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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 10/14/10

Oct 14, 2010

Grains were mixed today with November Soybeans finishing 12 cents higher.  December corn and December wheat both finished 2 cents lower.  

 

Corn traded both sides of the market again but failed to hold its early gains. We are probably seeing more profit taking as traders sell corn and buy beans.  NOPA crush came out this morning and it showed better than estimated 124.9 mill bu crushed (expected 116.5). As a result of the extra crushing soyoil stocks were higher than expected at 2.765 mill lbs.

 

The USDA announced the sale of 280,000 MT of US soybeans to China this morning.  Tomorrow we will have export sales in the morning.  Sales have been strong since the USDA report and the market is expecting large export sales numbers.

 

Expected ranges for export sales:

Corn: 1,500-1,800

Wheat: 500-700

Soybeans: 900-1,200

 

Yesterday the EPA approved an increase in ethanol blending up to 15% for cars made after 2007.  They will not approve the E15 fuel for cars made before 2001 at lease not this year.  The real question is what they do with the blending credit and what is the practicality of having multiple blends for multiple cars?  The blending credit is expected to slowly start to decrease but over a period of time.  We expect to know more about this administration’s plans for bio-fuels from USDA secretary Tom Vilsack next week.

 

If this buying spree continues, we could see a shortage of futures similar to the 07 wheat market.  As we learned that year many producers had cash sales on at $5 – 6 and basis went from 50 cents under to 3.00 under.  We are not predicting this will happen but it is something we can try to avoid by not taking the unnecessary risk of leaving the basis open.  This also puts most risk in the elevators hands and leaves the margin up to them.  Please call your broker to discuss strategies for your particular operation.

 

With a battle for acres corn/beans/wheat/cotton could keep feeding off each other through the March planting intentions report.  Having the March/May corn call spreads in place will give us upside potential against current sales.  If you need additional protection, please call your broker for current strategies.

 

 

 

 

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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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