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June 2009 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 Grains Commentary 6/30/09

Jun 30, 2009
 
SETTLEMENTS 6/30
         
 
July 09 Corn
347 ¾
- 29 ¼
Dec 09 Corn
367 ¼
- 30
July 09 Beans
1225
+ 10
Nov 09 Beans
981
- 2 ½
July 09 Wheat
512 ¾
- 15 ¾
July 09 KC Wheat
572 ¼
- 9 ¼
July 09 Min Wheat
636
- 15 ¾
July 09 Meal
413.2
+ 1.8
July 09 Oil
34.87
- 0.91
 
 
 
 
 
 
 
 
 
 
 
 
 






Overview:
 
Corn closed limit down after the USDA revealed a surprise jump in US planted acreage in this morning’s acreage and stocks update. The USDA also revealed a higher-than-anticipated quarterly stocks figure that added to corn’s woes, while also revealing higher soybean acres and stocks. The full figures of today’s USDA releases are below.

 
Overall, corn took the heaviest hit on the day, but we believe new crop soybeans remain highly vulnerable to pressure as well going forward, and so continue to urge producers to top up sales and hedges during any rallies.
 
In addition to being buffeted by the USDA report, today marked the end of the quarter, so institutional money managers will have been active squaring up positions throughout the session. It’ll be interesting to see whether investors are willing to pour funds back into our arena for July following today’s active decline, or whether they’ve been scared off by the recent volatility. Only time will tell, so Wednesday’s day session will be one to watch.
 
As we noted above, we’ll be releasing a more detailed outlook now that the acreage jigsaw has been somewhat assembled, so look out for that sometime on Wednesday.
 
 
 
 
 
USDA June 2009 Planting Report in millions of acres (released June 30, 2009, 7:30 a.m. CST)
Crop
USDA June 30 Estimate
Average Guess
Range
USDA March 31
Prospective
Plantings
USDA 2008 Final
 
Corn
87.035
83.961
82.474 - 86.000
84.986
85.982
 
Soybeans
77.483
78.121
75.300 - 79.631
76.024
75.718
 
All Wheat
59.775
58.243
57.600 - 58.600
58.638
63.147
 
Spring Wheat
13.772
13.097
12.826 - 13.800
13.304
14.135
 
Durum
2.555
2.389
2.300 - 2.440
2.445
2.731
 
 
 
 
USDA June 2009 Quarterly Grain Stocks Report in billions of bushels (released June 30, 2009, 7:30 a.m. CST)
Crop
USDA June Estimate
Average Guess
Range
USDA March 1, 2009 Stocks
Corn
4.266
4.178
4.064 - 4.321
6.958
Soybeans
0.597
0.585
0.559 - 0.620
1.302
Wheat
0.667
0.670
0.640 - 0.687
1.037
 
 
 
 
Go to http://www.ehedger.com/sign-up/ for a free two-week trial that includes our hedging recommendations, trades of the day, market recaps or to simply open an account.
 
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.
 
 
 

Grains await USDA report 6/29/09

Jun 29, 2009
Grains await USDA report
 
SETTLEMENTS 6/29
         
 
July 09 Corn
377 ½
-6 ¾
Dec 09 Corn
397 ¼
- 7
July 09 Beans
1215 ½
+ 14 ½
Nov 09 Beans
983 ½
- 7 ½
July 09 Wheat
530 ¾
- 3 ½
July 09 KC Wheat
581 ½
- 8
July 09 Min Wheat
651 ¾
- 15 ½
July 09 Meal
410.2
+ 5.2
July 09 Oil
35.73
-0.35
 
 
 
 
 
 
 
 
 
 
 
 
 






July soybeans and July soybean meal closed higher and corn, wheat and new crop soybeans closed lower. Old crop/ new crop soybean and soybean meal spreads were the main features once again today. The June 30th stocks and acreage report comes out tomorrow morning, and the market is awaiting those numbers. The trade is anticipating a bullish stocks figure and increased acres for soybeans, and a bearish stocks figure and fewer acres for corn (estimates below). Even with the possibility of losing too many acres on the report, the bearish demand outlook and good weather outlook has driven corn prices lower. Corn is now on a 75-cent break from the 1st of the month and new crop soybeans are down $1/ bushel. We will have to see what the report says tomorrow, but corn and (new crop) soybeans will need a bullish report to keep prices supported at these levels. Both the stocks figures and acres will be very important tomorrow. I will write a more detailed letter following the report. As always, call if you have any questions.
 


 
 
 
 
Go to http://www.ehedger.com/sign-up/ for a free two-week trial that includes our hedging recommendations, trades of the day, market recaps or to simply open an account.
 
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 Grains Commentary 6/25/09

Jun 25, 2009
 
SETTLEMENTS 6/25
         
 
July 09 Corn
382 ½
- 4
Dec 09 Corn
401 ½
- 5 ¾
July 09 Beans
1196
+ 11
Nov 09 Beans
1002
- 6
July 09 Wheat
533
- 6 ¾
July 09 KC Wheat
592 ¼
- 5 ¼
July 09 Min Wheat
678 ½
- 14 ½
July 09 Meal
397.3
+ 4.8
July 09 Oil
36.54
+ 0.10
 
 
 
 
 
 
 
 
 
 
 
 
 







Highlights:
 
  • Grains, Oilseeds Close Mixed After Quiet Session
  • New Crop Corn Settles At Lowest Level Since April 27
  • Firmer Crude Oil Offers Little Support
  • USDA June 30 acreage report becoming main focus of corn & soy markets
 
The grains and oilseeds markets closed mixed, with old crop soybeans, soy meal and soy oil ending the session firmer while corn and wheat ended lower. Overall volumes were light throughout as traders appear content to count down the clock ahead of Tuesday’s USDA acreage update.
 
The US dollar weakened while crude oil rallied on the day, which normally would have provided a supportive backdrop to the grains and oilseed markets. However, only the soy complex responded positively, and even there only in the old crop contracts.
 
