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July 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 Weekly Grain Wrap-Up 7/31/09

Jul 31, 2009
 
SETTLEMENTS 7/31
         
 
Sep 09 Corn
338 ¾  
+ 6 ½
Dec 09 Corn
348 ¾
+ 6 ½
Aug 09 Beans
1134 
+ 5 ¾
Nov 09 Beans
980 ¼  
+ 9 ¼
Sep 09 Wheat
529 
+ 12 ¾
Sep 09 KC Wheat
559 ¼ 
+ 9 3/4
Sep 09 Min Wheat
609 
+ 9 ½
Dec 09 Meal
299.4
+ 2.6
Dec 09 Oil
35.78
+ 0.10
 
 
 
 
 
 
 
 
 
 
 
 
 
 




              Corn closed 7-cents higher on the day and 22-cents higher on the week. A large rally in the soybean market combined with the USDA’s announcement last week of an acreage revision has helped corn prices rally 35-cents off of their lows. The U.S. dollar is making new lows for the move and the stock market continues to rally. This is attracting money into commodities. We saw another round of “end of the month” buying late in the day. We should see additional money enter the markets early next week. Corn has had a significant break and was well overdo for a rally. We are now approaching levels that producers should start getting caught up on sales if need be. I have been waiting for Dec. corn to rally back to the $3.50-3.60 level. Overall, it sounds like the corn crop is getting bigger. This of course can still change depending on how the crop finishes out. If we get through August with cool weather and good rains and avoid an early frost, we should have a very large corn crop. Hopefully the outside markets will help corn stage another rally early next week and allow everyone to get caught up on sales. The market will also want to see what acreage changes the USDA makes on the August 12th report. If the changes are small, we could see corn turn back down and break as the farmer sells the remaining old crop bushels. When this happens, I think it will be time to start covering some sales.
 
August soybeans closed 6-cents higher on the day and $1.13 higher on the week! November soybeans closed 11-cents higher on the day and 67-cents higher on the week. Relentless Chinese buying helped old crop soybeans turn around and post a sharp rally this week. Old crop soybeans still look to be tight in the end and we are starting to see the extreme volatility that is likely to continue as we get closer the “end” of the marketing year. I said early in the week that it would not surprise me to see a sharp rally in August soybeans and that it could pull up November soybeans to the $9.50-9.80 level. Obviously, I had no idea that this would happen in 1 day! Soybeans look very good technically and this has caused massive short covering and new buying all within the past two days. This has put November soybeans back to the highs of my estimate. If we see additional buying next week, it would not surprise me to see November soybeans rally all the way back to $10.25. As a producer you should have orders in from the current price level all the way up to $10.25 to get caught up on sales in the next week or so. Again, we still have to get through August and we still have to avoid and early frost. However, if we finish off the growing season strong in the U.S. and South America expands as aggressively as is forecasted, we could see much lower prices this winter and/or next spring. 
 
                 Wheat closed 12-cents higher on the day and 12-cents higher on the week. Week demand and large global supplies continue to weigh on the wheat market. U.S. prices remain overpriced compared to other key exporters and this is keeping export demand low. A growing HRW crop size and good spring wheat conditions in the U.S. combined with a possible record Australian crop as keeping global production outlooks strong. These factors all helped drive wheat prices to new contract lows by Wednesday. A rally in corn and soybeans however, helped prices stage a 3-day rally at the end of the week. Going forward, I don’t see anything bullish wheat besides the fact that the funds have record short positions. This could certainly cause a large short covering rally at any given time, but overall this will not cause a bull market. Fears of stricter regulations on Index Funds by the CFTC have also weighed on prices. This will certainly need to be monitored as the Index funds hold massive long positions in all of our commodities, and especially large positions in wheat and soybean oil. Look for any large rallies to make sales if you are behind. Have a good weekend and as always, 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.
 
 
 

Beans lead the charge on higher grains market 7/30/09

Jul 30, 2009
 
SETTLEMENTS 7/30
         
 
Sep 09 Corn
332 ¾  
+ 12
Dec 09 Corn
342 ¼
+ 14 ¼ 
Aug 09 Beans
1128 
+ 70 ½
Nov 09 Beans
970 ½  
+ 54 ½  
Sep 09 Wheat
515 ¾  
+ 4 ¼
Sep 09 KC Wheat
549 ½ 
+ 3
Sep 09 Min Wheat
600 
+ 1 ¾
Dec 09 Meal
296.5
+ 14.5
Dec 09 Oil
35.65
+ 1.87
 
 
 
 
 
 
 
 
 
 
 
 
 
 




