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January 2013 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 1/30/13

Jan 30, 2013

March Soybeans closed up 27 cents at $14.78 ¾, just below the 100 day moving average of $14.80.  March soybeans have not closed above the 100 day since November 1st of 2012.  This may be an area of technical resistance for old crop beans but the weather concerns in South America may be enough to continue fueling the bulls.

 

Soybean Chart

 

The latest forecast has a more aggressive high pressure ridge in Argentina’s 7-14 day outlook.  Argentina is going to need more precipitation to prevent increased crop stress over the next two weeks.  On the flip side, sections of Brazil are still too wet and harvest delays are prompting the market to also add weather premium to our markets. The concern is that some of those orders will have to switch back to the US. Our forecasted carryout is extremely low and we can’t absorb the extra business without another price spike for rationing domestic use.  We obviously haven’t seen this yet but the market is adjusting for the risk.

 

With a bumper crop still expected in Brazil, and large acres still expected in the US, we want to use this opportunity to make those new crop soybean hedges as we believe world stocks-to-use will be much more adequate assuming normal growing conditions in the US in 2013*.  If anything these harvest delays may support our bull spread (long March, short July soybeans) which is part of our re-ownership strategy for 2012 production.  We want to place our exit orders at +45 cents on that spread.  Please see the EHedger YouTube channel for more information on this strategy by clicking here.

 

I still think wheat fundamentals remain strong from the low ratings and the dry forecast.  Tomorrow we should get an update from the US Drought Monitor.  Here is the link for those who would like to follow the current drought ratings.

 

Drought Monitor (the next update will be on Thursday)

 

*Hedge recommendations should be carefully considered by each individual based on risk tolerance.  EHedger does not recommend hedging bushels that are not guaranteed by federal crop insurance.  Please contact EHedger for a custom marketing plan that adheres to your specific risk tolerance and business situation.

 

If you would like EHedger's Grain Commentaries emailed to you, Sign Up Here.

 

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 1/29/13

Jan 29, 2013

March Soybeans closed 4 cents higher at $14.51 ¾.  Dryness concerns in Argentina are still the main topic of discussion.  Wheat was unable to hold onto its early gains despite the poor crop conditions reported yesterday.  Although the market has already discounted the low ratings, we have to consider the magnitude of the current drought levels in the HRW belt.  For those who have not had a chance to see the current drought monitor, please see the link below:

 

Drought Monitor (the next update will be on Thursday)

 

Harvest delays are also a concern for sections of Brazil.  If these persist we could start to see some orders switch back to the US which would be bullish for old crop soybeans especially.  Our old crop recommendations have been at 100% sold or protected for quite some time, it is the re-ownership strategies that we want to manage.  Our soybean re-ownership strategy was to buy the March futures and sell the July.  As of Tuesday the spread settled at +22 ¼ cents.  Our short term target on the spread is +45 cents which is just below the 100 and 200 day moving averages.

 

 

 

March-July Soybean Spread

 

New crop corn and soybean prices are still at great levels for hedging in our opinion.  Although old crop supplies are tight the large acreage expected for 2013 may continue to provide a ceiling for new crop prices. Many times when we come off of a terrible growing year such as 2012, the market tends to overestimate yield reductions for the following year. Just looking at how far below trendline yield many estimates are coming in at, there is a hefty premium built into the price.  At this time we still want to leave a healthy amount of upside potential in the market in case the drought conditions get worse for the Midwest but we want to make sure that the extremely high cost of inputs are covered.  Creating a custom plan using AgYield is what we recommend to make more informed decisions regarding your marking plan.

 

If you would like EHedger's Grain Commentaries emailed to you, Sign Up Here.

 

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 1/28/13

Jan 28, 2013

Corn, wheat, and soybeans all closed higher on Monday.  Corn strength was supported by the higher than expected export inspections this morning.  The market was expecting about 11.5 million bushels and they ended up at 21.12 million.  Wheat and soybeans were near their expected levels which helps explain why corn held the most strength into the closing bell.

 

A high pressure ridge in South America’s two week forecast is also helping to support price.  Dryness in Argentina is expected in the 10 day forecast while Brazil could see some harvest delays from increased precipitation in some areas.  We will be monitoring these situations as the information flows in.  A large enough reduction in Argentine corn production would be a chance to see another late surge in old crop US corn.