We are still concerned about the health of end users in the agricultural markets, especially in the animal sector where hog production margins continue to deteriorate and livestock profitability remains at risk. With that in mind, the recent price-break in corn will have been welcomed, but we are still awaiting a clear response on the demand side of the equation for signs that we’ve reached a more comfortable level for both buyers and sellers of that crop. It’s quite possible that strong buying may not surface until we’re back below $3.80 in new crop prices, so there’s still potential for more losses here. Further, the weather seems to be panning out favorably after our late start, so we need to start bracing for calls for record yields etc in a few weeks if we continue to get regular rains.
 
Given that potential for more weakness, we encourage producers to look to top up sales and hedges on any further price rallies that we may see in the days and weeks ahead. Next week’s report could provide a bullish surprise in the form of a large planted acreage projection, but we suggest using any resulting rallies as a chance to lock in further sales.
 
On the bean front, we think there’s potential for a more aggressive slide in new crop prices if next week’s acreage figures reveal a jump of more than 2 million acres from the March 31 projections. The beans have put on a hugely impressive price rally since early March, and those higher prices will certainly have purchased more acres than estimated in early Spring. We’re even hearing stories that some farmers who are set to harvest winter wheat are pondering double cropping some beans behind them just to see what return they’ll get if prices stay high. So, again, we are urging producers…
 
As always, please give us a call if you have any questions or for a consultation about your positioning heading into the June report and growing season.
 
Best regards,
 
EHedger
 
 
 
Go to http://www.ehedger.com/sign-up/ for a free two-week trial that includes our hedging recommendations, trades of the day, market recaps or to simply open an account.
 
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 Grains Commentary 6/22/09

Jun 22, 2009
 
 
SETTLEMENTS 6/22
         
 
July 09 Corn
385 ¼
- 14
Dec 09 Corn
405 ½
- 14
July 09 Beans
1151 ½
- 27 ½
Nov 09 Beans
981
- 25
July 09 Wheat
546
- 9 ¼
July 09 KC Wheat
605 ½
- 9 ¼
July 09 Min Wheat
693 ½
- 5 ½
July 09 Meal
377
- 13
July 09 Oil
35.93
- 0.60
 
 
 
 
 
 
 
 
 
 
 
 
 







Highlights:
 
  • US Soybeans 91% planted, versus 90% a year-ago. Corn 70% good to excellent versus 59% a year ago.
  • Export inspections were below estimates for wheat at 13.3 million bushels, above estimates for corn at 38 million (versus 29-33 estimated) and at the top end of estimates for soybeans at 13.4 million. Spring wheat 77% good to excellent, versus 72% a year ago.
 
The grains and oilseeds markets closed lower across the board after a low-key session that saw each of the main agricultural crops start the day under pressure and remain on the defensive throughout. The firmer tone of the US dollar and the softness in crude oil (which closed more than $2.50 lower on the day at around $67.30 a barrel) helped weigh on commodities generally, and look set to be major drivers of the raw materials markets going forward.
 
Overall, it looks as though the recent strong buying spree from investors of nearly all commodities markets has subsided, and now the early waves of profit taking are starting to come through. We have been saying for some time now that without investor interest these crops look very vulnerable to steep setbacks, and so it has proved. Dec corn has lost more than 60 cents a bushel since June 1, while Nov beans have fallen more than $1. More losses could certainly be seen in the days ahead if more investor liquidation emerges.
 
Another major factor impacting our markets is the weather, which has turned quite crop-friendly in the US lately following the very wet and cool spring. The latest forecasts for the US Midwest are for less rain and higher temperatures, which is just what we need for the crops here to develop further. Conditions have also improved in growing regions in Canada, Europe and Australia, so concerns about any major crop development issues should die down.
 
That leaves the market looking more and more at the demand side of the equation, which upon close inspection does not look all that healthy for any industries that use corn or soymeal as a major input. Hog farmers are under particularly intense pressure right now, while cattle feeders are also suffering from razor thin/negative profit margins. This is not an environment that can persist if corn and soymeal are to enjoy firm demand prospects over the coming months, so either the price of those commodities continues to decline or the sale price of meat begins to climb notably. It looks like the former is starting to take place now, but it is clear that there is plenty more room to the downside before profit margins for feeders improves to the degree that would spur growth in those industries.
 
We expect the prices for corn, soybeans and wheat to retain a bearish bias over the near term, but acknowledge that the odd rally heading into the key month-end USDA report on stocks and acreage can’t be ruled out. Indeed, we should expect the occasional rally, but strongly suggest farmers use such price strength as a chance to top up sales and place hedges before the report is actually released.
Overall, the market is anticipating a rise in soybean acres of roughly 2-3 million acres, while corn acres are expected to decline by 750,000-1,000,000 acres or so. We will be releasing an EHedger post-report outlook once the report is digested by the market, so look out for it towards the end of next week.
 
As always, please give us a call if you have any questions or for a consultation about your positioning heading into the June report and growing season.
 
Best regards,
 
EHedger
 


 











 
 
Go to http://www.ehedger.com/sign-up/ for a free two-week trial that includes our hedging recommendations, trades of the day, market recaps or to simply open an account.
 