      Grain futures closed sharply higher today with soybeans leading the charge. Volatility still remains ever present in the commodities markets. Yesterday, August soybeans managed to rally to finish higher on the day despite deferred contracts settling lower. This move gave traders confidence to buy or short cover soybeans overnight ahead of today’s sales figure. Today’s sales were very strong for corn and beans. In addition, private exporters reported a sale this morning to China with 1.8 million tonnes for delivery for 09/10 and 120,000 tonnes of old crop. These strong sells are keeping attention on tight old crop supplies and talk of a “squeeze” in Aug beans. Tomorrow is first notice date for the August contract and the price of August soybeans will be determined by a very small group of buyers and sellers. If August soybeans continue a sharp rally from here and new crop soybeans follow, I would use that opportunity to get caught up on sales if you have not done so already. We know today’s strong close has left the charts looking positive technically, so a further rally cannot be unexpected. Even though the extent of today’s rally was unexpected the current value of today’s prices are at levels recommended to be a scale up seller. The corn market also had a strong day thanks to strength in soybeans, strong financial markets, and crude oil, which nearly erased all of yesterday’s $4 loss. Corn will remain tied to soybeans, but unlike beans positive corn stories still appear limited. Weather for much of the Midwest remains non-threatening and any potential acreage loss looks to be offset by a yield increase. I would look to... Today’s action added a lot of value back to bushels, so be ready and willing to capitalize on the movement. Give us a call to get a plan in place.
 

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 rally sharply; corn and wheat unable to follow 7/28/09

Jul 28, 2009
 
SETTLEMENTS 7/28
         
 
Sep 09 Corn
321 
- 1 ¼ 
Dec 09 Corn
330
- 3 ¾ 
Aug 09 Beans
1052 ¾  
+ 31 ½  
Nov 09 Beans
926 ¾  
+ 20 ¼  
Sep 09 Wheat
514 ¾  
- 5 ¾
Sep 09 KC Wheat
550
- 1 ¾ 
Sep 09 Min Wheat
599 ¼  
+ 1 ¾ 
Dec 09 Meal
283
+ 6.8
Dec 09 Oil
34.55
+ 0.25
 
 
 
 
 
 
 
 
 
 
 
 
 
 




        Corn and wheat closed lower and soybeans closed higher. Just as soybeans were unable to follow corn and wheat higher yesterday, corn and wheat were unable to follow soybeans higher today. August soybeans were certainly the driver today. August soybeans opened higher following a stronger Chinese market overnight and never looked back. First notice day for the August contracts is Friday. We are likely seeing some positioning/ rolling from August to the September and November contracts. With the expectation of tight supplies ahead of harvest, few commercials have been willing to give up ownership during delivery. This was certainly a good close for August soybeans and we could easily see another rally tomorrow. We are quickly approaching the “end game” for old crop soybeans. The price of August soybeans will be determined by a very small group of buyers and sellers. If August soybeans have a sharp rally from here and new crop soybeans follow, I would use that opportunity to get caught up on sales if you have not done so already. Although I do not think it would last long, it wouldn’t surprise me to see November soybeans rally up to $9.50-$9.80 area. If this happens, you need to be ready to make sales in my opinion. Corn and wheat are still having a difficult time holding on to rallies. Although I think we could see corn find support ahead of the August 12th report, we don’t think corn will be able to put a low in until the farmer sells the remaining old crop bushels ahead of harvest. I would look to make sales if Dec. futures reach the $3.50-3.60 area ahead of the report. Again, each farmer is unique so give us a call if you would like a personalized hedging strategy ahead of 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 wheat rally, soybeans sag 7/27/09

Jul 27, 2009
 
SETTLEMENTS 7/27
         
 
Sep 09 Corn
322 ¼  
+ 6
Dec 09 Corn
333 ¾
+ 6 ½ 
Aug 09 Beans
1021 ¼  
+ ¼  
Nov 09 Beans
907 
- 8 
Sep 09 Wheat
520 
+ 3 ¾
Sep 09 KC Wheat
551 ¾ 
+ 2 ¾
Sep 09 Min Wheat
595 
+ 3 ½
Dec 09 Meal
276.6
- 3.1
Dec 09 Oil
34.24
- 0.35
 
 
 
 
 
 
 
 
 
 
 
 
 
 