 

If we see harvest delays out of Brazil it could also help our soybean re-ownership strategy which is long the March-July soybean spread.  As of Monday the spread settled at +25 cents.  Our short term target on the spread is +45 cents which is just below the 100 and 200 day moving averages.

 

March-July Soybean Spread

   

There are still a lot of unknowns for wheat but I believe it is the product most fundamentally supported at this point.  Monday’s crop ratings in Kansas were down to only 20 percent good to excellent!  Weather is still dry in the US and we came into the winter with the worst crop ratings on record.  We are also coming off of a major price break which brought us down to competitive prices in the world market.  Wheat sales were at 572,500 MTs last week and export inspects were 22.28 million bushels, both slightly better than estimates.

 

March Wheat Chart

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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 1/24/13

Jan 24, 2013

Grains and oilseeds staged a late day rally off the lows of the day.  March corn finished 3 ½ cents higher at $7.24 ¼, March soybeans 1 ¾ cents lower at $14.35 ¼ (20 cents above the daily low), and March wheat 6 ¼ cents lower at $7.68 ½.

The early weakness was attributed to additional rains added to the Argentine forecast on the GFS model.  The USDA announced the sale of 510,000 MTs of new crop soybeans to China and 113,000 MTs to "unknown destinations".  These sales helped the November 2013 contract settle higher on the day.  Old crop soybeans were hard pressed for support until the very end of the trading session. Much of the weakness was blamed on reports of reduced crush margins in China.

The EIA ethanol data was better than last week but not necessarily "bullish".  We believe old crop corn needs to continue to ration feed demand and will find support on setbacks like today.  The December 1st stocks were low enough in our opinion to hold prices at least until the South American production becomes available.  We are more concerned about the price of new crop as we believe both corn and soybeans will secure additional acres this year.  Until we get through March 1st, guaranteed revenue from crop insurance is still unknown which means the next 25-30 days will be your biggest risk for those who rely on crop insurance as a main source of hedging.  If you are caught up to the current EHedger recommended sale levels we believe this is adequate coverage for this timeframe.  If you still need to place these hedges please contact us to go over some short term hedging strategies to get you through the Spring Federal Crop Insurance price-setting.  To receive the EHedger producer recommendations please sign up for a free trial by clicking here.

Wheat is still having a hard time sustaining rallies despite the competitive US pricing in the world market.  The record low winter wheat conditions this fall and the ongoing dryness may provide the necessary support into the spring. Tomorrow’s sales report will be the next directional indicator to watch.

Weekly Sales Estimates for Friday, January 25th 

Commodity Estimate Range
Corn 200,000-450,000
Soybeans 750,000-950,000
Soymeal 200,000-300,000
Soyoil 10,000-30,000
Wheat 350,000-550,000

 

March Corn

March Corn Chart

March Wheat

March Wheat Chart

March Soybeans

March Soybean Chart

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 1/22/13

Jan 22, 2013

Grains and oilseeds started the day stronger after the long holiday weekend but wheat was unable to hold the early gains.  March wheat closed 12 cents lower at $7.79 ¼, March corn up 1 cent at $7.28 ½, and March soybeans up 22 ½ at $14.51 ¾.

Soybean crush margins are still very strong in China which was a large part of today’s rally.  The USDA announced an optional origin soybean sale to China for 13/14. Soybean techincals also look favorable with a close back above the 200 day moving average (grey line).

March Soybean Chart

Wheat has been choppy on rumors that Russia will be lowering their import duty on wheat continue to float around the market.  Russian flour prices are at a record high which may mean they will have to take measures to cool domestic prices before their new crop harvest.  If they announce the removal of the tariff it may open the door for imports of French wheat.  These rumors were favorable for prices on Friday but the enthusiasm seems to have left the market as we erase those gains.

 

March Wheat Chart

 

March corn found sell pressure after the wheat market’s weakness Tuesday.  It continues to trade in a range-bound manner.  Just like late November and early December, March corn was supported above the 50 day moving average (red line) but was unable to break through the 100 day (blue line). Since the January reports were rather bullish I am inclined to believe corn will hold support this time but we always want to remain vigilant for closes below that level.

 

December Corn Chart

 

Weather in Brazil remains favorable for most areas.  Southern Brazil will need to start seeing rains in the forecast soon but for now it is not a major concern.  Argentine weather is drier than they would like to see especially into mid-next week.  This could support price action in the US if the forecast continues to come in without adequate moisture. We will continue to monitor.

