stay into the 100 degree temps next week or are we really looking at low 90’s?  This can obviously can vary quite a bit when it is all said and done so we like buying short term options (August corn calls/September bean calls) to help mitigate some of the upside risk for this timeframe.

There were really no headlines to influence the market today besides some outside market reports like CPI and consumer confidence which ended up being non events.  We will have to see what weather does over the weekend for direction, as well as crop conditions on Monday. We want to remain with the current hedge recommendations.

Please call your broker Monday if you have any questions.  Have a great weekend!

 

Best Regards,

 

EHedger

 

For a free trial of EHedger services including the morning automated phone call, daily afternoon market commentary, and/or a free consultation, please contact EHedger at 866-433-4371. You can also visit us at 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 7-14-2011

Jul 14, 2011

To start the day grains were called higher but corn quickly turned lower.  Part of the selloff can be attributed to Fed Chairman Bernanke’s comments about NOT planning a QE3 at this time which helped send crude oil and equities sharply lower.  December corn finished 1 ¼ cents lower at $6.78 ½, November soybeans up 4 ¼ at $13.84, and December wheat down 4 ¾ at $7.38.

Where is the market headed in the next couple of weeks?  This still highly depends on how the weather plays out.  Right now there are conflicting weather models, but it is suggested that the ridge will start breaking up next Saturday.  From Saturday into the 11-16 day forecast there is a potential for Northwesterly winds coming in.  The question also is do we get up and stay into the 100 degree temps next week or are we really looking at low 90’s?  This can obviously can vary quite a bit when it is all said and done so we like buying short term options (August corn calls) to help mitigate some of the upside risk for this timeframe.

Our thoughts on corn demand for ethanol have revolved around the weekly numbers not matching up with the monthly supply and demand numbers. The weekly numbers have been running behind pace and we feel this is part of the reason the quarterly stocks numbers were so far off from market estimates.  The big question has revolved around the conversion rate the USDA is using.  I have included a link to an AgWeb article by Darrel Good because I feel it is a good article and our thoughts are much in line with his on the issue.

Now is a good time to double check your AMMO to make sure you are covered.  Please call your broker if you would like to go over this. 

www.agweb.com/article/corn_market_waiting_on_august_production_report/

Have a great rest of the week!

 

Best Regards,

 

EHedger

 

For a free trial of EHedger services including the morning automated phone call, daily afternoon market commentary, and/or a free consultation, please contact EHedger at 866-433-4371. You can also visit us at 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 7-13-2011

Jul 13, 2011

Grains rallied right out of the gate today and ended up finishing sharply higher.  December corn finished 21 ¾ cents higher at $6.79 ¾.  September wheat finished 42 ½ cents higher at $7.14 ½, and November beans finished 21 ½ cents higher at $13.79 ¾.

We are trading a full weather market right now and grain prices have certainly benefited from this 2 –week forecast.  On top of this we have had some technical buying as we have blown through many of the moving averages over the last couple of days.  The comments made by Fed Chairmen Ben Bernanke today were only adding fuel to the fire.  The potential for the market to see another round of quantitative easing pushed the dollar sharply lower and gold to a record high today.

Even though this should have a positive effect on all things dollar denominated, yield is still everything for grains.  Right now the market is trying to forecast yield and how the weather plays out over the next two weeks which will be the determining factor.  If over the weekend they take out the ridge and add rain to the forecast we could see December corn back towards the $6 level next week.  If weather remains hot and dry in the 2 week forecasts, we could see the market come back to the contract highs.  I hate to be overly simplistic about this but weather is going to be the biggest factor right now.  Now is a good time to double check your AMMO to make sure you are covered.  Please call your broker if you would like to go over this. 

Have a great rest of the week!