Corn and wheat closed higher and soybeans closed lower. A mostly favorable weather outlook pressured corn and soybeans early. A strong weekly export figure for corn and the expectation of a lower acreage estimate on the August 12th report helped corn rally today. Corn basis levels remain firm as export business remains strong and the farmer remains reluctant to sell. We could see basis levels break during August as the farmer sells his remaining old crop bushels ahead of harvest. However, if prices remain around $3/bushel or lower, we will likely see the farmer hold on to new crop bushels. This should keep basis levels relatively strong after harvest. Corn has broken the hardest over the past month and we could see corn gain on wheat and soybeans as we head into the August report. The funds are still long soybeans and short corn and wheat. Lower than expected weekly soybean exports and the expectation of increased acres could continue to cause some unwinding of this spread. Crop ratings came in as expected with soybeans unchanged at 67% good-to-excellent and corn down 1% at 70% good-to-excellent. The extended outlook still looks favorable for most areas. As long as this continues, corn and soybeans should have a hard time maintaining large rallies.  However, with both crops still lagging in maturity the market will be very touchy once we get closer to October. An early frost would certainly hurt the crops in several areas, so the “fear” of an early frost could give us several good selling opportunities over the next two months. October is still 2 months away; so waiting to see if we have an early frost is not a good marketing strategy. If you are hesitant to make sales for this reason, give us a call and we can discuss some strategies to help take advantage of a “frost” rally this fall without having so much downside risk.
 
 
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 7/24/09

Jul 24, 2009
       EHedger Weekly Grain Wrap-Up
 
SETTLEMENTS 7/24
         
 
Sep 09 Corn
316 ¼  
- 10 ¾ 
Dec 09 Corn
327 ¼
- 11 ½ 
Aug 09 Beans
1021 
- 2 ½  
Nov 09 Beans
915 
- 17 
Sep 09 Wheat
516 ¼  
- 15 ½
Sep 09 KC Wheat
549
- 12 ½ 
Sep 09 Min Wheat
591 ½  
- 8 ½ 
Dec 09 Meal
279.7
- 4.5
Dec 09 Oil
34.59
- 0.78
 
 
 
 
 
 
 
 
 
 
 
 
 





                  Corn closed 11-cents lower on the day and 4-cents lower on the week. An announcement by the USDA, which said that they would adjust the acreage numbers on the August report, helped rally corn prices yesterday. However, the expectation of large corn yields is keeping a lid on prices. Since the late planting, the U.S. weather has been ideal for most areas of the Midwest. Weather forecasts continue to call for rains throughout the Midwest and keep any threatening temperatures out. This can certainly change overnight, but if this trend continues corn should continue to break. There are still a lot of unsold bushels out there and that should cap any rallies as long as the weather stays good. We should see another sell-off as the farmer sells the remaining old crop bushels and makes room for the new crop. The sharp break in corn prices has helped margins return to the ethanol industry and has attracted foreign importers. The feeding industry has also improved from horrible feeding margins and some are even able to lock in some positive margins. Eventually, this will help corn prices but I think it is still too early. Just as the bearish fundamentals were ignored when the market was going up, any bullish fundamentals will likely be ignored on the way down. If the weather remains good, analysts will continue to increase their yield estimates. This attitude combined with old crop selling could cause prices to break much deeper than the fundamentals would suggest they should. December corn is already at 2 ½ year lows and the funds are now building short positions. Without any major weather problems around the world, it will be hard to “turn” the corn market… at least for now. The break in prices has caused option volatility to break, so if you haven’t made any sales and need to, I would sell your grain and buy some inexpensive calls. The next major support level for Dec. futures would be the contract lows of $3.04.
 
November soybeans closed 17-cents lower on the day and 9-cents lower on the week. Soybean prices have been going sideways now for 2 weeks and are looking for direction. The “tight” old crop supplies is keeping plenty of bulls in the market. However, the good growing conditions are weighing on new crop soybeans. It looks likely that China will end up releasing its corn and soybean reserves ahead of harvest. Currently, they are offering 500,000T of soybeans and 2 million T of corn reserves. Prices are too high so the domestic user is buying little. The government will likely lower their prices to sell off their reserves and make room for additional purchases next spring. Storage capacity is not nearly as high as in the U.S. and this should force the Chinese to release these supplies. Domestic basis levels have broken sharply in the past two weeks and this is likely the result of poor crushing margins and some farmer selling. There could still be some “fireworks” in the old crop soybeans, but we are getting close enough to new crop supplies that end users have likely covered their needs until then. We still have to get through the heart of the soybean-growing season. This should continue to cause nice rallies as people worry about hot and dry conditions. However, the weather has been very good to date, and if this pattern continues we should see sharply lower prices. Again, anything can still happen to the soybean crop. We could turn hot and dry and/or we could have a devastating frost. I completely understand this. I am worried however, that there is still a lot of unsold bushels for the new crop. With soybeans now the most “expensive” crop in the world, we should see oilseed acres increase sharply in the Southern Hemisphere. A good crop here and a good crop in South America could easily increase global stocks to record levels. If you waited for the corn and the wheat crops to get past the growing season in good shape before making sales, you ended up leaving DOLLARS/ bushel on the table. If you wait until the end of August to see if the weather turns “hot and dry”, you could end up having to sell soybeans much cheaper than here. Again, I am not saying that the weather is going to stay good, I am just pointing out the risk of not making any sales. If you have any questions please give us a call. 
 
