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February 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 2/28/11

Feb 28, 2011

Monday was the last day of the month and first notice day for grains as they settle mixed.  March corn finished 10 ½ cents higher at $7.225.  For the month of February, March corn was up 63 cents.  March soybeans finished down 8 ¼ at $13.57 ¼.  For February, March beans finished 55 ¾ cents lower.  March wheat finished 6 cents higher at $7.82 ½.  March wheat finished 58 ¼ cents lower for the month of February.
 
The latest Commitment of Traders report shows the funds reducing their net long grain positions, especially in soybeans.  Fund liquidation is still seen as one of the major risks we are watching.  Also, the March 31st report is just around the corner.  From this point on, we may be nearing highs UNLESS we see a true weather problem erupt.  We feel these are great levels to be very aggressive with sales (on Guaranteed bushels) and keep your upside in the call spreads in case of unforeseen events that push us higher. Especially since today was the last day for Spring Federal Crop Insurance Prices to be set.  It looks like corn will be approximately $6.02 and beans approximately $13.49.  The bottom line, there is a lot of uncertainty premium that is built into these markets, and we want to take advantage while we are at these prices.
 
Before making any decision producers should get in touch with their broker to go through the strategy in the AMMO Program to see how it will benefit their farm operation.
 
Next Thursday thru Saturday EHedger will have representatives at the Commodity Classic in Tampa Florida. Please feel free to stop by the booth to learn more about the AMMO Program and to discuss your individual farming operation. Hope to see you there!

 

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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 2/16/11

Feb 16, 2011

Grains settle mixed but off their lows.  December corn finished ½ cent higher, November beans finished 4 cents lower, and December wheat finished 3 ½ cents lower.
 
Monday's key reversal in December corn has pushed corn below the trendline (see chart below). The next technical target would be $5.67.  We are getting more aggressive on new crop sales.  Please see new hedge recommendation to see the latest levels sold and call strategy.
 
Weekly export inspections.  Estimates for tomorrow morning:
 
Corn                 700-1400
Wheat               300-750
Soybeans         400-700
 
Cattle on Feed Average Estimate (Friday)
                                    Average            Range
On-Feed (Feb 1)            105.1                104-106
Placed in Jan                103.5                98-109.2
Marketed in Jan             100.6                99-103
 
 
The next WASDE report will be on March 10th.  After that, we will have the March 31st planting intentions report.  We want to be more aggressive on sales between now and then.  In fact, we want to consider the idea of getting all the way sold on guaranteed bushels right now, and re-own with call spreads.  I believe this recommendation would be best considered on an individual basis with your broker and with a close look at your breakevens/ROI's.  Many times we make highs in February, and we want to secure these levels while we are up here.  We would still want to keep upside in the market on these bushels with call strategies.  Please call your broker to discuss a specific strategy for your operation.

 

1717

 

 

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 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 2/14/11

Feb 14, 2011

Corn and beans had a sharp setback today while wheat managed to remain higher.  December corn finished 10 ¾ cents lower, November beans finished 14 cents lower, and December wheat finished 4 ¼ cents higher.
 
Today the U.S. Crops Baseline Report was out at the high end of estimates and was a large part of the intra-day selloff.  They are projecting ethanol usage to slow in 2011 to 4.875 Bill Bu.  Also bearish, is the increase in expected acreage to levels not seen since 2008.  The 8 major crops are expected to jump to 255 million acres from 245 million acres in 2010.  Again, these are preliminary projections, the main acreage report will still be of more significance in March.
 
Recent weather in Argentina has been favorable for soybean production according to the Agriculture Ministry.  Rains are still needed in the Southern regions, but for the most part they have played a significant role in reviving expected production.  Their corn crop production is still expected to remain below expectations. 
 
The next WASDE report will be on March 10th.  After that, we will have the March 31st planting intentions report.  We want to be more aggressive on sales between now and then.  In fact, we want to consider the idea of getting all the way sold on guaranteed bushels right now, and re-own with call spreads.  I believe this recommendation would be best considered on an individual basis with your broker and with a close look at your breakevens/ROI's.  Many times we make highs in February, and we want to secure these levels while we are up here.  We would still want to keep upside in the market on these bushels with call strategies.  Please call your broker to discuss a specific strategy for your operation.

 

 

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 2/9/11

Feb 09, 2011

Wednesday the Feb WASDE report sparked some fireworks in the grains.  March corn finished 24 ¼ cents higher, March soybeans 16 ¾ cents higher, and March wheat 11 ¾ cents higher.
 
Before we even reached the report, the overnight markets were trading sharply higher.  Most of this was from continued fears of the Chinese wheat crop losing production from dry weather.  It is now estimated that over 6 million hectors may be affected in the region (this is out of 14 million hectors).  
 
The USDA report was basically neutral for soybeans and wheat, but bullish for corn. U.S. corn carryout was lowered to 675 million bu (market estimated 736).  On top of a bullish US number, the world carryout was expecting 127 MMTs, and the Feb report pegged the world number at 122.5 MMTs. 
 
I have included an outline of the report below.