 

For now we expect old crop prices to be supported on setbacks due to the tight supply. The large acreage expected for 2013 may continue to keep new crop prices resisted.  Have a great week!

 

If you would like EHedger's Grain Commentaries emailed to you, Sign Up Here.

 

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 1/17/13

Jan 17, 2013

Grains and oilseeds closed lower on Thursday despite very strong soybean sales reported.

Total soybean sales were expected to be 750,000 at the very high end of analyst guesses.  The actual Weekly Sales Report revealed 1.608 million mts of old crop beans sold and an additional 180,000 mts of new crop!  This helps explain why the soybeans were so strong over the last few trading sessions.  The meal sales were also very strong at 236,100 mts.  At 8:00 am the USDA also announced an additional sale of 240,000 mts of US soybeans to unknown destinations for 13/14.

Even with the bullish soybean data beans quickly found selling pressure on a classic "buy the rumor, sell the news" trade.  The March contract also found technical resistance at the 200 day moving average (grey line).

March Soybean Chart

South American weather remains unchanged through mid next week.  Increased rains were noted for Argentina late next week and weekend.  Brazil is still forecasted to be dry but subsoil moistures are adequate enough that we are not concerned with lowering yield projections at this time.  With strong sales and tight stocks in the US as well as good yields forecasted in South America, we still favor bullspreading the March – July soybeans for a re-ownership strategy (please see the EHedger Youtube Channel for details).

 

Corn and wheat continue to trend together.  It is important to note that leading into today corn had closed higher for 8 consecutive trading sessions.  It is not surprising to see a corrective move and it managed to close slightly below the 50 day moving average.

 

March Corn Chart

For now we expect old crop prices to be supported on setbacks due to the tight supply. The large acreage expected for 2013 may continue to keep new crop prices resisted.  We have no new recommendations at this time.

 

If you would like EHedger's Grain commentaries emailed to you, Sign Up Here.

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 1/16/13

Jan 16, 2013

Corn, soybeans, and wheat all finished higher Wednesday with soybeans leading the way.  It appears the market is still ready to buy soybeans which could be in anticipation of large soybean sales on Thursday morning’s export sales report.

Corn closed higher but traded lower for much of the day after the EIA Ethanol numbers were below estimates and considered "bearish".  In fact this is the lowest weekly production since they began recording it in June of 2010.  Ethanol stocks were also the highest they have been in 4 weeks.  With ethanol profit margins in the red for so many weeks in a row it is not surprising to see the slump in production.

Weekly Export Sales Guesses for January 17th 2013:

Corn

 

250,000 – 475,000

Soybeans

 

550,000 – 750,000

Wheat

 

275,000 – 425,000

Soymeal

 

75,000 – 150,000

Soyoil

 

10,000 – 25,000

 

Colder temperatures in the US are still supportive for wheat and the dryness in Argentina and Southern Brazil are supporting soybeans.  As of right now we don’t believe South American production will be cut from current estimates but it warrants monitoring the forecast for any changes.

If you would like EHedger's Grain commentaries emailed to you, Sign Up Here.

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 1/15/13

Jan 15, 2013

Grains and oilseeds were mixed Tuesday after trading both sides of the market.  March soybeans were sharply higher at one point but closed 4 ½ cents lower at $14.13 ½.  March corn finished 6 ½ cents higher at $7.30 ½ and March wheat was 15 ¾ cents higher at $7.82 ¾.

Wheat held the most support as colder temperatures in the US threaten production.  The 2013 growing year has started out very dry and we just had a bullish acreage report so it isn’t very surprising to see wheat prices rally.  We have recently become competitive again in the world market which is also driving price. Since today was the last day for the fund rebalancing the wheat strength could also be a result of improved investor confidence now that the index funds are no longer expected to be selling Chicago wheat.

Corn followed wheat higher and as I have discussed in earlier reports I believe old crop corn and wheat have the strongest fundamental story.  Soybeans rallied right into the 50 day moving average before dipping back to negative territory for the day.  Why exactly did we see the strength in soybeans yesterday?  It could be that we were past the report and a major NOPA crush number and the bulls felt confident to get long again.  The dry weather affecting sections of South America right now is not a major concern for production at this time.  On a side note the Argentine Ag secretary is estimating corn production at 28-30 Million MTs which is up by 500,000 from the last estimate.