Wheat closed 15-cents lower on the day and 25-cents lower on the week. It is hard to find anything bullish in the wheat market. U.S. and global stocks continue to build. We are now looking at a carryout above 700 million bushels here in the U.S. With large corn supplies and large global supplies, wheat is having a difficult time increasing demand. Global weather has been good in all of the major producing areas, beside Argentina. Argentina however has finally started to receive some decent rains this week and should receive more next week.  Record high wheat prices over the past two years have caused a massive increase in global production. As with corn and soybeans, wheat is on a very large break and due for a rally. Typically, wheat bottoms in July. Although this could certainly be the case this year, I wouldn’t expect a major rally off of the lows. The wheat market will need a new fundamental to turn prices higher from here.
 
 
 
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 7/23/09

Jul 23, 2009
 
SETTLEMENTS 7/23
         
 
Sep 09 Corn
327 ¾  
+ 19 ¾ 
Dec 09 Corn
339 ½ 
+ 20 ¼ 
Aug 09 Beans
1024 ¼  
+ 5 ¾  
Nov 09 Beans
933 
+ 25 
Sep 09 Wheat
531 ¾  
+ 9 ¾
Sep 09 KC Wheat
561 ½ 
+ 6 ¾
Sep 09 Min Wheat
601 
+ 3
Dec 09 Meal
283.6
+ 10.3
Dec 09 Oil
35.40
+ 0.18
 
 
 
 
 
 
 
 
 
 
 
 
 





Grains Close: USDA Re-Survey News Sparks Corn Rally
 
  • USDA Resurvey Story Spurs Short Covering Surge In Corn
  • Strong Buying Also Seen In New Crop Soybeans, Crude Oil & Stocks Mkt
  • Weather Still Friendly For Crop Development
 
Overview:
 
News that the USDA was set to resurvey corn and sorghum plantings in several states in the wake of the wet weather that hindered fieldwork from early June sparked a strong turnaround in the corn price Thursday that resulted in Dec prices settling nearly 20 cents higher. Short covering and fresh momentum buying also lifted corn on the day alongside a majority of other commodities markets.
 
The USDA’s resurveying will take place in seven states: Illinois, Indiana, Kentucky, Missouri, North Dakota, Ohio and Pennsylvania, and is anticipated by many to result in a downward revision in overall corn acreage from the June 30th planted acres estimate of 87.035 million acres. The results of the resurvey are expected in the August 12 monthly supply and demand report. Certainly several Illinois farmers had a tough time getting corn planted this year, and so we would not be too surprised to see a small reduction in planted acres in that state next month. However, a steep acreage decline is unlikely as most producers seem to have persevered through the grim conditions, and any abandoned corn acres are almost certainly destined to be planted with beans.
 
Nonetheless, this news clearly gave the corn market a lift today, and could well usher in a period of strength here that gives producers a fresh opportunity to catch up on sales following the recent aggressive slump.
 
Corn:
 
December corn gained 19½ cents or 6.1% Thursday to reverse the recent downward trend. A combination of the USDA news, strong general commodity buying and abrupt short covering all fueled the day’s gains, and could well continue to offer support to corn in the sessions ahead.
 
However, we continue to stress to farmers that such strength must be viewed as a selling opportunity given the favorable growing weather that prevails across the Corn Belt. It’s very unlikely that the overall corn acreage number declines by more than 1 million or so acres, but it is likely that the conducive weather across key growing areas gives the national yield a notable boost beyond trendline estimates. And it doesn’t take a brilliant mind to deduce that a 5 bushel-per-acre increase in yield on roughly 85 million acres more than offsets a 1 million acre decline in overall planted acres.
 
Also, we’re still concerned about the state of overall demand amid the continuing global recession that is crimping profit margins of all corn end users in every region. So, until we get a better read on actual US production, and see a genuine improvement in end-user demand, we recommend producers use periods of strength in the corn price to top up sales and hedges.
 
Soybeans:
 
New crop beans pushed higher in line with corn, and closed at its highest level since July 6. However, the buying interest seen has every chance of proving short lived, since it coincided with strong interested in copper, crude oil and other materials and flew in the face of ag market expectations that this year’s soybean crop will be a bin-buster. Also, the strong advance failed to break prices out of their recent sideways channel, and so did little to improve Nov beans’ technical appeal.
 
In addition, today’s news of a corn acreage resurvey is likely to raise projections of soybean plantings, as every corn acre that was abandoned due to poor conditions is likely to have gone to beans once the fields finally dried out.
 