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 Weekly Grain Wrap-Up 6/19/09

Jun 19, 2009
Weekly Grain Wrap-UP
 
SETTLEMENTS 6/19
         
 
July 09 Corn
399 ¼
- 4
Dec 09 Corn
419 ½
- 4 ¼
July 09 Beans
1179
- 34 ¾
Nov 09 Beans
1006
- 37 ½
July 09 Wheat
555 ¼
- 5
July 09 KC Wheat
615 ¾
- 3 ¼
July 09 Min Wheat
698
- 8 ½
July 09 Meal
390
- 15.4
July 09 Oil
36.53
- 0.42
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 




Corn closed 4-cents lower on the day and 26-cents lower on the week. This is the lowest weekly close since 4/24. After hitting 6-month highs last week on planting worries and a bullish USDA report, corn has since sold off over 50-cents. With the crop now in the ground and growing, the market was forced to look at demand. Weak export demand and a collapsing feed industry was too much for the corn market to handle. The chicken industry has been cutting production for over a year due to poor margins and is currently running about 5% behind a year ago. June is the 22nd consecutive month that the hog industry has been running with negative margins. Currently, producers are losing around $30/head for a combined total of around $60 million/ week as an industry. (The Chinese producer is only losing $20/head!) The U.S. cattle feeder is currently losing around $50/ head. Cattle on Feed came in at 96% (of a year ago) as of June 1st and the Cattle Placed in Feedlots during May was 86% of a year ago. This is the lowest May Placement figure since 1996. The Dairy producer is still losing $100/ month on every cow! Okay, enough with all the bearish news. On the bright side, ethanol margins are finally improving. The recent run in gasoline prices has helped margins to improve to around 30-cents bushel. This is the best since last October. Also, there is still a good chance that we ended up losing acres this spring. The dollar has obviously been under pressure and this has drawn in large sums of money to our markets. If this continues, we could see corn prices hold around these levels. As you can see in the chart below…
 

 
 
            Old crop soybeans closed 35-cents lower on the day and 66-cents lower on the week. New crop soybeans closed 38-cents lower on the day and 70-cents lower on the week. Tight Old crop supplies and a bullish USDA report last week helped drive old crop beans up towards $13 and new crop soybeans to $11/bushel. A late start to planting and the old crop tightness has caused many analysts to estimate a low carryover again next year.   Although this could certainly end up being the case, I would be very cautious on this presumption. First of all, these estimates are based on record demand projections for next year. Again, this could happen but I don’t see the fundamentals (right now) to support this theory. Currently, soybean oil stocks are at record levels. I have already mentioned the situation in the animal sector. So, domestic demand is likely to fall once again next year, so who is responsible for this increase in demand? Currently, the USDA and the Chinese National Grain and Oils Information Center (CNGOIC) are both estimating a decrease in Chinese soybean imports next year. The USDA is estimating a small decrease and CNGOIC is estimating a decrease of 3 million MT. The argument is that soybean meal exports and soybean exports will be huge to compensate for the drought in Argentina this year. Chinese soybean meal usage was down 15% for May versus last year and the Chinese hog producer is losing money due to the Chinese government propping up grain prices. Who is consuming more soybean meal this year than last year? I won’t argue that meal exports won’t be large this fall and winter, but what about next spring? Brazil and Argentina will likely grow another crop next year. Currently, Argentina is projected to increase soybean acres to a record level of 20 million hectares as wheat acreage is expected to decline once again. With normal crops next year, we could see South American production increase by 20 Million MT. What about the U.S.? We will see what the USDA says about soybean acres on the 30th, but right now it looks like acres should increase. The USDA is estimating that global stocks of soybeans will increase by 10 million MT or 20% next year. This is with record demand and without an increase in U.S. acres. As with corn, soybeans are approaching some key technical levels, and will need to hold here to avoid further liquidation. The funds were long 114,000) contracts (570 million bushels) of soybeans and 54,000 contracts (10.8 million tons) of soybean meal.
 
 
Wheat closed 5-cents lower on the day and 29-cents lower on the week. Good weather across the globe (exception being Argentina) has helped the wheat market break as we head into harvest. Large global wheat supplies should keep rallies tempered for now. Export demand has remained weak and this will need to improve after harvest to help the wheat market stage another rally. If corn prices continue to come under pressure in the coming weeks, we could see wheat prices break to new contract lows into July. After harvest, we will need to see how demand and the global wheat markets are faring.
 I know that a lot can change. We could grow a bad crop in the U.S. or bad crop in Brazil or a bad crop in Argentina or have bad crops in all three. I certainly don’t want to be too bearish here, but it seems like everyone is leaning one way. In the long run, I still think…
 
 
Go to http://www.ehedger.com/sign-up/for a free two-week trial that includes our hedging recommendations, trades of the day, market recaps or to simply open an account.
 
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.
 
 
 

Favorable weather outlooks drives grains lower; old crop soybeans the exception 6/18/09

Jun 18, 2009
 
SETTLEMENTS 6/18
         
 
July 09 Corn
403 ¼
- 4 ½
Dec 09 Corn
424
- 4 ¾
July 09 Beans
1216 ¾
+ 10 ½
Nov 09 Beans
1045 ½
- 4 ½
July 09 Wheat
561 ½
- 4 ½
July 09 KC Wheat
619
- 3 ¾
July 09 Min Wheat
706 ¾
- 4 ½
July 09 Meal
405
+ 4.6
July 09 Oil
36.92
- 0.18
 
 
 
 
 
 
 
 
 
 
 
 
 
 




Old crop soybeans and old crop soybean meal closed higher; everything else closed lower. Ideal weather forecasts weighed on corn, new crop soybean and wheat prices while decent soybean sales and strong soybean meal exports kept the old crop soybeans and meal supported. The tight old crop soybean outlook combined with fund liquidation of the old crop/new crop spreads is causing the soybean spreads to whip around violently. Yesterday, old crop soybeans lost over 20-cents to new crop during the day and today they gained nearly 20-cents. Good weather outlooks for the next two weeks and weak feed demand outlooks are pressuring corn and soybeans. Tight soybean stocks are keeping old crop prices supported on breaks. These two fundamental differences are keeping prices close to several technical levels. With the highly anticipated June 30th report just around the corner, many traders are adjusting their positions. The general outlook is for a tight old crop stocks figure, and increase of 1-2 million soybean acres and a decrease of 1 million corn acres. Hopefully we will get one more selling opportunity before the report for new crop corn and soybeans. For those of you who did get caught up on sales already, I would look to buy some additional corn calls as Dec. corn breaks from here. Technically, $4.10 is a strong support level in the December futures. Hopefully this will be able to hold before the report. I cannot stress strongly enough that a producer should not go into this report without any downside protection for corn and soybeans. Give us a call if you need any help getting positioned before the report.
 