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March Soybeans were unable to close above the 50 day moving average (red line)March Soybean Chart

March Corn looks poised to try and test the 100 day moving average of $7.45 (blue line)March Corn Chart

March Wheat is coming off of sharply oversold levels and is well below the major moving averages.March Wheat Chart

If you would like EHedger's Grain commentaries emailed to you, Sign Up Here.

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 1/14/13

Jan 14, 2013

Soybeans lead the way higher to start the week. March soybeans were up 44 ¾ cents at $14.18.  March corn closed 15 ¼ cents higher at $7.24 and March wheat 12 ¼ cents higher at $7.67.

The soybean strength started on Sunday night and continued into the closing bell.  The USDA announced the sale of 120,000 MTs of US Soybeans to China.  NOPA crush was below the average trade guess by 1.1 million bushels but still at a strong monthly pace.  Conditions are a little dry in Southern Brazil and Argentina.  The dryness is not expected to be an overly bullish factor yet even though many headlines are trying to find a reason for today’s strength.  We can’t say the report was bullish either.  What I believe we are seeing is an increase in confidence.  Funds have been reluctant to hold large long positions especially ahead of the January reports.  This makes sense given the historical uncertainty for the December stocks numbers. Now that we are past the report it may be a "risk-on" scenario again for the funds.

Corn and wheat are finding support not only from soybeans but follow through buying from Friday’s reports.  Wheat acres were lower and corn stocks were well below expectations.  Tuesday the last day of the fund repositioning and we feel a short term bottom may be forming for old crop corn and wheat.

USDA REPORT BREAKDOWN

Corn stocks were reported to be 8.03 billion bushels as of December 1st (average guess was 8.283 billion).  Corn production was slightly higher than expected but so was use.  The WASDE report raised feed demand by 300 million bushels for the year lowering carryout expectations to 602 million.

Soybean stocks were 1.966 billion which was right in line with expectations.  Soybean production was stronger than expected after harvested acres were reported at 76.1 million.  This was considered ‘bearish’ compared to the average analyst estimates as well as initial report response.

Wheat had the strongest report when all-wheat acres were reported at 41.8 million almost a full million less than expected.  With a poor start to the growing year, lower acres than expected, and a competitive price in the world market again, wheat has the strongest fundamentals in our opinion.  Given the fact that corn stocks came in less than expected we feel both products have a chance to at least hold support at these levels.

New crop corn and soybeans were stronger on Monday but failed to hold the same strength old crop has had.  Strong bull-spreading is a result of tight stocks and very large new crop acre estimates. Although I agree that we need to hold solid prices through March 1st to get the higher insurance revenue guarantee, the higher acres are a concern of ours for 2013 prices. For this reason we want to remain with the current EHedger sale recommendations especially through March 1st.  If you would like a second opinion of your current marketing plan, please sign up for a trial using the link below.

USDA REPORT SUMMARY VS EXPECTATIONS

Trade Estimates for US Dec. 1 Stocks

 

 

 

 

USDA

Average

Range

Dec 1, 2011

Sept 1, 2012

Wheat

1.660

1,684

1,553-1,750

1,663

2,104

Corn

8.030

8,219

8,000-8,750

9,647

988

Soybeans

1.966

1,981

1,800-2,100

2,370

169

 

 

 

 

 

 

Trade Estimate for US Crops

 

 

 

 

 

USDA

Average

Range

2012

2011

Corn

10.780

10,650

10,325-10,800

10,725

12,358

Corn Yield

123.4

122.6

121.3-125.0

122.3

147.2

Harvested Acres

87.375

86.89

84.56-87.72

88

83.981

 

 

 

 

 

 

Soybeans

3.015

2,993

2,935-3,104

2,971

3,094

Soybean Yield

39.6

39.6

38.9-41.0

39.3

41.9

Harvested Acres

76.104

75.56

74.70-75.90

75.693

73.776

 

 

 

 

 

 

Trade Estimate for U.S. 2013 Ending Stocks

 

 

 

USDA

Average

Range

2013

2012

Wheat

716

741

637-792

754

743

Corn

602

647

489-760

647

988

Soybeans

135

135

114-186

130

169

 