So, while today’s firm close in beans has buoyed the mood of some market participants, we continue to suggest producers look to use any forthcoming price advances as a chance to top up sales and hedges if they neglected to do so when Nov prices stretched above $10.50 a bushel last month.
 
Wheat:
 
CBOT Dec wheat joined in with corn and soybeans Wednesday in heading higher, but again looks vulnerable to renewed weakness once the recent buying spree lightens up.
 
Some further bouts of short covering may extend wheat’s solidity in the days ahead, but the main bias of this market remains lower given the growing piles of wheat stocks all over the world and the fact that overall consumer interest has diminished in recent months.
 
Continue to look to sell into any sharp rallies on the assumption that this market will need to break aggressively lower at some point in order to clear the excess supplies that the world has built up over the past year.
 


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 end the day mixed 7/22/09

Jul 22, 2009
 
SETTLEMENTS 7/22
         
 
Sep 09 Corn
308 
- 3 ½
Dec 09 Corn
319 ¼
- 2 ¾ 
Aug 09 Beans
1018 ½  
+ 4
Nov 09 Beans
908 
+ 3 
Sep 09 Wheat
522
- 12 ¾
Sep 09 KC Wheat
554 ¾ 
- 11
Sep 09 Min Wheat
600 
- ¼ 
Dec 09 Meal
273.3
+ 0.5
Dec 09 Oil
35.22
-0.23
 
 
 
 
 
 
 
 
 
 
 
 
 





Corn and wheat closed lower and soybean closed higher. Wheat led the way lower today on fears of Index fund liquidation and a weak corn market. Wheat demand remains very weak and U.S. prices remain well above the global prices. A sharp break in corn prices has caused wheat to become expensive relative to corn and this will need to correct. A continued good weather outlook continues to weigh on corn and soybean prices. Interior basis levels have come under pressure over the past few days and we are likely seeing some farmer selling. The farmer is still holding on to old crop supplies and this could continue to weigh on prices, especially corn, as the farmer begins to “clean out” the bins ahead of harvest. Corn has broken through most technical support areas, and the next level would be $2.90 in the nearby contract. The demand side of the equation is certainly improving for corn, but with most analysts now looking at large corn yields, it could take time before corn can find a stable bottom. Again, things can always change but for now it does not appear likely that we will see a sustained rally in our markets. There is still a “bullish” bias for the soybeans in response to the “tight” old crop stocks. This continues to draw buying interest into the new crop months and is providing ample selling opportunities. I know that there is still plenty of time to hurt the crop, but if the weather stays good, the soybean market could start to liquidate like the corn market has. Again, none of us “know” what the weather will do, but my fear is that a lot of people are waiting to see if something bad happens and prices rally. We could certainly see hot and dry weather throughout August and/or a frost or freeze hurt the crop. If we don’t, I fear a lot of farmers will be sitting with un-priced grain and sharply lower prices this fall. We are seeing this happen with corn right now.
 

 
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 7/21/09

Jul 21, 2009
 
SETTLEMENTS 7/21
         
 
Sep 09 Corn
311 ¼  
- 12
Dec 09 Corn
321 ½ 
- 12 ¼ 
Aug 09 Beans
1014 ¾  
- 18 ¼  
Nov 09 Beans
905 ¾  
- 17 ¼  
Sep 09 Wheat
534 ¾  
- 7 ½
Sep 09 KC Wheat
564 ½ 
- 6 ½ 
Sep 09 Min Wheat
600 ½  
- 12 ¾ 
Dec 09 Meal
272.5
- 2.4
Dec 09 Oil
35.37
- 0.67
 
 
 
 
 
 
 
 
 
 
 
 
 






Grains Close:
 
  • Kind Growing Weather, Firm Dollar Pressure Grains, Oilseeds
  • New Crop Corn Settles At New Lows As Chart Pattern Also Sours
  • Final Wave Of Old Crop Corn Sales May Dunk Dec Corn Below $3
 
Overview:
 
More red ink was scrawled across the board today as the grain and oilseed markets received another battering from long liquidation and fresh short selling. Broadly friendly growing weather combined with strength in the US dollar was deemed behind the weakness, and further shakeouts must be allowed for in the days ahead.
 
That said, it was interesting to note that the grains failed to find any support from the firmer crude oil market, which may mean the Ag arena is finally now dancing fully to its own tune rather than as part of the general ‘commodities pack.’ We’ll have to see on Wednesday whether things stay that way, or if we are merely a bit slow to respond to crude oil’s lead while our focus is so fully fixed on growing conditions.
 
Corn:
 
December corn lost another 11 ¾ cents a bushel, or 3.5%, to settle at fresh lows for the move and its lowest level since early December 2006. Large planted acres emerging amid broadly favorable conditions are serving to chase bulls out of this market right now, while bearish chart patterns are also serving to drive prices lower.
 