 
 
Go to http://www.ehedger.com/sign-up/ for a free two-week trial that includes our hedging recommendations, trades of the day, market recaps or to simply open an account.
 
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.
 
 
 

Corn and soybeans sell off sharply 6/15/09

Jun 15, 2009
 
SETTLEMENTS 6/15
         
 
July 09 Corn
406
- 19 ½
Dec 09 Corn
427 ¾
- 20
July 09 Beans
1197
- 48 ½
Nov 09 Beans
1024 ¾
- 51 ¾
July 09 Wheat
575 ¼
- 9 ½
July 09 KC Wheat
631 ¾
- 5 ¼
July 09 Min Wheat
720
- 12 ½
July 09 Meal
405.3
- 17.4
July 09 Oil
36.62
- 0.54
 
 
 
 
 
 
 
 
 
 
 
 
 




 
Corn closed 20-cents lower, Soybeans closed 50-cents lower and wheat closed 10-cents lower.   NOPA crush came in at 142 million bushels, which was 5 million above estimates. This kept old crop beans supported early, but was not enough by mid-day. Planting progress came in around expectations with soybeans 87% planted. This compares with 83% last year and 92% average. Soybeans were rated 66% Good to Excellent versus 56% last year and 63% on average. Corn was rated 70% G/E versus 69% last year and 67% average. Wheat was 9% harvested versus 16% last year and 19% average. The outside markets closed sharply lower and the Dollar closed sharply higher.
With planting wrapping up in corn and soybeans and wheat harvest underway, our markets came under pressure today. Cattle and hog prices continue to collapse and this is pressuring corn and meal prices as well. Animal numbers continue to decline. Once hog and cattle numbers decline, it takes AT LEAST 9 months to start building those herds back up. So even if feeding margins came back tomorrow (and they’re not even close) and feeders decided to expand, it wouldn’t be until next year that we would see that feed demand pick back up for corn and soybeans. With record demand currently forecasted by the USDA, we should see those figures adjusted in the coming reports. Without the support of the outside markets, our markets could remain under pressure. Money can certainly continue to enter our markets, but in the end the fundamentals will determine price. 
The next major report will be the June 30th report. Both the stocks figures and planted acres will be important. With a tight situation expected in the old crop soybeans, the stocks figure will very important. Equally important for soybeans will be the acreage estimate. A lot of things have changed since the last USDA estimate and it will be important to see how the farmer has responded to these changes. If old crop soybeans continue to sell-off, new crop soybeans will start focusing on the acreage situation. With the possibility of an increase in acres, the soybean market could continue this break as we head into the report. The acreage estimate will also be important for the corn market. Weakening demand has caused the corn market to sell-off sharply in the past week. If this trend continues, I would still look to buy some additional calls before the report. The possibility of losing too many acres should help the corn market find support before the report. I would…
Wheat continues to break as we head through harvest. If corn and soybeans remain weak, we should continue to see wheat prices head south. Large global stocks and weak U.S. demand should continue to weigh on prices. If money continues to invest in commodities, we should continue to see 25-30 cent rallies. These rallies should continue to be sold at least for now. As a producer you should…  Please call if you have any questions.













Go to http://www.ehedger.com/sign-up/ for a free two-week trial that includes our hedging recommendations, trades of the day, market recaps or to simply open an account.
 
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 Weekly Grain Wrap-Up 6/12/09

Jun 12, 2009
Weekly Grain Wrap-Up
 
SETTLEMENTS 6/12
         
 
July 09 Corn
425 ½
- 15 ½
Dec 09 Corn
447 ¾
- 15 ½
July 09 Beans
1245 ½
- 21 ½
Nov 09 Beans
1076 ½
- 13 ¼
July 09 Wheat
584 ¾
- 10
July 09 KC Wheat
637
- 7 ½
July 09 Min Wheat
732 ½
- 1 ½
July 09 Meal
422.7
- 5.3
July 09 Oil
37.16
- 1.04
 
 
 
 
 
 
 
 
 
 
 
 
 
 


 
Corn closed 15 cents lower on the day and 19 cents lower on the week. Concerns over planting delays, a weak U.S. dollar and investment money entering the commodities all helped push corn to the highest levels since last November. After a bullish report on Wednesday, the corn market started to take in profits. With the crop being planted, the market started to focus on the struggling animal sector. Heavy liquidation in the hog industry and an expected sharp drop in feedlot placements for cattle are weighing on the corn market. A weak dollar and the possibility of losing additional acres on the June 30th report is keeping the market supported. This is typically a very difficult time of year for the grain markets to rally. Once the corn starts growing and looking green, the market will want to sell off. This could make corn vulnerable for another round of selling next week. As we approach the end of the month, I still expect corn to find some more buying interest. If we lose too many acres, corn will be very sensitive to any hints of bad weather around pollination. On the other hand, if acres are unchanged on the report, the corn market will have a difficult time at these levels. The wheat market is selling off sharply as we head into harvest.  Large supplies of wheat should cause cash wheat prices to break in order to gain feed demand. With a struggling feeding sector, we could see low-quality wheat trade at a discount to corn. This could further pressure corn prices if the report is a “non-event.” Overall, I still think…
 