 

 

 

 

 

Trade Estimates for US Winter Wheat Acres

 

 

 

USDA

Average

Range

2012-13

2011-12

All Winter

41.8

42.585

41.700-44.650

41.324

40.646

Hard Red

29.1

30.296

29.900-31.000

29.863

28.480

Soft Red

9.42

8.898

8.217-10.000

8.120

8.561

White

3.27

3.474

3.300-3.920

3.350

3.360

 

Sign-Up

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 USDA Report Breakdown

Jan 11, 2013

Grains and oilseeds finished mixed after the report.  March corn closed 10 cents higher at $7.08 ¾, March soybeans 6 ½ cents lower at $13.73 ¼, and March wheat 10 ¼ higher at $7.54 ¾.

The net changes fell in line with the USDA report results.  Corn had a rather favorable report after grain stocks came in at 8.03 billion bushels (average guess was 8.283 billion).  Corn production was slightly higher than expected but so was use.  The WASDE report raised feed demand by 300 million bushels for the year lowering carryout expectations to 602 million.

Soybean stocks were 1.966 billion which was right in line with expectations.  Soybean production was stronger than expected after harvested acres were reported at 76.1 million.  This was rather bearish for those looking for lower production and the market traded down to new lows for the move.

Wheat had the strongest report when all-wheat acres were reported at 41.8 million almost a full million less than expected.  With a poor start the growing year, lower acres than expected, and a competitive price in the world market again, wheat has the strongest fundamentals in our opinion.  Given the fact that corn stocks came in less than expected we feel both products have a chance to at least hold support at these levels.

New crop corn and soybeans both closed lower.  Bullspreading was evident since old crop supply is known to be tight while new crop acre estimates continue to come in large. Although I agree that we need to hold solid prices through March 1st to get the higher insurance revenue guarantee, the higher acres are a concern of ours for 2013 prices. For this reason we want to remain with the current EHedger sale recommendations especially through March 1st.  If you would like a second opinion of your current marketing plan, please sign up for a trial using the link below.

USDA REPORT SUMMARY WITH EXPECTATIONS

Trade Estimates for US Dec. 1 Stocks

 

 

 

 

USDA

Average

Range

Dec 1, 2011

Sept 1, 2012

Wheat

1.660

1,684

1,553-1,750

1,663

2,104

Corn

8.030

8,219

8,000-8,750

9,647

988

Soybeans

1.966

1,981

1,800-2,100

2,370

169

 

 

 

 

 

 

Trade Estimate for US Crops

 

 

 

 

 

USDA

Average

Range

2012

2011

Corn

10.780

10,650

10,325-10,800

10,725

12,358

Corn Yield

123.4

122.6

121.3-125.0

122.3

147.2

Harvested Acres

87.375

86.89

84.56-87.72

88

83.981

 

 

 

 

 

 

Soybeans

3.015

2,993

2,935-3,104

2,971

3,094

Soybean Yield

39.6

39.6

38.9-41.0

39.3

41.9

Harvested Acres

76.104

75.56

74.70-75.90

75.693

73.776

 

 

 

 

 

 

Trade Estimate for U.S. 2013 Ending Stocks

 

 

 

USDA

Average

Range

2013

2012

Wheat

716

741

637-792

754

743

Corn

602

647

489-760

647

988

Soybeans

135

135

114-186

130

169

 

 

 

 

 

 

Trade Estimates for US Winter Wheat Acres

 

 

 

USDA

Average

Range

2012-13

2011-12

All Winter

41.8

42.585

41.700-44.650

41.324

40.646

Hard Red

29.1

30.296

29.900-31.000

29.863

28.480

Soft Red

9.42

8.898

8.217-10.000

8.120

8.561

White

3.27

3.474

3.300-3.920

3.350

3.360

 

Sign-Up

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 1/8/13

Jan 08, 2013

Grains and oilseeds closed mixed after a choppy trading session.  The funds have started their rebalancing which supported soymeal and Kansas City wheat while they sold corn, soybeans, Chicago wheat and soyoil.  Corn managed to hold support which may be attributed to the fact that we are once again competitively priced in the world market.  We have no major changes to our current hedge recommendations.

Soybeans had an intra-day market surge after rumors of China buying (up to 6) cargoes of beans started to circle. As always we want to wait for confirmation from the USDA before accepting these statements as fact. After we get through Wednesday and Thursday’s fund rebalancing all eyes will shift back to the January USDA reports.