The momentum here is clearly lower, so fresh weakness must be allowed for in the sessions ahead. However, end users of corn must be licking their chops right now as few would have thought it would be possible to secure large quantities of corn in the low $3s less than two months after new crop prices traded above $4.70. It may take quite some time for a sustained jump in consumer demand to turn corn prices around, but we suspect that strong cash market interest will start to offer support to this market quite soon.
 
That said, what worries us is the prospect of final waves of old crop corn sales emerging into any corn price rallies over the remainder of the growing season. Farmers who had been hoping for a chance to fire off some sales above $5 are now coming to grips with the grim reality that those chances are now long gone. So, there’s a good chance that hundreds of thousands of bushels will come out of private storage and into the market as those producers make way for the hefty new crop - snuffing out any chance of a meaningful pre-harvest rally in the process.
 
This selling may not just limit corn’s upside, but could easily drive this market far lower than any producer may bear to think about right now. Such a move would certainly spark an aggressive rebound in demand, but would still deeply hurt any growers who had to sell down there in order to free up some cash ahead of the harvest season. So don’t get caught up in such a mess if it occurs, and instead...
 
Soybeans:
 
Both old and new crop beans suffered double-digit setbacks Tuesday as the prospect of a large US crop that is emerging in non-threatening conditions continues to propel selling interest. Chart-based signals also spurred selling, as both old and new crop prices failed to break out of their recent trading bands to the upside late last week and early Monday despite aggressive buying interest.
 
We’re expecting more volatility in the beans over the coming days, as many traders and analysts continue to harp on about nearby tightness and worries about the state of the late-planted US crop. However, we continue to suggest using any strong rallies as selling opportunities in Nov futures, as eventually the record US planted acreage will turn into huge fresh supplies that will have the potential to apply tremendous pressure to bean prices over the second half of 2009.
 
Wheat:
 
CBOT Dec wheat joined in with corn and soybeans Tuesday in heading lower, breaking its recent string of gains. Some bouts of short covering may limit wheat’s losses over the near term, but the main bias of this market remains lower given the growing piles of wheat stocks all over the world and the fact that overall consumer interest has diminished in recent months.
 
Continue to look to sell into any sharp rallies on the assumption that this market will need to break aggressively lower at some point in order to clear the excess supplies that the world has built up over the past year.
 
 
 
 
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 7/20/09

Jul 20, 2009
 
SETTLEMENTS 7/20
         
 
Sep 09 Corn
323 ¾  
+ 1 ½ 
Dec 09 Corn
334
+ 2 ½ 
Aug 09 Beans
1032 
+ 22 ½  
Nov 09 Beans
920 ¾  
- 2 ¾  
Sep 09 Wheat
542 ¼  
+ ½
Sep 09 KC Wheat
571
+ 4 ½ 
Sep 09 Min Wheat
612 
- 4 ¼ 
Dec 09 Meal
275.5
- 3.2
Dec 09 Oil
35.91
+ 0.39
 
 
 
 
 
 
 
 
 
 
 
 
 
·       




  • Corn good to excellent conditions remain unchanged at 71% vs. 65% yr ago
  •   Beans good to excellent conditions 1% higher at 67% vs. 61% yr ago
 
The grain markets closed mixed to positive in today’s session. Corn managed to close slightly higher after trading on both sides of unchanged. Fundamentals remain weak and will continue to do so unless the weather changes drastically. Cooler temperatures and rainfall projected across large portions of the Midwest are making conditions nearly ideal for corn development. Much of the corn planted on time should make it through pollination under these conditions. The later planted corn could still see hot dry conditions, but until the forecast reflects this change corn rallies look to be a function of short covering rather than bullish buying. In fact, we are now reading many estimates for record yields close to 160 bu/ac vs. the current USDA projection of 153.4 bu/ac. Regardless of the final yield, the thought is for a higher figure. Now if corn can manage to rally towards and above the $3.50 mark in December futures this appears to be an area to sell. While futures price sentiment for corn remains bearish, one positive note is that basis levels should remain firm until harvest begins, thanks to the lack of selling. Farmer selling has nearly dried up on this last price break, yet old crop corn still sitting unpriced in bins across the country will need to be moved ahead of fall harvest. Today’s bean complex market was yet again very interesting as traders resumed the bull spreads. It seems that China (or industry news) cannot make up their mind on whether they need to buy more old crop beans or sell reserves. While we cannot control or predict what China will do to affect old/new crop spreads, we are still looking for new crop sales on price rallies. The main factor behind this is number of planted acres and current yield outlooks. Meanwhile, wheat remains mixed in a two-sided trade. Today’s crop conditions report did not show any significant surprises; therefore tomorrow’s trade looks to be a follower of outside market indicators. 
 