Old crop soybeans closed 21 cents lower on the day and 25 cents higher on the week. New crop soybeans closed 13 cents lower on the day and 15 cents higher on the week. Tight old crop soybeans and a strong old crop soybean meal market lead the soy complex higher once again this week. After a bullish report, soybeans made new highs for the move led by old crop soybean meal. After trading nearly limit up yesterday, soybean meal and old crop soybeans sold off sharply. Old crop supplies will likely remain tight for the remainder of the summer, but new crop soybeans could start to separate from them. Once the funds finish “rolling” from old crop to new crop, we should see the new crop soybeans act on their own accord. The June 30th report will determine where the soybeans need to head from here. We will see what old crop stocks are as well as new crop acres. The potential for a large increase in acres could pressure the soybean market over the next two weeks. Global production is expected to rise next year, raising ending stocks by an estimated 23%. This is with high demand estimates and without an increase in U.S. acres. Obviously, things can change, but this is something that shouldn’t just be ignored. As a producer, I would …
 
Wheat remains under pressure as we head into harvest. Wheat closed 10 cents lower on the day and 39 cents lower on the week. A bearish report on Wednesday helped wheat continue its break ahead of harvest. Demand remains weak for wheat and global and U.S. supplies look to remain large. Weather looks good for wheat in all areas except Argentina. If new money continues to flow into commodities, we should continue to see 15-cent to 30-cent wheat rallies. These should be viewed as selling opportunities as we head into harvest. After harvest, we will need to see how -- or if -- demand picks up and what corn and soybean prices do. You should…
 
 
 
 
Go to http://www.ehedger.com/sign-up/ for a free two-week trial that includes our hedging recommendations, trades of the day, market recaps or to simply open an account.
 
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.
 
 
 

July soybeans and soybean meal explode; drag corn and new crop soybeans along 6/11/09

Jun 11, 2009
 
SETTLEMENTS 6/11
         
 
July 09 Corn
440
+ 4 ¼
Dec 09 Corn
462 ¼
+ 4 ¼
July 09 Beans
1268 ¾
+ 22 ¾
Nov 09 Beans
1089 ¼
+ 10
July 09 Wheat
593 ¼
- 2 ¾
July 09 KC Wheat
644 ½
- 3 ½
July 09 Min Wheat
730 ½
+ 4
July 09 Meal
427.2
+ 13.8
July 09 Oil
38.14
- 0.47
 
 
 
 
 
 
 
 
 
 
 
 
 






Corn and soybeans closed higher; wheat closed lower. Old crop soybeans and soybean meal led the rally once again. July meal has been on fire and traded only $2/ton off of the contract high set back last July. Tight old crop soybean stocks and a shortage of “high protein meal” are fueling the rally. Old crop/ New crop spreads made new highs in both soybeans and soybean meal today. The dollar was also sharply lower today and this added new buying to all of the commodities. Corn, wheat and new crop soybeans were also sharply higher until a sell-off late in the day. Demand outlooks continue to worsen as margins dive deeper into the red with every passing day. More and more stories of hog producers shutting down continue to enter the news wires. Eventually, this will matter but for now the market is more focused with the stock market and weak U.S. dollar. Old crop soybeans and soybean meal are their own animals. The market is trying to make sure that enough demand is rationed in the old crop. The problem is that new crop prices are trying to keep up. This is rationing demand across the board. With record demand written down in almost every S&D that I see published, I think we might be getting way ahead of ourselves. I still think you want to be heavily protected in corn, soybeans and wheat before the end of the month.
 As long as money continues to enter our markets, the grains can continue to rally despite any underlying fundamentals. However, this is very hard to forecast. Even if futures continue to rally, demand will eventually matter for the cash markets. If demand gets bad enough, the cash markets will stop following the futures markets. Although we are not at this point, it is something to keep in mind. Basis levels are still strong in most areas of the belt. As you make cash sales, make sure to lock in your basis if it is at a good level.
 
 
 
Go to http://www.ehedger.com/sign-up/ for a free two-week trial that includes our hedging recommendations, trades of the day, market recaps or to simply open an account.
 
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 Grains Commentary 6/10/09

Jun 11, 2009
 
 
SETTLEMENTS 6/10
         
 
July 09 Corn
435 ¾
- 8 ¼
Dec 09 Corn
458
- 8 ¼
July 09 Beans
1246
+ 2 ½
Nov 09 Beans
1079 ¼
+ 6 ¾
July 09 Wheat
596
- 17 ¾
July 09 KC Wheat
648
- 17 ½
July 09 Min Wheat
726 ½
- 16 ½
July 09 Meal
413.4
+ 5.6
July 09 Oil
38.61
- 0.84
 
 
 
 
 
 
 
 
 
 
 
 
 





Corn and wheat closed lower and soybeans closed higher. The June Supply and Demand report came in around expectations. Old crop soybean stocks were trimmed by 20 million bushels due to an increase in both crush and exports of 10 million each. This dropped the carryout to 110 million bushels. The new crop also dropped by 20 million bushels due to the lower carry-in from old crop. New crop soybean demand still looks way to high to me. 
In the report, the USDA lowered meat production in every sector besides turkey. They also stated that low profitability in the animal sector combined with weak demand for meat should continue to cause producers to cut back production. In response to this, the USDA lowered corn demand and wheat demand. However, the USDA left soybean demand unchanged for next year. The USDA has soybean crush rising by 25 million bushels next year. Domestic meal consumption is estimated to rise by 300,000T. Why would demand for every other feed ingredient decrease next year except for soybean meal? The two largest consumers of soybean meal are hogs and poultry. Both sectors have been cutting production as margins continue to dive deeper into the red. Old crop soybeans are more than likely going to remain in a tight situation for the remainder of the year. This bullish sentiment has spilled over into new crop soybeans. The rationing that is taking place right now will have major implications for ’09-10 demand. It doesn’t take a lot of imagination to see new crop demand drop by 150 million bushels next year for soybeans. If acres are to increase in the June 30th report, we could easily see the ’09-10 carryover well over 300 million bushels if not 400 million. I know that we still have to grow the crop, and if we have a drought this summer we will probably keep going higher. I also know that things can change, but right now the demand figures look very optimistic.
Corn has the most bullish fundamentals for new crop, in my opinion. Although I think weakening demand will ultimately drive prices lower, the possibility of losing 2 million corn acres to soybeans is more important right now. If this happens, we could be looking at a carryout below 1 billion bushels. This will keep corn very nervous on any additional weather scares this summer. The USDA has already factored in lower feed demand for corn next year (unlike soybeans) and I think this will give the corn market less “wiggle room” than soybeans. With the crop now mostly planted, we could see an additional selloff over the coming weeks. If this happens, I expect corn to find support as we get closer to the June 30th report. 
The report was bearish for wheat. Even with a crop that is 500 million bushels less than a year ago, the stocks only decrease by 25 million bushels. Demand remains weak, and this should cause the wheat market to struggle on rallies, especially as we head into harvest. Wheat is on a large break, so we could certainly be due for a rally, especially if the funds continue to pour money into our markets. So far, we have not seen any signs that they are not still investing, so I would expect to see plenty of selling opportunities. If the money does slow down, wheat is probably very overpriced at these levels. As a producer, you should be hedged as we head into harvest.
 