Trade Estimates for Friday’s USDA Reports

Trade Estimates for US Dec. 1 Stocks    
  Average Range Dec 1, 2011 Sept 1, 2012
Wheat 1,684 1,553-1,750 1,663 2,104
Corn 8,219 8,000-8,750 9,647 988
Soybeans 1,981 1,800-2,100 2,370 169
         
Trade Estimate for US Crops      
  Average Range 2012 2011
Corn 10,650 10,325-10,800 10,725 12,358
Corn Yield 122.6 121.3-125.0 122.3 147.2
Harvested Acres 86.89 84.56-87.72 88 83.981
         
Soybeans 2,993 2,935-3,104 2,971 3,094
Soybean Yield 39.6 38.9-41.0 39.3 41.9
Harvested Acres 75.56 74.70-75.90 75.693 73.776
         
Trade Estimate for U.S. 2013 Ending Stocks    
  Average Range 2013 2012
Wheat 741 637-792 754 743
Corn 647 489-760 647 988
Soybeans 135 114-186 130 169
         
Trade Estimates for US Winter Wheat Acres    
  Average Range 2012-13 2011-12
All Winter 42.585 41.700-44.650 41.324 40.646
Hard Red 30.296 29.900-31.000 29.863 28.480
Soft Red 8.898 8.217-10.000 8.120 8.561
White 3.474 3.300-3.920 3.350 3.360

Friday is one of the most important report days of the year as it sets the tone for early 2013 trading.  The USDA will release their final acreage and bushels for 2012, Winter Wheat Seedings, and the December 1st grain stocks.  The January reports have resulted in a limit move in corn 4 out of the last 5 years!  Final acreage, final yield, a full quarter of demand, and estimating total bushels in transit make it almost impossible to get an accurate guess for final quarterly stocks in December for corn and soybeans.

Informa’s estimates for 2012 corn and soybean production are still much higher than the current USDA estimates. 

·         Informa corn production estimate = 10.8 billion USDA currently at 10.725

·         Soybean production estimate at 3.04 billion USDA currently at 2.971

Corn exports have been extremely dismal and ethanol’s production pace hasn’t been great either.  We believe the market has done its job rationing demand and we shouldn’t see an overly bullish response for corn unless it comes from lowered production.  With that being said we have already had a significant correction in the last 30 days and are once again competitive in the world market.

Soybean export pace has been running at a record from strong Asian demand, despite the recent cancellations.  Crush has been running very strong as well.  Any bullish market surprises would have to come in lowered production in my opinion because the strong demand has already been noted by the market.

Techincals

March Corn is in a downtrend and looks technically "bearish" but we are coming off of oversold levels.

March Corn

March Soybeans also in a "bearish" downtrend.  They have made a double bottom but watch out if that level is breached again.

March Soybeans

March Wheat has had the largest selloff and is very oversold.  Wheat techincals are still pointing lower but if an upside breakout does occur we expect it to be strong.

March Wheat

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EHedger 

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 1/4/13

Jan 04, 2013

Grains and oilseeds closed lower again and lower on the week.  March wheat has had negative weekly closes for 6 weeks in a row.  Soybeans continued their downtrend from this week’s Chinese cancellations.  Corn followed wheat lower on poor demand.  We have no major changes to the current recommendations.

Export sales were poor for corn and contributed to the lower markets.  Today was the first time closing below the 200 day moving average since June 22nd!  Corn is finally starting to fill the gap made over the 4th of July.  Next support can be found at the bottom of the gap at $6.75 ¼.

Front Month Corn (Gap Fill)Front Month Corn

Informa released their estimates for 2012 corn and soybean production which were still much higher than the current USDA estimates.  They have corn production pegged at 10.8 billion which is up from their previous estimate of 10.738 billion and the USDA currently at 10.725.  Informa has soybean production at 3.04 billion bushels compared to 2.925 billion last time and the USDA estimate of 2.971.  These numbers are quite bearish but we will see where the rest of the estimates come in as they are available next week when Dow Jones and Reuters report their analyst polls.

The USDA Grain Stocks report will be released at 11:00 am Friday, January 11th.  The normal time for USDA reports has been 7:30am and this is the first report with the time change.

