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July 2012 Archive for EHedger Report

RSS By: Dustin Johnson

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

Grains still focusing on weather

Jul 12, 2012

Corn overcame its losses from yesterday to close at new settlement highs.  December corn finished up 28 ¼ cents at $7.32 ¼, November soybeans 6 ½ cents higher at $15.29, and December wheat up 21 ½ cents at $8.59 ¾.

The past two trading sessions have really shaken the market, especially for corn.  The December corn contract had a 62 ¾ cent range yesterday and another 34 cent range today!  Why did we see the price fall yesterday only to see another sharp rally today?  For one the weather forecast was a bit drier on the midday models this morning.  If weather continues to be a problem we can obviously see more upward pressure on the market.  The past few Commitment of Traders reports have revealed that much of this rally has been due to short covering.  The managed money and the non-reportable traders have liquidated a very large portion of their short positions.  Will investment and end-user hedging continue to push the market above the all-time highs of $8?  Time will tell, but until we know more about the crop size we don’t want to make any "sudden changes" to our marketing plans.  The past few times corn has been able to make it above $7 it hasn’t stayed for very long.  This may be the year to change this but we know that demand is being rationed at these levels already.  The USDA has already cut its corn demand estimates by 650 million bushels for feed, 100 million for ethanol, and 300 million in exports due to the recent spike in prices.  They have also dropped the demand for US beans by 150 million bushels.  The point is the market is trying to ration the demand and a lot of speculation goes into this until we know the actual crop size.  At this point we know it will be lower but extremely difficult to peg just "how low".  We want to remain in sustainable hedges until more is known about the final crop size.

In such a volatile weather market, price direction will still likely come from any changes on the morning and midday forecasts.  If you would like to sign up for a trial of the EHedger daily emails including hedge recommendations, please sign up using the link below.  Thanks and have a great weekend!

DECEMBER CORN


www.ehedger.com/signup
 

Best Regards, 

EHedger 

866-433-4371

www.EHedger.com 

Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge and financial resources. The market information contained in this message has been obtained from sources believed to be reliable, but is not guaranteed as to its accuracy or completeness. Market information may not be consistent with current or future market positions of EHedger LLC, its affiliates, officers, directors, employees or agents.

EHedger Afternoon Grain Commentary 7/6/12

Jul 06, 2012

 

Grains finished the day lower along with sharply lower outside markets.  December corn closed 15 ½ cents lower at $6.93, November soybeans 20 ¾ cents lower at $15.05 ¾, and December wheat 25 ¼ cents lower at $8.21 ¾.  Despite the lower daily closes we still finished with strong gains on the weekly charts.  December corn finished the week 58 ¼ cents higher, November soybeans up 78 cents, and December wheat up 45 cents.

Weekly December CornDec Corn

Weekly November SoybeansNov Soybeans

Weekly December WheatDec Wheat

This morning’s weekly export sales were all in line with expectations and weren’t a market mover.  Informa released their production estimates dropping their national corn yield estimate to 153.5 and soybean yield to 42.0.  Informa’s estimates didn’t seem to spark a reaction out of the market either way.  Grains had already started their double digit losses.  The weakness in grains was attributed to pre-weekend profit taking as well as extremely weak outside markets.  The stock market fell sharply today after the jobs data came in disappointing and crude oil fell by over $3 a barrel.  In 2008, the agricultural bull market was ultimately over after the economy started to slow.  We have to be mindful of similar responses to the fiscal problems the economy is facing right now.

Weather is still the most important fundamental to watch for direction.  We have now had three weeks of sharp gains in grain futures all based on weather and declining crop conditions.  We are expected to have a few more days of hot and dry conditions before we see relief in parts of the Midwest Sunday – Monday.  The latest midday forecast has added more rains to the driest parts of the Southern Midwest.  As of right now our forecasters are still not expecting the rain to be enough to replenish soil moisture levels and crop stress is expected to continue in many areas of the Midwest.

Sunday night forecast changes have been major market movers resulting in large rallies for corn and soybeans. The market will surely be watching any changes to the forecast over the weekend.  Monday we will have crop conditions in the afternoon as well as the CFTC’s Commitment of Traders report which was delayed due to the holiday week.

There is no doubt that this rally has negatively affected the demand outlook especially for corn.  We want to remain in sustainable hedges until we know more about the crop size.  If you would like to receive a free trial of our research including hedge recommendations, please sign up using the link below.  To discuss opening an EHedger account with one of our experienced agricultural brokers, please call 866-433-4371.  Have a great weekend!

www.ehedger.com/signup 

Best Regards, 

EHedger 

866-433-4371

www.EHedger.com 

Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge and financial resources. The market information contained in this message has been obtained from sources believed to be reliable, but is not guaranteed as to its accuracy or completeness. Market information may not be consistent with current or future market positions of EHedger LLC, its affiliates, officers, directors, employees or agents.

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