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April 2010 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 Report

Apr 29, 2010
Corn, soybeans and wheat all closed higher. Corn and wheat led the way higher today. Rumors of more corn sales to China helped rally corn prices overnight and this morning. Weekly exports were good for corn and this also helped fuel the rally. The sharp rally in cash corn prices prompted farmers to make old crop sales today and this helped prices set back. Interior basis levels are down 10-15 cents over the past 2 days. This is indication that plenty of old crop corn still remains to be sold. The strong demand should keep prices supported near recent lows and the large supplies should keep prices tempered on large rallies. Wheat saw another round of short-covering and this pushed prices sharply higher by mid-day. Soybeans tried to keep up with corn, but weak export sales and a weak meal market tempered the rally today. The “Head and Shoulders” formation is still intact for December corn. With China buying some U.S. corn and the entire growing season ahead of us, we may see corn prices bottom at these levels for now. Corn remains cheap to wheat and soybeans and without a large break in soybean prices it will be hard for corn to head much lower for now. On the other hand, the growing season if off to a great start and this should make it difficult for corn to sustain a large rally without a weather problem. The July calls that we purchased should give us some nice upside potential if the weather turns for the worst this summer. Options are even cheaper for soybeans and this is giving the producer a very unique opportunity to protect the downside with puts or have some upside exposure with calls. Usually option volatility is much higher when prices are this high (especially as we head into the growing season). Please call if you have any questions. 

Get More From EHedger. Our commentaries are just one part of our whole risk management service. Please go to http://www.ehedger.com/getmore.htmlfor a free two-week trial of our full member website that gives you access to all our hedge and marketing recommendations, educational tools, market snapshots and much more. Also learn about our acclaimed AMMO Program that helps producers optimize their marketing strategies using the premier tools and insights in the industry.  
 
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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 Afternoon Grain Report

Apr 26, 2010
Corn closed a penny lower on the day. Prices started the day strong on rumors that China had purchased 5-7 cargoes from the U.S. over the weekend. So far these rumors are unsubstantiated.  Chinese corn prices remain very high, and the government continues to release corn reserves to “cool” their domestic market. China has been a very strong buyer of DDG’s (Dried Distillers Grain) as they are currently exempt from the large import duty that is put on corn imports. So, to our knowledge this is an untrue story. Planting Progress was released today and the USDA pegged corn plantings at 50% complete! This is above the previous record of 30% set in 2005, last years’ pace of 5% and the average of 22%. Widespread rains over the weekend should help the corn crop to the best start in history. This great start to the growing season should press corn prices lower for now. New crop corn prices remain only slightly above the 2010 lows around $3.75 and we should see prices test these lows and possible break through these lows this week. With large supplies of wheat around and plenty of Old crop corn still left to be sold, look for another leg lower in corn prices.    
 
Soybean closed 1-3 cents lower. Prices opened around 10-cents higher, but were unable to remain in positive territory. The USDA did not release a national total for soybean plantings as the first report will be next week. However, by looking at the State by State breakdowns, soybean plantings look moving along quickly (see below). The soybean market has been on an incredible rally as Managed money traders have built impressive “long” positions over the past several weeks. The large speculator added another 30,000 or so long positions by last mid-week. This puts the “fund” position long well over 100,000 contracts once soybean meal and oil are considered. As long as this buying continues, prices will have a hard time breaking. However, knowing what the “funds” will do is a tough job. With the growing season off to a good start, it should be hard for soybeans at current prices without a weather problem. Brazilian basis levels have finally started to break implying that the record supply down there is finally “hitting” the export market. Chinese importers are reportedly covered through July now and this should slow down our export pace significantly. Weekly exports were about half of last week’s and last year’s figures. Cheap corn and wheat prices should start to weigh on soybean prices as well. While 50% of the corn is planted already, 50% is not planted. The sharp run-up in soybean prices and sharp break in corn prices is incentivizing many producers to plant more soybeans. This is especially true in the “fringe” areas of the Midwest. Whereas Illinois, Indiana and Iowa typically see 200+ corn yields and a “switch” to more soybeans is not likely considering the record planting pace; switching in the other areas of the belt makes a lot of sense. Unfortunately we will not get another acreage report until the end of June. 
 