Weekly export sales data:

Corn                49,100 MTs     Expected Range: 100,000 – 200,000 MTs

Soybeans        496,300 MTs   Expected Range: 200,000 – 400,000 MTs

Wheat             402,500 MTs   Expected Range: 250,000 – 500,000 MTs

Soymeal          53,800 MTs     Expected Range: 125,000 – 250,000 MTs

Soyoil             31,300 MTs     Expected Range: 0 – 20,000 MTs 

 

Favorable weather continues for South America and could make it difficult for soybeans to stay supported.  Monday is expected to be the start of the rebalancing of the funds.  We expect a rather choppy week for price action as non-index-fund traders also reposition for the January reports.  With such large price declines in corn and soybeans recently we could see some short covering ahead of Friday Jan 11th.  These opportunities may be a great time to get your 2013 hedges caught up.  We have a new recommendation for 2013 corn and 2013 soybeans. For a free two week trial of our services including hedge recommendations, please click on the sign-up link below. Have a great weekend!

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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 1/3/13

Jan 03, 2013

Grains and oilseeds closed modestly lower after more soybean cancellations were reported.  March corn settled 1 ½ cents lower at $6.89 ¼, March soybeans 5 ¾ cents lower at $13.86 ½, and March wheat up ¼ of a cent at $7.55 ½.

The USDA reported the cancellation of 315,000 MTs of US soybeans to China which sent soybeans back to their overnight lows again at $13.72 ½.  The soybean strength over the past few months has been heavily dependent on export demand.  The sale cancellations by China have certainly sent unsettling signals to the bulls. Favorable weather in South America also continues to weigh on soybean prices.  With record production potential in SA, the world stocks to usage ratio will look much better in July than it does currently.  This weakness could also be related to pre-fund liquidation in expectation of next week’s rebalancing. In my opinion we still need to see the January 11th stocks report for further direction.  We may have seen a short term technical bottom reached today based on the front month soybean chart. 

Soybeans (Front Month)Front Month Soybeans

The US Dollar Index was exceptionally strong today after the FOMC Minutes.  Some Fed members want to end the QE programs at the end of 2013, well before the prior Minutes report suggested.  Either way it shows some dissention between the officials on what the right policy approach is.  A stronger dollar could have contributed to some of today’s weakness.  We will have to see if this change in sentiment continues to affect the dollar positively.

For a free two week trial of our services please click on the sign-up link below. We wish you a happy and prosperous 2013!

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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 1/2/13

Jan 02, 2013

Grains closed sharply lower today with March corn 7 ½ cents lower, March wheat down 22 ¾, and March soybeans down 17 ¼.

Late last night congress passed the Fiscal Cliff bill which the outside markets viewed as quite positive.  There was a sharp rally on Monday afternoon in anticipation of a compromise and that rally was extended today.  The Dow Jones futures closed up over 300 points on the trading session!

Congress also passed the extension of the Farm Bill including the $1/gallon blender’s credit for biodiesel retroactive for 2012 and for 2013.  These credits were particularly bullish for soyoil and we saw a corresponding rally in the March contract finishing 135 points higher!  With the stock market sharply higher and the dollar sharply lower the opening grain prices were also quite strong.  Within the first half hour of trading it was clear that the rally was slowing and long liquidation appeared to have taken control.  This coincided with a strengthening US Dollar index as well.

What fueled the massive selloff?  Favorable South American weather is certainly not helping support prices.  It could be money flowing out of agricultural commodities and back in the stock market.  It could also be additional producer hedging after the 1st of the year.  The next downside target for March corn is at the 200 day moving average of $6.83.

March CornMarch Corn

March soybeans broke their recent lows and look poised to try and test the November low of $13.56. The outside down day was also a negative short term technical indicator for March soybeans.

March SoybeansMarch Soybeans

March wheat had an outside down day which is short term negative.  Wheat has finally reached its 68.2% retracement level which may slow the selling.  Fund rebalancing starts on Monday and expectations are for a large exit of Chicago wheat futures.

March WheatMarch Wheat

The January 11th report will be the next major indicator for price action in grains.  Until then we could see choppy markets.  Today’s US Dollar Index rally seemed to directly impact grains so continue to watch currencies for flat price direction.

For a free two week trial of our services please click on the sign-up link below. We wish you a happy and prosperous 2013!

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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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