1705
 
 
So where do we go from here?  The bullish report will likely continue to support grains on breaks.  Really the report only puts more emphases on the fact that we need all the acres we can get in order to replenish stocks.  If China comes in to start importing an estimated 6-9 MMTs of Corn, we could see even more upside pressure on grains.  On the other hand, we may be getting a little ahead of ourselves as the market is well overbought at this level and eventually we will have to start heavily cutting into demand.  As a producer, we haven't been able to sell grains at these prices since 2008.  We aren't even into March yet. Between now and the March 31st planting intentions report, we could be a little more aggressive on selling guaranteed bushels, playing into the hype, especially since we are now above $6.  Even though I mentioned we are fundamentally friendly these markets, things can change on a dime when we have the market so loaded up with longs.  We can also use option strategies to look at ways of making those cash sales, but still retaining some sort of ownership on the board.  Please call your broker to discuss an individualized plan if you have not already done so.  Otherwise, we like remaining with current hedges.

 

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 2/8/11

Feb 08, 2011

China's quarter point rate hike had the grains lower in the overnight session.   Throughout the day grains came off their lows and finished higher in the new crop months.  December corn finished 2 ½ cents higher, November soybeans 11 ½ cents higher, and December wheat 15 ½ cents higher. 
 
Anti-inflationary measures by China were enough to scare the market early, but they were quickly forgotten by mid morning.  Also today was another round of heavy bear spreading as Goldman continues their roll.  This prompted the back months to trade higher by the settlement.  Outside markets were nothing special; equities continue to make new highs for the move and crude oil had another setback.
 
For grains, wheat led the way higher. Much of the strength was due to concerns over the Chinese wheat crop.  The UN's food and agriculture organization commented today on the dry Chinese weather and that it could affect up to 5.16 million hectors may be affected (out of 14 million hectors).  Wheat is making new contract highs on the headlines.
 
Tomorrow morning the USDA WASDE report will be released at 7:30 AM.  The average analyst estimates for corn, beans, and wheat carryout are as follows:
 
                        Estimate            Range
Corn                 736                   645-795
Soybeans           135                   105-150
Wheat               810                   751-889
 
There is a potential to see a decrease in US and world corn carryout expectations in this report.  For US carryout, stronger ethanol production may be the number one reason for this. For world carryover, the decrease would likely come from a lowered Argentine corn production.  The last USDA report projects Argentine production at 23.5 MMTs, we could easily see that reduced by 2 Million from the weather problems they have had.  Brazilian production is expected to remain strong.
 
We like remaining with current hedges.  Please call your broker for a specific recommendation for your operation.

 

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 Gain Commentary

Feb 07, 2011

Grains started the day stronger but came well off their highs by the close.  March corn finished 3 ¾ cents lower, March beans 9 cents lower, and March wheat 5 cents higher.
 
Export inspections were out this morning and showed a decline from last week in corn and beans, but an increase in wheat.  Today we saw heavy bear spreading in grains which is likely due to the fact Goldman is currently rolling positions.  Outside markets were mixed with equities making new highs and crude oil having a large break.  The energy market weakness poured over to corn and soybeans, helping push them lower on the day.
 
The USDA WASDE report will be out this Wednesday at 7:30 AM.  The average analyst estimates for corn, beans, and wheat carryout are as follows:
 
                        Estimate            Range
Corn                 736                   645-795
Soybeans           135                   105-150
Wheat               810                   751-889
 
There is a potential to see a decrease in US and world corn carryout expectations in this report.  For US carryout, stronger ethanol production may be the number one reason for this. For world carryover, the decrease would likely come from a lowered Argentine corn production.  The last USDA report projects Argentine production at 23.5 MMTs, we could easily see that reduced by 2 Million from the weather problems they have had.  Brazilian production is expected to remain strong.
 
Not much else has changed fundamentally and so the path of least resistance is still pointing higher.  The latest commitment of traders report shows the funds increased their net long positions in grains as follows:
 
+25,748 net long contracts of corn
+13,805 net long contracts of soybeans
+4,582 net long contracts of wheat
 
 
We recommend keeping your upside potential in the calls spreads, and make sales in the cash market. Please call your broker for a specific recommendation for your operation.
 

 

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 2/3/11

Feb 03, 2011

Grain prices dropped today on profit taking and a sharply higher dollar.  March corn finished 6 ¾ cents lower, March beans 8 ½ cents lower, and March wheat 4 cents lower.
 
Coming into the day the markets were slightly weaker with wheat leading the way lower.  Weekly exports came in above expectations for soybeans and corn; and below expectations for wheat. 
 
Here are the following Exports (Actual vs Estimated in 1000 MT's):
 
                        Estimate                        Actual
Soybeans           3400-3600                     4107.9
Corn                 450-700                         1236
Wheat               800-1100                       565.4
 
 
Despite the impressive soybean exports, the stronger US dollar weighed heavily on prices today.  Comments made by the European Central bank President Jean-Claude Trichet were viewed as bearish the Euro currency which in turn is bullish the US Dollar.  Also today, Ben Bernanke commented that he doesn't believe his economic policies have contributed to the global rise in food prices.  He also mentioned that inflation is contained, and it may take a while for the unemployment rate to fall substantially.  These comments may be a sign that rates will not be rising in the short term which would be bullish dollar-denominated assets like commodities.
 
Weather is looking favorable in South America and is helping to put pressure on grains.  If the dollar starts to strengthen again, we could see this continue to negatively affect the price of corn, wheat, and beans, especially since we are coming off the highs in these markets.  Even though the traditional fundamentals look bullish, outside market forces could still be a significant risk.
 
We recommend keeping your upside potential in the calls spreads, and make sales in the cash market. Please call your broker for a specific recommendation for your operation.

 

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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