Wheat closed 17-cents lower on the day. Wheat climbed to new highs for the move before plummeting 30-cents in less than 1 minute! This is reportedly due to a 4,000 contract “sell stop” order that was triggered. This quickly caused wheat to break to $4.49 or 44-cents lower on the day!  Prices quickly rebounded to only 12-cents lower. This is a good example of why it is important to “have your orders in”. Although a rare occurrence these days, these “swipes” happen several times every year. If you have sell or buy targets make sure you put in your orders (GTC orders make sure your orders are working every day until you cancel them).  Crop conditions showed that the wheat crop remains in good shape overall, especially in HRW wheat. The SRW crop still looks poor especially in Illinois and Missouri and this has caused some growers to disc up fields with poor stand in favor of planting corn and soybeans. Besides stories that we have heard from our growers, this was cited in the Missouri state breakdown this afternoon. Current supplies remain plentiful, but this trend will have to be watched. Producers should store wheat and hedge on the futures market. There is a huge “carry” in the futures market and a discount in the basis right now. With the potential for a sharp reduction in the SRW crop, we could see cash prices improve rapidly after harvest. Because of the implementation of the VSR (Variable Storage Rates) forward futures prices are very high. This could present a very unique opportunity for the producer. Please call if you have any questions.
 
Percent Planted
State
2010
2009
5-year    Average
Alabama
7%
0%
9%
Arkansas
24%
11%
15%
Georgia
4%
4%
3%
Illinois
5%
0%
1%
Indiana
12%
0%
2%
Iowa
4%
2%
1%
Kentucky
3%
0%
2%
Minnesota
4%
2%
1%
Mississippi
60%
30%
48%
Missouri
5%
1%
2%
North Dakota
2%
0%
0%
Ohio
13%
0%
5%
 
 
 
 
Get More From EHedger. Our commentaries are just one part of our whole risk management service. Please go to http://www.ehedger.com/getmore.htmlfor a free two-week trial of our full member website that gives you access to all our hedge and marketing recommendations, educational tools, market snapshots and much more. Also learn about our acclaimed AMMO Program that helps producers optimize their marketing strategies using the premier tools and insights in the industry.  
 
Get Organized. Get Ahead. Get EHedger 
 
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.
 

Friday Weekly Grain Wrap-Up 4/23/10

Apr 23, 2010

Corn closed 9-cents lower on the day and 11-cents lower on the week. Short-covering, good end-user buying and “new money” buying helped support corn throughout the week. However, ideal planting conditions throughout the Midwest has helped many producers plant corn at a record pace and this eventually weighed on prices this week. Many producers have reportedly finished planting corn this week and have started on soybeans! Two rain events are supposed to impact the Midwest in the next 10-days. The two events should drop 0.75-3.00 inches over 100% of the Midwest. With such an ideal start to the growing season, it will be hard for corn to hold on to any large rallies. It will likely take a weather problem to help move corn prices higher from here. Although corn demand is strong right now, we are in a supply bear market for now.  

Soybean closed 4-cents lower on the day and 15-cents higher on the week. The soybean market continues to be led higher by money flow and Chinese demand. The Chinese continue to support local prices ahead of planting. This support continues to incentivize the Chinese crusher to import cheaper soybeans. The Chinese government is also supporting their local pork prices to help pork producers deal with high feed prices (also caused by the Chinese government!). These support programs are keeping Chinese soybean imports very high. Ironically, South America is running out of storage capacity. Bin-buster crops are being stored under tarps until they can be exported. The poor infrastructure and extremely large crops has made transportation costs skyrocket. Eventually the record supply in South America will reach China, but right now transportation is the limiting factor. I still believe this is creating a very good opportunity for the U.S. producer. Once the large global supply is “moved around” prices look sharply over-valued. Soybean oil and soybean meal are being supported by export demand as well. Domestic demand remains very weak and without this demand prices should struggle. Strong ethanol production is creating a lot of DDG’s. DDG’s are running about 1/3 the price of soybean meal and this will hurt soybean meal demand. The biodiesel industry is not much better. Without the blender’s credit, soybean oil supplies continue to build. Argentina is the world’s largest exporter of soybean meal and soybean oil in the world. After having a very small crop last year, the U.S. had to make up for this lost export capacity. With a huge crop in Argentina this year, this export demand will also slow significantly. Once this happens, it will be up to our domestic demand to determine the soybean “crush”. I highly recommend taking advantage of current prices. Option volatility remains very cheap and is providing a very unique opportunity to purchase puts and calls for very reasonable prices. Please call if you need any help.
 