 
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 make fresh lows 7/16/09

Jul 16, 2009
 
SETTLEMENTS 7/16
         
 
Sep 09 Corn
316 ¾  
- 12 ¾ 
Dec 09 Corn
325 ¼
- 12 ¼ 
Aug 09 Beans
976 
- 44 ½
Nov 09 Beans
890 
- 14 ½
Sep 09 Wheat
533 ¼  
- 1 ½
Sep 09 KC Wheat
559 ½ 
- 1
Sep 09 Min Wheat
615 
- 4 
Dec 09 Meal
268.5
- 6.9
Dec 09 Oil
34.48
- 0.32
 
 
 
 
 
 
 
 
 
 
 
 
 





Corn and soybeans closed sharply lower, wheat followed. Well, “When it’s over, it’s over.” Corn and wheat both made new lows for the move today. Nearby soybean prices closed 45-cents lower and nearby corn closed 13-cents lower. All soybean contracts are now under $10/bushel and new crop soybeans are back under $9.   There isn’t much to say that hasn’t already been said. High prices this summer rationed demand and cured high prices. The weather has been good across the globe and looks to stay that way. Some people are worried about having and early frost. I certainly won’t argue that an early frost will hurt the crop, but that is a long ways away. At this rate, you will need a frost in September to get prices back to where they just came from. I would still be hedged and worry about an early frost when/ if it happens. There is still a lot of money moving around in these markets. Most people are always bullish. This will continue to give us selling opportunities. Corn and soybean prices are higher nearly every night. Soybeans have traded higher every day for the past 2-weeks. I know prices aren’t as high as many of you were hoping, but unfortunately I don’t see a reason for a sharp rally. 
 
 
 
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 soybean meal break sharply 7/15/09

Jul 15, 2009
 
SETTLEMENTS 7/15
         
 
Sep 09 Corn
329 ¼
- 9 ¼ 
Dec 09 Corn
336 ¾
- 8 ¾ 
Aug 09 Beans
1018 
- 16 ½  
Nov 09 Beans
902 ½  
- 15 ½  
Sep 09 Wheat
534 ¼  
+ 4 ¼
Sep 09 KC Wheat
561
+ 3
Sep 09 Min Wheat
619 ½  
+ 6
Dec 09 Meal
275.6
- 7.4
Dec 09 Oil
34.75
+ 0.29
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 




Corn and soybeans closed lower and wheat closed higher.   Corn, soybeans and wheat all opened sharply higher. A strong close in the corn and soybeans yesterday combined with very strong outside markets and a very weak dollar helped rally the grains early. By mid-day, Tyson announced that it would pair back their hog-breeding herd by 28% within the next 10 weeks. Although the actual number of sows being sent to slaughter isn’t that large, it is another sign of the demand destruction caused from the high meal and corn prices this summer. This news caused the corn and soybean meal markets to break sharply. Corn quickly broke 12-cents and soybean meal broke $15. The USDA and many analysts have record soybean demand estimates written down for next year. These estimates are looking very high. Besides “wanting” demand to be a record, there is nothing that suggests it should be a record. Animal numbers are still declining and this trend will need to reverse before we can assume an increase in feed demand next year. Feeding margins have certainly improved considerably, but we are still far from expanding animal numbers at current levels. Old crop soybeans could still be “tight” in the end, but the soybean fundamentals going forward look weak to me. We still have to get through the rest of the growing season, but if the weather stays like this we should see very good yields. 
The outside markets closed very strong and if the sales figures are strong tomorrow, we could see another rally tomorrow morning. The grains continue to give you selling opportunities. Corn rallied over 20-cents from it’s lows, soybeans rallied 56-cents from it’s lows and wheat rallied nearly 30-cents off of the low. I wish I could say that corn, soybeans and wheat should all rally from here but I don’t see a good reason for that to happen. Corn has started to pick up some end-user demand at these levels and that has kept prices from falling for now. U.S. corn is the cheapest in the world and this should keep exports strong. Ethanol margins are also back to positive levels. These are all good things for the corn market. Hopefully we can continue to build back demand and keep prices towards the $3 mark. Once again, margins have improved but we are still far from a major jump in demand. Weather will still “trump” all other fundamentals for now. If the weather stays cool and wet, it will be hard for the corn market to stage a large rally. Again, anything can change but I would still use these 2-3 day rallies as selling opportunities. As always, give us a 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 7/10/09