 
 
 
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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.
 
 
 

EHedger Grains Market Commentary 6/9/09

Jun 09, 2009
 
SETTLEMENTS 6/09
         
 
July 09 Corn
444
+ 9
Dec 09 Corn
466 ¼
+ 8 ¼
July 09 Beans
1243 ½
+ 11
Nov 09 Beans
1074 ½
+ 22 ¾
July 09 Wheat
613 ¾
+ 15 ¾
July 09 KC Wheat
665 ½
+ 12 ¾
July 09 Min Wheat
743
+ 24 ¾
July 09 Meal
407.8
+ 6.1
July 09 Oil
39.45
+ 0.05

















Corn, wheat and soybeans all closed sharply higher. The dollar was sharply lower and the commodities markets rallied in response. Money continues to pour into commodities and on any given day, the amount of buying (or lack there of) is the main driver of price. There is a USDA Supply and Report tomorrow morning. Most people are looking for the USDA to cut ending stocks for corn and soybeans (estimates are below). I will write a more detailed comment tomorrow after we see what the USDA estimates for next year’s Supply and Demand.






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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.


EHedger Weekly Grain Wrap-Up 6/5/09

Jun 05, 2009
Weekly Grain Wrap-UP
 
SETTLEMENTS 6/05
         
 
July 09 Corn
444
- 4 ½
Dec 09 Corn
467 ½
- 4
July 09 Beans
1225 ½
- 4 ½
Nov 09 Beans
1061 ¾
- 19 ¾
July 09 Wheat
623
- 12 ¼
July 09 KC Wheat
675
- 15
July 09 Min Wheat
743 ½
- 17 ¾
July 09 Meal
396
- 3
July 09 Oil
39.73
- 0.61
 
 
 
 
 
 
 
 
 
 
 
 
 
 





Corn, soybeans and wheat all closed lower today. After an extremely volatile week Dec corn closed 8 cents higher on the week, Dec wheat 10 cents lower, and Nov soybeans were basically unchanged. This volatility should continue the rest of the month. We have seen good progress in plantings recently but the bean market will be closely watching Monday’s planting progress report. Also, the market should see some positioning ahead of Wednesdays USDA’s S&D report. Furthermore, everyone has their eyes on the acreage report at the end of the month, which should have a large impact on the overall market direction. If this was not enough, the extremely volatile outside market should also continue to have a large impact on the grain markets.
 
Corn has been in a large, sideways range since last October and is now at the top of that range. Corn has been torn in two directions. Weak demand and large farmer ownership has been weighing on corn rallies and a wet spring, weak dollar and strong outside markets have all supported corn on breaks. With most of the corn now planted, there should continue to be corn for sale above the market. If the new buying slows down, we could see a nice setback in corn as we head into June. Soon, the corn will be knee-high and people will be talking about "how good the crop looks"...just like every other year. By mid to late June however, the market will start looking towards the June 30th report to see how/if acres have changed since the Planting Intentions report. The possibility of losing corn acres should keep corn supported on any large breaks until then. Although demand is currently taking a back seat, eventually it will matter. Hogs and cattle are hovering prices and continue to struggle. This is causing further herd liquidation in the hog market. The cattle industry has not seen the liquidation yet, but that could happen soon. Margins continue to fall deeper and deeper into the red. The chicken producer has been liquidating for a year and the dairy industry is in ruins. So, if the corn market runs up to $5 or higher on production fears and/or new buying, a producer should take advantage. A sharp run-up from here would likely cause the cattle industry to start liquidating the herd size. So, even though I understand why we could see corn prices rally over $5 this summer, I do not see how we can keep prices there unless something changes. Once we liquidate animal numbers, it takes time to build them back up.
 
            Nov Soybeans took out the recent highs to start the week but closed unchanged after an extremely volatile week. Soybeans have now rallied $4/bushel since last December! Relentless Chinese buying, a bad Argentine crop, strong commodities markets and a sharp reduction in U.S. acres all led to the rally.   June will be a very important month for the soybean market. China has been supporting their domestic prices by stockpiling nearly 7 million tons. This has caused the Chinese crusher to import cheaper soybeans. Because Argentina harvested a crop that was 35% less than originally thought and the farmer refused to sell soybeans due to high export taxes, Brazil and the U.S. had to make up the difference. Week after week of strong sales to China, left the soybean market no other choice but to ration demand. The soybean market inverted sharply and remains inverted in all contracts through November of 2010. With the Planting Intentions report showing a sharp drop in total acres, a tightening '08-09 carryover caused many to raise demand forecasts and lower the carryout for the '09-10 crop year. So now what? The Chinese have said that they will buy up to 7 million tons of domestic soybeans through June 1. Now that the Chinese crop is planted, does the government release some reserves to help the domestic hog and chicken producer and/or roll some of their purchases to new crop to take advantage of the large discount? Most of the large Chinese purchases have been for new crop lately, so we will have to see what happens this month. 
On June 30th, we will get the next acreage estimate from the USDA. Did soybean acres increase since the March Intentions report? The market has tried its hardest to get all the acres it can, so I would think acres would increase in the report. Corn has rallied over 80-cents since the Planting Intentions survey, soybeans have rallied $2.70/bushel and spring wheat has rallied over a $1.80/bushel. Can't a farmer make money planting $4.50 corn, $10.50 soybeans or $7.50 spring wheat? If so, why would he let millions of acres go fallow? If the farmer did decide to plant these acres, wet weather in the Delta, Eastern Midwest and Northern Plains this spring should have caused the majority of these acres to go to soybeans. We will have to wait and see what the report shows, but once again, June will be a very important month for the soybean market.
 