Wheat closed 5-cents lower on the day and 3-cents higher on the week. Short-covering was the main “theme” in the wheat market this week. Traditional funds are still holding record short positions and we have been seeing some unwinding of this. Both U.S. and global fundamentals remain bearish and this should eventually help move prices lower.   Export demand remains weak as global supplies continue to undercut U.S. prices. Cheaper corn prices should also continue to weigh on wheat prices here in the U.S. The HRW crop is in some of the best conditions ever while the SRW crop is struggling. There continues to be stories of producers tearing up wheat fields and planting corn and soybeans instead. Cheap cash wheat prices, poor crop conditions and high corn and soybean prices are making the decision easy for some. How widespread of an occurrence is hard to tell, but it is something that could help SRW prices down the road. Wheat acres are also declining in Canada, Australia and in other areas throughout the world in favor of planting higher-priced oilseeds. Eventually this trend should help wheat prices relative to oilseeds, but right now global supplies are just too high.  


 
Get More From EHedger. Our commentaries are just one part of our whole risk management service. Please go to http://www.ehedger.com/getmore.htmlfor a free two-week trial of our full member website that gives you access to all our hedge and marketing recommendations, educational tools, market snapshots and much more. Also learn about our acclaimed AMMO Program that helps producers optimize their marketing strategies using the premier tools and insights in the industry.  
 
Get Organized. Get Ahead. Get EHedger 
 
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.

E Hedger Morning Grain Commentary 4/23/10

Apr 23, 2010







E Hedger Morning Grain Commentary 4/23/10


 

1. Overnight trade was lower for corn, beans, and lower for wheat.

2.  May options expire at today's close.

 

3. Informa pegs 2010-2011 US corn production slightly above last year's record 13.13 bil, beans at 3.342 vs. 3.359, wheat off 8% from last year's 2.2 bil.

 

4. US March durable goods orders fall unexpectedly by 1.3%, the biggest drop since August; but ex-transportation, durable orders jumped 2.8%, the largest gain since December 2007.

 

5. Trading in DDG futures starts Wednesday, Apr 26, 2010; link for info on contract specs :

 

http://www.cmegroup.com/trading/commodities/distillers-dried-grain-futures.html

 

6. Greece formally requests lifeline for aid; details on IMF-EU package still have to be worked out; possible objections could derail the final bailout.

 

7. As of this writing the stock market is unchanged while the dollar index is sharply higher. Crude oil is trading lower while gold is trading $6.00 lower.

 

 

 

 

Get More From EHedger.

 

Our commentaries are just one part of our whole risk management service. Please go to http://www.ehedger.com/getmore.html for a free two-week trial of our full member website that gives you access to all our hedge and marketing recommendations, educational tools, market snapshots and much more.

Also learn about our acclaimed AMMO Program that helps producers optimize their marketing strategies using the premier tools and insights in the industry.

 

Get Organized. Get Ahead. Get EHedger

 

Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. The market information contained in this message has been obtained from sources believed to be reliable, but is not guaranteed as to its accuracy or completeness. Market information may not be consistent with current or future market positions of E Hedger, its affiliates, officers, directors, employees, or agents. Recipients assume the risk of reliance on and indemnify and hold E Hedger harmless for any and all losses, costs, or tax consequences incurred as a result of their use of market information.










EHedger Closing Grain Commentary 4/14/2010

Apr 14, 2010
Market Settlement Change Low High 
May corn 358    5 1/2 351.5 363.75
May wheat 474 3/4 -1 1/4 470.5 482
May beans 969    1    965 976
May soymeal 274.30 -0.90 273.1 277
May soyoil 39.86 0.12 39.68 40.18
June live cattle 92.95 -0.525 92.88 93.80
June lean hogs 77.425 -0.52 84.78 86.05
 
 
Thank you for all who attended the April 9th supply/demand webinar. It is now available on our website (www.ehedger.com) for your review. You can review it by clicking on the icon found on the home page.
 
