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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.

Soybeans lead grains higher on frost fears 8/24/09

Aug 24, 2009
 
SETTLEMENTS 8/24
         
 
Sep 09 Corn
329 ¼   
+ 7 ½
Dec 09 Corn
335
+ 8 ¾
Nov 09 Beans
1006 ¾
+ 33 ¾
Sep 09 Wheat
471
+ 11 ½
Sep 09 KC Wheat
503 ¼  
+ 9 ½ 
Sep 09 Min Wheat
539  
+ 7
Dec 09 Meal
299.8
+ 9.8
Dec 09 Oil
37.66
+ 0.72
 
 
 
 
 
 
 
 
 
 
 
 





All three grains closed sharply higher. Soybeans were the clear leader today with September closing 57-cents higher and November closing 35-cents higher. Corn and wheat followed late in the day. The main feature was a forecast calling for a possible frost this coming weekend in the upper Midwest. This seems very unlikely; put there is a possibility. A frost/ freeze this early would obviously be devastating, so many people are positioning themselves accordingly. We will likely see this forecast change several times as we head throughout the week, so expect a VERY volatile trade. If you want some protection against a frost, buy some October soybean and/or corn calls to get you through this timeframe. This is the type of “scare” that we should be used to catch up on some sales. There are also some cheap put options that you can buy if you do not want to make any more cash sales. There is now $2/bushel of risk premium in the soybean market (in my opinion). If we see a frost this early, we will likely have a sharp rally from here. If we do not see a frost, and the weather outlook remains good, we will likely see a sharp break ahead of harvest. As a producer, this is a very difficult position. If you are completely unsold, I would either make sales and buy some calls (for upside protection), or I would buy some puts (to protect unsold bushels) at this time. At least this will help give you some comfort over the next month. Please give us a call if you have any questions.

 
 
 











 

 
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COMMENTS (2 Comments)

Anonymous
The crop tour didn't even give state by state estimates because "they don't estimate bean yields, only pod counts" then at the end they come up with a national estimate. I think you should buy soybeans when there isn't a frost and see what happens.
6:26 AM Aug 25th
 
Anonymous
$2.00 risk premium for frost fears already put into market. Give me a break. Other than today all summmer we were told dont worry its still early, perhaps todays up market was more the realization the crop tour lowered yield estimate on soybeans.
9:00 PM Aug 24th
 
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