 

Best Regards,

 

EHedger

 

For a free trial of EHedger services including the morning automated phone call, daily afternoon market commentary, and/or a free consultation, please contact EHedger at 866-433-4371. You can also visit us at 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 7-12-2011

Jul 12, 2011

Grains rallied today after a friendly USDA Supply and demand report.  December corn finished 25 ¼ cents higher at $6.58, November beans finished 11 ¼ cents higher at $13.58 ¼, and December wheat finished 31 ¼ cents higher at $7.05 ¼. 

The report was most friendly for corn with carryout coming in much lower than expectations for the 2011/2012 crop.  First of all, they increased corn usage for Ethanol by 50 million bushels for 2010/2011, even though they are running behind pace on the weekly reports with only a few months left.  We think this number is overstated by up to 150 million bushels.  They did however lower Feed and Residual quite a bit so this year’s carryout wasn’t too far off from market estimates.  However, for 2011/2012 corn usage for ethanol, they bumped that number up substantially.  Blenders have had a huge financial incentive this year to blend ethanol and we still think the numbers are going to be towards a 4.9 billion bushel usage for this year.  So increasing this number to 5.150 billion for next year seems overly optimistic in our opinion.

So basically, what I am getting at here is that the numbers seem overly pessimistic for yield and overly optimistic for demand.  From here on out, yield is going to be the biggest factor and that is still obviously most dependent weather.  For now, we like buying corn calls on breaks, and selling corn into these rallies.   Soybean volatility is still quite low so using long options can be a good way to protect these prices.  We think soybeans and wheat could hold support over corn and we saw a glimpse of that in wheat’s comeback today.

Please call your broker if you have any questions.

 

Best Regards,

 

EHedger

 

For a free trial of EHedger services including the morning automated phone call, daily afternoon market commentary, and/or a free consultation, please contact EHedger at 866-433-4371. You can also visit us at 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 7-8-2011

Jul 08, 2011

It was a strong day in the corn market after good export sales were announced this morning. December corn settled the day up 21 ½ cents to close the week at $6.37. The soybean market had export sales come back at the low end of the estimates and the November contract settled 8 ¾ higher finishing the day at $13.46 ½. The wheat complex saw sales come in below the trade expectations and still managed to finish the day 15 cents higher in the December Chicago contract closing the week at $ 6.90 ½.

Today the grain trade was anxiously awaiting the Informa report estimates that came back with a corn crop of 1.3759 billion bushel vs. the USDA June estimate of 1.3200. Informa estimated the US 2011 soybean crop at 3.203 billion bushels vs. the USDA June estimate of 3.285. The all wheat estimate came back at 2.095 billion vs. the USDA June estimate of 2.058. The market rallied on this data and the talk quickly turned to the extended forecast. There was massive discussion all day about the potential for hot and dry temperatures throughout the corn -belt in the two-three week timeframe. The near term forecast appears to favor growing conditions for the majority of the belt. Our opinion is that weather is obviously very difficult to predict. It is quite possible that the extended forecast could change numerous times next week. At this stage of the game we are getting caught up on cash sales for corn and soybeans as these are still very profitable levels for a lot of producers. Please get in touch with your broker to discuss your AMMO Account to see what the best strategy going forward will be for your operation. Looking ahead to next week, we will have an updated Supply/Demand and Production report that will be released on Tuesday July 12, 2011 at 7:30am. Below you will find the EHedger report preview with our estimates at the bottom.

USDA REPORT NEXT TUESDAY:

The USDA Supply and Demand Report will be released next Tuesday.  I have included our estimates for the supply and demand tables and where it places carryout for next year in the chart below.  As you can see we put the new June 30th acreage report's numbers in for 2011/2012 production and how they compare to the last S & D report in June.

You can see that I have factored in a drop in corn usage for ethanol by 100 million bu for 10/11 as well as Feed and Residual as more of that demand switches to wheat, also due to a jump in the June 30th stocks report.  This would put a much larger number of 930 million bushels carried "in" to the 2011/2012 crop year for corn.  And if we get a 161 yield, we could easily see corn carryout back above 1 billion bushel for next year.