Grain markets closed mixed for the day. It was an interesting session that saw buyers emerge and push corn 10 cents higher, beans and wheat 6 cents higher at one point. Despite this midday strength, prices backed off into the close and even settled lower in the wheat market. The outside markets were one of the factors for today’s continued strength. The dollar was lower and trading just above the $80 level on thoughts that the US Fed may not raise interest rates. Meanwhile, crude oil was roughly $2 higher and the financial markets were at new contract highs. 
 
The March NOPA crush came out as 149.6 mil bu. with soyoil stocks slightly lower than guesses at 2.738 bil lbs. Soybeans have been led by concerns about South America farmer selling pace and slow export movement. The crop size is still large, but the actual transportation has been slow. Soybean prices are back near the highs since the January supply/demand report. Resistance was met in May soybeans at the 200-day moving average that we talked about in yesterday’s letter. Below is a chart:
 
 
 
We have been hearing many friendly reports of spring fieldwork and planting progress throughout the Midwest. For the most part, weather outlooks will continue to support progress and keep a ceiling on the market. New crop corn will have difficulty sustaining a rally above $4 and the same can be said for Nov beans at $9.50-9.75. The grain market remains in mostly bearish fundamentals, but bullish money flow conditions, meaning that two-sided trade should be expected. Please call us if you have any questions. 

 
Get More From EHedger. Our commentaries are just one part of our whole risk management service. Please go to http://www.ehedger.com/getmore.htmlfor a free two-week trial of our full member website that gives you access to all our hedge and marketing recommendations, educational tools, market snapshots and much more. Also learn about our acclaimed AMMO Program that helps producers optimize their marketing strategies using the premier tools and insights in the industry.  
 
Get Organized. Get Ahead. Get EHedger 
 
Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. The market information contained in this message has been obtained from sources believed to be reliable, but is not guaranteed as to its accuracy or completeness. Market information may not be consistent with current or future market positions of E Hedger, its affiliates, officers, directors, employees, or agents. Recipients assume the risk of reliance on and indemnify and hold E Hedger harmless for any and all losses, costs, or tax consequences incurred as a result of their use of market information.

EHedger Closing Grain Commentary 4/9/2010

Apr 09, 2010
Market Settlement Change Low High 
May corn 345 3/4 -2 1/2 344 352
May wheat 465 3/4 -3 1/2 462.5 478.75
May beans 952 1/4 5 3/4 943.25 963.75
May soymeal 265.30 2.70 261.5 267.7
May soyoil 40.04 0.12 39.82 40.48
Apr live cattle 99.65 0.3 99.58 100.20
Apr lean hogs 76.225 -0.45 76.03 77.5

Thank you for all who attended this morning's webinar on the USDA report.  For those of you who were unable to attend we will be uploading it to our website shortly (www.ehedger.com) for your review.  Also, don’t forget that we have the March 31st USDA webinar available. You can review it by clicking on the icon found on the home page.
 
 
Grain posted a mixed session with corn and wheat closing lower, while old crop soybeans higher and new crop closed lower. For the week May corn was 1 cent higher, May wheat was 10 cents higher, May soybeans was 10 cents higher and Nov soybeans was 10 cents higher. The USDA will begin estimating corn planting pace next Monday. Much of the week’s trade was spent in the aftermath of the March 31st USDA report and in anticipation for todays supply/demand report. Below are the ending stock numbers from the report:
 
 
USDA
Ave. estimate
March
Corn
1.899
1.909
1.799
Soybeans
0.290
0.209
0.190
Wheat
0.950
1.001
1.001
 
 
Corn opened firmly, but closed in negative territory near session lows. The increase in ending stocks was a result of 100 million bushel reduction in the feeding demand. This follows our outlook due to feed competition from abundant wheat supplies, smaller animal numbers, and increased rations of DDG’s from the ethanol production. The estimated world corn carryout was 144.3 mmt vs. 140.3 previously. For the most part this report once again showcased growing stocks and without any spring weather problems it will continue make corn price rallies difficult. 
 
Soybeans had mixed outlooks from the report and thus traded in this fashion. The friendly surprise came from the ending stocks figure, which was left unchanged from the March report at 190 million bushels. Exports were increased by 25 mil bu, yet this was offset by a drop in residual. The fact that the ending stocks were left unchanged caused for immediate buying in the old crop/new crop spreads. July/Nov traded 7 cents higher to $0.25 today. While this number is friendly on paper the fact that world soybean stocks are a record should continue to weigh on prices, especially in the new crop. The estimated world soybean carryout is at 62.96 mmt vs. 60.67 previously. Soyoil and soymeal stocks were left unchanged from the previous report. 
 