Wheat was sharply higher to start the week but actually set back to close lower on the week.   Worries over spring plantings combined with a large influx of capital fueled the rally this month. Inflationary hedges have caused funds to buy all commodities. One of these commodities is wheat. With such a small crop size relative to the open interest, it is difficult for the wheat market to absorb such large amounts of buying. Even with demand remaining weak, good weather around the globe and the U.S. crop close to being harvested, the SRW market was able to rally nearly as much as the old crop soybeans this month. Without new money continuing to pour in, wheat should have a very sharp break from these levels as we head into harvest. However, that is a very large "if". In these situations, the SRW contract becomes useless as a hedging mechanism. The CFTC and CBOT have been working on fixing the situation, and hopefully the changes that we see in July (increasing deliverable stocks by 80 million bushels and increasing storage costs) will help. 
 
 
 
 
 
Go to http://www.ehedger.com/sign-up/for a free two-week trial that includes our hedging recommendations, trades of the day, market recaps or to simply open an account.
 
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.
 
 
 

Soybeans make new highs 6/04/09

Jun 04, 2009
 
 
SETTLEMENTS 6/04
         
 
July 09 Corn
448 ½
+ 16
Dec 09 Corn
471 ½
+ 16 ½
July 09 Beans
1230
+ 48
Nov 09 Beans
1081 ½
+ 34 ½
July 09 Wheat
635 ¼
+ 17 ¾
July 09 KC Wheat
690
+ 18 ¼
July 09 Min Wheat
761 ½
+ 28
July 09 Meal
399
+ 19.5
July 09 Oil
40.34
+ 1.09
 
 
 
 
 
 
 
 
 
 
 
 
 




 
Corn, wheat and soybeans all closed sharply higher. The grains were able to rally today despite weak exports sales and improved weather forecasts this morning. All of the commodities were sharply higher today and this “trumped” everything else. Money continues to pour into our markets and this is driving prices higher. Eventually the fundamentals will matter, but right now money flow is determining prices. No matter how you slice it, the markets closed strong today. Soybeans closed on fresh highs for the move and corn closed just below them. Wheat was the weakest today, but if more money comes in tomorrow wheat could certainly rally back to the highs. I do not know how much money will enter our markets, or how long it will last. If money continues to push prices higher and IF fundamentals continue to worsen, than cash will need to disconnect from futures. End-users are going out of business, and eventually something will need to change. If prices for beef, chicken and pork don’t rise and allow producers to “pay up” for high priced grain than cash prices will need to fall. If the market continues to rally because of “outside” influences, than futures and cash prices may head in opposite directions. Basis levels are very good for many areas of the belt. If your basis levels are good, I would avoid leaving your basis “open”. There is no need to take on the extra risk. 
 
 
 
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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.
 
 
 

Grains close sharply lower 6/03/09

Jun 03, 2009
Grains close sharply lower
 
SETTLEMENTS 6/03
         
 
July 09 Corn
432 1/2
- 17
Dec 09 Corn
455
- 17 ¾
July 09 Beans
1182
- 27
Nov 09 Beans
1047
- 35 ½
July 09 Wheat
617 ½
- 52
July 09 KC Wheat
671 ¾
- 47 ¼
July 09 Min Wheat
733 ¼
- 59 ¾
July 09 Meal
379.5
- 8
July 09 Oil
39.25
- 1.25
 
 
 
 
 
 
 
 
 
 
 
 
 
 




Corn closed higher, wheat and soybeans all closed sharply lower. A rally in the dollar and weaker stock market helped trigger a sell-off in commodities. This combined with liquidation of animal herds helped pressure prices today. Wheat closed nearly limit-down and corn and soybeans closed near the lows for the day. Obviously the funds could come right back in tomorrow and rally the market, but we could be set for a large break. Collapsing hog prices are causing many producers to liquidate. With animal numbers already falling in the poultry, dairy and hog industries it will be very hard to see demand increase this year. Many analysts have large increases in demand in their ’09-10 balance sheets. This is how they come up with a sub-200 million bushel carryout in soybeans and a 1 billion bushel carryout in corn. I am not saying that the carryovers next year will not end up being at those levels. I am only saying that we will not have those carryouts because of record domestic demand, at least not at these prices.   That being said, I still think that corn will have the most support on large breaks from here. Until we see what the June 30th acreage report says, it should be hard for Dec. corn to break under $4. 
November soybeans and wheat, on the other hand, could have substantial sell-offs in the next 30-45 days in my opinion. Wheat rallied over $1.50/ bushel right before heading into harvest. Fundamentals remain bearish and the market has added 50,000 contracts to Open Interest since 5/22/2009! After today’s break, July futures are only 5-cents higher than before they added those 50,000 longs. Again, a wheat producer should sell cash and buy HRS calls.
 Soybeans have already priced in a “tight” situation for both old and new crop soybeans (This may have been the first time in history the soybean market was “inverted” through the entire complex for 18 months out). Old crop soybeans are likely to remain tight this year, but new crop soybeans could be a very different situation. The tightness in old crop soybeans has forced the market to ration domestic demand. With soybean oil stocks building and animal numbers falling, soybean meal and soybean oil are likely over-priced for new crop. New crop soybeans have rallied over $2.50/bushel since the Planting Intentions survey was conducted last March. This combined with a wet spring points to more acres. Add 2 or 3 million more acres to the mix and soybeans look very over-priced. Obviously weather will still be very important and we still need to see what the USDA writes down for acres. However as a producer, I would not want to have the majority of my new crop soybeans un-priced or un-protected.
 