For wheat we now have the ending stocks number of 860.7 million bu.  Next year we expect to see feed and residual usage climb up to 275 bringing carryout next year down to 659 million bu. 

For soybeans, we lowered exports down to 1525 this year and 1500 for next due to lower demand pace. Competition from such a large South American soybean crop has had a large impact on demand for US beans.  We also plugged in the USDA acreage change down to 75.2 million acres.  Even with the lower exports, this would bring us down to an extremely tight carryout situation of 160 million bushels.

Of course the yield fluctuations can have tremendously different outcomes for carryout at the end of the year.  Right now the fundamentals seem to support beans and wheat over corn and it is a good idea to make sure you are covered.  We still like selling corn rallies from here.  Bean volatility is still very cheap and buying November bean options is a great way to hedge risk. 

Please get in touch with your broker if you have any questions. Have a great weekend!

Chart 7.8.2011

Best Regards,

 

EHedger

 

For a free trial of EHedger services including the morning automated phone call, daily afternoon market commentary, and/or a free consultation, please contact EHedger at 866-433-4371. You can also visit us at 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 7-7-2011

Jul 07, 2011

Grains were stronger today after corn sale announcements were made before the market opened. 540,000 MTs of corn were sold to China and another 300,000 MTs to "unknown". December corn ended up finishing 7 cents higher at $6.15 ½, November beans up 19 ¼ at $13.37 ¾, and December wheat up 3 ¾ at $6.75 ½.

The sale announcement of 300,000 MTs of new crop corn to "unknown" is likely also going to China. If this is the case we have seen about 2 million bu of new crop corn sold to China over the last 2 weeks after this recent setback in the price of corn. This is still well behind many analysts who have been calling for up to 6-8 Million Mts. So even though this was headline purchasing, more of the strength may have also been attributed to a warmer/drier weather forecast. Crude oil and equities were also sharply higher today.
USDA REPORT NEXT TUESDAY:
The USDA Supply and Demand Report will be released next Tuesday. I have included our estimates for the supply and demand tables and where it places carryout for next year in the chart below. As you can see we put the new June 30th acreage report’s numbers in for 2011/2012 production and how they compare to the last S & D report in June.
You can see that I have factored in a drop in corn usage for ethanol by 100 million bu for 10/11 as well as Feed and Residual as more of that demand switches to wheat, also due to a jump in the June 30th stocks report. This would put a much larger number of 930 million bushels carried "in" to the 2011/2012 crop year for corn. And if we get a 161 yield, we could easily see corn carryout back above 1 billion bushel for next year.
For wheat we now have the ending stocks number of 860.7 million bu. Next year we expect to see feed and residual usage climb up to 275 bringing carryout next year down to 659 million bu. 
For soybeans, we lowered exports down to 1525 this year and 1500 for next due to lower demand pace. Competition from such a large South American soybean crop has had a large impact on demand for US beans. We also plugged in the USDA acreage change down to 75.2 million acres. Even with the lower exports, this would bring us down to an extremely tight carryout situation of 160 million bushels.
Of course the yield fluctuations can have tremendously different outcomes for carryout at the end of the year. Right now the fundamentals seem to support beans and wheat over corn and it is a good idea to make sure you are covered.  We still like selling corn rallies from here. Bean volatility is still very cheap and buying November bean options is a great way to hedge risk. Please call your broker if you have any questions. 

Best Regards,

 

EHedger

 

For a free trial of EHedger services including the morning automated phone call, daily afternoon market commentary, and/or a free consultation, please contact EHedger at 866-433-4371. You can also visit us at 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 7/06/2011

Jul 06, 2011

Grains were mixed today after the Chinese rate hike of 25 basis points. December corn finished 4 cents lower. November soybeans ½ cent higher, and December wheat 9 cents lower. 