Wheat finally saw a small reduction in the US and world ending stocks. USDA raised their estimate of US exports 40 million bushels and feed use 10 million bushels. Also, the world wheat ending stocks were lowered to 195.8 mmt v. 196.8 previously. Demand appears to have slightly picked up at these depressed prices, but it still must be noted that the supplies are abundant. It still looks attractive to store available wheat and sell forward into the market premium. 
 
Today’s report did not offer any real bullish themes for the weeks to come. Old crop soybean figures were friendly, but the massive South American crop along with our planted acreage will continue to pressure strength in the bean market. Fund buying, weather events, and outside markets may allow short term rallies to occur. We continue to believe that these need to be taken advantage of. Please call us if you have any questions.
 
 
Get More From EHedger. Our commentaries are just one part of our whole risk management service. Please go to http://www.ehedger.com/getmore.htmlfor a free two-week trial of our full member website that gives you access to all our hedge and marketing recommendations, educational tools, market snapshots and much more. Also learn about our acclaimed AMMO Program that helps producers optimize their marketing strategies using the premier tools and insights in the industry.  
 
Get Organized. Get Ahead. Get EHedger 
 
Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. The market information contained in this message has been obtained from sources believed to be reliable, but is not guaranteed as to its accuracy or completeness. Market information may not be consistent with current or future market positions of E Hedger, its affiliates, officers, directors, employees, or agents. Recipients assume the risk of reliance on and indemnify and hold E Hedger harmless for any and all losses, costs, or tax consequences incurred as a result of their use of market information.
 
 

EHedger Closing Grain Commentary 4/6/2010

Apr 06, 2010
Market Settlement Change Low High 
May corn 346 1/2  3/4 344.25 349.75
May wheat 463 1/2 10    448.75 470
May beans 944 1/2 8 1/2 932.75 944.75
May soymeal 263.10 1.90 260.5 263.8
May soyoil 39.77 0.42 39.03 40
 
Please join us Friday (April 9th) morning for another free live Webinar! We will be discussing the USDA supply/demand report. Follow these simple instructions to join:
 
 
2. Enter this Webinar ID: 969-909-689
 
Also, don’t forget that we now have the March 31st USDA webinar on our website www.ehedger.com. You can review it by clicking on the icon found on the home page.
 
 
Grains closed higher on the day. Today’s action looked to be the result of short covering, especially in the wheat market which led the gains. Winter wheat conditions were 65% good to excellent vs. 43 % last year in the first crop progress report. Also, Iraq purchased a large volume of wheat, but most of the sales were from Russian and Canadian sources. This shows that US wheat still remains uncompetitive on the world market and that our abundant supplies need to be worked through. However, with funds holding record amount of short positions futures will still be subject to short covering rallies. We continue to recommend storing wheat and selling forward into the premiums. 
 
The focus on corn and soybeans has turned to weather and this Friday’s USDA supply/demand report. The expectations are for increased corn ending stocks and soybean ending stocks of 20-50 mil bu.  This is due to the 60 mil bu of soybeans found on the March 1 stocks.  The latest weather forecasts call for showers midweek and early next week with precipitation increased in the northwest Midwest. Yet, there have been reports of field work and corn planting since last Thursday. While the Midwest still has concerns over wet spots it does appear that we are off to a good start this year. If prices continue lower it will provide us with a unique opportunity, especially in corn, to sell puts against our insurance levels and sold bushels. This will lock in revenue should insurance pay at year’s end or help pay for your initial insurance premiums. Please call us with questions regarding this outlook.
 
 
Get More From EHedger. Our commentaries are just one part of our whole risk management service. Please go to http://www.ehedger.com/getmore.htmlfor a free two-week trial of our full member website that gives you access to all our hedge and marketing recommendations, educational tools, market snapshots and much more. Also learn about our acclaimed AMMO Program that helps producers optimize their marketing strategies using the premier tools and insights in the industry.  
 
Get Organized. Get Ahead. Get EHedger 
 
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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