 
 
 
 
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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.
 
 
 

Grains closed mixed 6/02/09

Jun 02, 2009
 
 
SETTLEMENTS 6/02
         
 
July 09 Corn
449 ½
+ 3 ¾
Dec 09 Corn
472 ¾
+ 3 ½
July 09 Beans
1209
- 9 ½
Nov 09 Beans
1082 ½
-3 ½
July 09 Wheat
669 ½
- 5
July 09 KC Wheat
719
- 7
July 09 Min Wheat
785 ½
- 9 ½
July 09 Meal
387.5
- 3.3
July 09 Oil
40.50
+0.05
 
 
 
 
 
 
 
 
 
 
 
 
 




 
Corn closed higher, wheat and soybeans closed mixed. A lack of fresh news and some liquidation weighed on prices today, but the weak dollar once again helped prices recover late in the day. Most of the buying came in the deferred months today and this was probably in response to “investment” type buying. The differed contracts are discounted in both corn and soybeans. If you want to buy commodities because of inflation, buying these contracts makes the most sense. There are also a lot of people “bull spread” soybeans and this is unwinding as the funds begin to “roll” positions from old crop to new crop. Cattle and hog prices were sharply lower once again today, with hog prices closing “locked” limit down. With margins collapsing over the past several months- year, many hog producers are finally “throwing in the towel”. Cattle margins are also diving deeper into the red and this may be the next sector to be forced into liquidation. So, although I still believe grain prices can continue this rally, we need to realize the total “demand destruction” that is occurring. If the grains continue to rally from here, the chance that corn, soybeans and wheat will all make contract lows this year will also increase. The market is trying to ration demand before the crop is even finished being planted. Maybe we have to go a lot higher, I don’t know, but once we force enough end-users out, the market will have a large break.   I know that the dollar is weak and that grains are priced in dollars. However, cattle, hogs and chickens are also priced in dollars and are heading lower. If this relationship does not improve, it doesn’t matter what the dollar is worth.
 
 
Go to http://www.ehedger.com/sign-up/ for a free two-week trial that includes our hedging recommendations, trades of the day, market recaps or to simply open an account.
 
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.
 
 
 

Corn, Soybeans, and wheat post fresh highs 6/01/09

Jun 01, 2009
Corn, Soybeans, and wheat post fresh highs
 
SETTLEMENTS 6/01
         
 
July 09 Corn
445 ¾
+ 9 ½
Dec 09 Corn
469 ¼
+ 10
July 09 Beans
1218 ½
+ 34 ½
Nov 09 Beans
1086
+ 23 ½
July 09 Wheat
674 ½
+ 37 ¼
July 09 KC Wheat
726
+ 39
July 09 Min Wheat
795
+ 23
July 09 Meal
390.8
+ 8.3
July 09 Oil
40.45
+ 1.40
 
 
 
 
 
 
 
 
 
 
 
 
 






Corn, soybeans and wheat all closed sharply higher today. Strong closes last week, a weaker dollar and strong outside markets all helped the grains. The dollar made fresh lows and all of the commodities rallied sharply. The stock market also made fresh highs for the move. Money continues to pour into commodities, and the grains are no exception. (SRW) Wheat was the leader once again today, and I think this tells the story. While soybeans, corn and spring wheat have at least some bullish potential, SRW has outpaced them all despite having the weakest fundamentals. So RIGHT NOW, the biggest fundamental is money flow. Demand continues to weaken further and further on these sharp rallies. Producers continue to liquidate hog herds and feeding margins continue to dive deeper into the red (Hog prices made fresh lows once again today). If the Index funds are going to continue and rally prices, we should see spreads come under increasing pressure. If you have a good to decent basis level and are making cash sales, make sure you lock in the basis. If prices continue to rally from here, we could see basis levels at harvest much, much lower. 
Crop progress came in as expected for corn and spring wheat and was further behind for soybeans. Corn was 93% planted versus 94% last year and 97% average. The market was looking for 90-95% complete. Although some areas will have to re-plant, most areas have finished up planting corn this weekend. The market will be more focused on the next acreage report at the end of June to see if/and or how many acres were lost from the Planting Intentions report. Obviously, this will be very important for the corn market heading forward. If corn loses acres on the report, it will be hard for the market to break too far until we see how the “pollination window” looks. Soybean plantings came in at 66% versus 67% last year and 79% average. This was below expectations of 70-80% complete. Many producers in the Eastern belt are just finishing up on corn plantings and have just started planting soybeans this past week. We should see a sharp jump in soybean planting on next week’s progress report. Although planting progress is important, the June 30th report may be even more important. If and/or how many acres soybeans pick up in this report will be very important. It is always difficult to guess what that report will say, and this year is even worse. In a normal year, a wet spring would naturally lead you to believe there would be a modest increase in soybean acres at the expense of corn. However, not only did we have a wet spring in the Delta, Northern Plains and Midwest, but we also started with a very low acreage number courtesy of the USDA. Today is June 1. I know that the weather could keep some areas wet and unable to plant, but there is still a lot of time to plant soybeans in the areas that are not yet planted. I don’t know how many soybean acres will be planted, but with at least $10 cash soybeans off the combine (for those of you that don’t like when I use CBOT prices),the market is trying it’s hardest to get as many acres as it can.
 
 
 
 
 
Go to http://www.ehedger.com/sign-up/ for a free two-week trial that includes our hedging recommendations, trades of the day, market recaps or to simply open an account.
 
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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