The USDA Supply and Demand Report will be released next Tuesday. I have included our estimates for the supply and demand tables and where it places carryout for next year in the chart below. As you can see we put the new June 30th acreage report’s numbers in for 2011/2012 production and how they compare to the last S & D report in June.
You can see that I have factored in a drop in corn usage for ethanol by 100 million bu for 10/11 as well as Feed and Residual as more of that demand switches to wheat, also due to a jump in the June 30th stocks report. This would put a much larger number of 930 million bushels carried “in” to the 2011/2012 crop year for corn. And if we get a 161 yield, we could easily see corn carryout back above 1 billion bushel for next year.
For wheat we now have the ending stocks number of 860.7 million bu. Next year we expect to see feed and residual usage climb up to 275 bringing carryout next year down to 659 million bu.
For soybeans, we lowered exports down to 1525 this year and 1500 for next due to lower demand pace. Competition from such a large South American soybean crop has had a large impact on demand for US beans. We also plugged in the USDA acreage change down to 75.2 million acres. Even with the lower exports, this would bring us down to an extremely tight carryout situation of 160 million bushels.
Of course the yield fluctuations can have tremendously different outcomes for carryout at the end of the year. Right now the fundamentals seem to support beans and wheat over corn and it is a good idea to make sure you are covered. Checking up with AMMO is a good way to make sure there aren’t any gaps in your marketing plan. Please call your broker with any questions and have a great rest of the week!

Best Regards,

 
EHedger
USDA Report 7 6 2011
 
 
For a free trial of EHedger services including the morning automated phone call, daily afternoon market commentary, and/or a free consultation, please contact EHedger at 866-433-4371. You can also visit us at 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 7.5.2011

Jul 05, 2011

Grains continued their rebound today finishing 18 ¾ higher for September corn, 23 ¼ higher for September wheat, and 5 ½ higher for September soybeans.

There are rumors of China buying more corn on this break as import margins have gotten strong.  Basically their cash price didn’t drop like ours did on last week’s setback.  Technically we are also rallying back up towards filling the recent gap at 6.20 ½ (Dec corn).  There have been stories of some ethanol plants switching to wheat instead of corn in Indiana and Ohio.  On top of this French wheat futures have been rallying after yields are coming in 20-30% lower.  This supports the idea that wheat will be supported by any rallies in corn as margins between the two are close.  I have included a chart of September wheat against new crop corn and NEXT year’s wheat.  You can see that the price has fallen dramatically since the beginning of the year and as a substitute it is getting to a point where it makes sense for more feed use at these levels.  Producers who have on farm storage for soft red winter wheat  will want to store the wheat and sell into the deferred contracts to try to collect the carry (depending on basis levels, please call your broker to discuss).

The weekly crop progress report shows conditions improving for soybeans and corn.  Corn is now at 69% good-to-excellent compared to 68% last week and 71% last year.  Soybeans are at 66% which is right where they were at this time last year.

For those of you that haven’t had a chance to use AMMO please get in touch with your broker. The AMMO program will allow you to see where your farm operation stands mark-to market taking into consideration cash sales, HTA’s, futures and options, and crop insurance. The profitability matrix will help you discover where your farm’s profitability is based on various yield and harvest price scenarios. The "what if" calculator will then allow you to build a strategy that eliminates risk and maximizes your farm’s profitability. Please call your broker for more information about how you can put AMMO to work for you.

2   ZWU11   ZCZ11   ZWN12 ~ Daily 07052011 030339pm

2   ZWU11   ZCZ11   ZWN12 ~ Daily 07052011 030339pm

2   ZWU11   ZCZ11   ZWN12 ~ Daily 07052011 030339pm

Best Regards,

 

EHedger

 

For a free trial of EHedger services including the morning automated phone call, daily afternoon market commentary, and/or a free consultation, please contact EHedger at 866-433-4371. You can also visit us at 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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