Jul 10, 2009
 
SETTLEMENTS 7/10
         
 
Sep 09 Corn
328 ¼  
- 1 ¼ 
Dec 09 Corn
338
- 2
Aug 09 Beans
1044 ¾  
- 2 ¾  
Nov 09 Beans
917 
+ 1 
Sep 09 Wheat
518 ¾  
- 3 ½
Sep 09 KC Wheat
547 ½ 
- 4
Sep 09 Min Wheat
602 ¾  
- 4 ¾ 
Dec 09 Meal
289.3
- 0.7
Dec 09 Oil
33.47
+ 0.09
 
 
 
 
 
 
 
 
 
 
 
 
 
 




Corn and soybeans closed mixed on the day and wheat closed lower. The USDA report was a little bearish this morning. Corn, wheat and soybean supplies look to increase both in the U.S. and the World. Corn and soybeans were sharply lower early in the day, but old crop corn and old crop soybeans helped prices recover by mid-day. Corn, soybeans and wheat are all on very large breaks. There was some short covering ahead of the weekend and we will have to see if the good weather forecasts hold up through the weekend. If the forecast continues to call for good weather next week, we could see another sell-off Sunday night. If the weather forecast calls for drier or hotter weather, we should see a rally. It would not surprise me to see a 15-20 cent corn rally and a 30-40 cent soybean rally sometime next week. If we do see those rallies, I would make some sales if you are behind.
 
Corn closed 2-cents lower on the day, and 20-cents lower on the week. Since the late planting, the U.S. weather has been ideal for most areas of the Midwest. Weather forecasts continue to call for rains throughout the Midwest and keep any threatening temperatures out. This can certainly change overnight, but if this trend continues corn should continue to break. Again, corn is on a very large break and is due for a rally. I would again use a nice rally next week as a selling opportunity. There are still a lot of unsold bushels out there and that should cap any rallies as long as the weather stays good. Corn has now broken $1.50 since the beginning of June. This has helped margins return to the ethanol industry and has attracted foreign importers. The feeding industry has also improved from horrible feeding margins to around break-even levels. Eventually, this will help corn prices but I think it is still too early. Just as the bearish fundamentals were ignored when the market was going up, any bullish fundamentals will likely be ignored on the way down. If the weather remains good, analysts will start talking about a national yield of 155, 160 or higher. This will put carryout estimates well over 2 billion bushels. Whether or not yields end up that high is not the point, the point is that the market will start trading those numbers. With the outside markets remaining weak, it will be hard to find a bull shortly. This attitude could cause prices to break much deeper than the fundamentals would suggest they should. December corn is already at 2 ½ year lows and the funds are now building short positions. Without any major weather problems around the world, it will be hard to “turn” the corn market… at least for now. The break in prices has caused option volatility to break, so if you haven’t made any sales and need to I would look at buying back some calls. The next major support level for Dec. futures would be the contract lows of $3.04.
 
Soybeans closed 1-cent higher on the day and 91-cents lower on the week. The tight old crop story had caused the new crop prices to rally to extreme highs. Although old crop soybeans could still do anything, new crop prices may not be able to follow any large rallies. If the weather remains good, soybeans could be dollars a bushel too high. In my opinion, the 250 million bushel carryout for the ’09-10 crop year will continue to increase as we head through the year. The USDA already has record demand written down for next year. These numbers look too high to me. New crop soybeans sales are huge. This is why the USDA has a record export figure written down. However, I believe that we are seeing the world importer “front load” their purchases for next year. For months, every analyst has talked about how “tight” the soybean supplies would be again next year. If you thought we were going to “run out” of soybeans would you wait to make your purchases or would you make them now? We saw the same type of buying last year in the wheat market. When prices rallied to $14/ bushel, large importers started to secure supplies for a year or even two years out. Although this was bullish while it was taking place, it ultimately proved to be very bearish. After the world finishes preparing for the “tight” situation, there won’t be anyone left to buy. A good crop in the U.S. and good crops in South America could help global stocks increase by 20-25% next year. I realize that we still have a long way to go before we “make” the U.S. and South American crops, but at this time we should assume normal weather. The old crop tightness will still make the soybean market very interesting and very volatile, and good weather will still be important. I just want to make the point that it would not surprise me to see soybean prices break to $7 by this fall. Again, we have had a very large break and are due for a rally. I would look to make sales as November futures reach the $9.40 to $9.60 levels. As always, give us a call if you have any questions.
 
Wheat closed 3-cents lower on the day and 9-cents lower on the week. It is hard to find anything bullish in the wheat market. U.S. and global stocks continue to build. We are now looking at a carryout above 700 million bushels here in the U.S. With large corn supplies and large global supplies, wheat is having a difficult time increasing demand. Global weather has been good in all of the major producing areas, beside Argentina. Argentina however has finally started to receive some decent rains this week and should receive more next week. Record high wheat prices over the past two years have caused a massive increase in global production. As with corn and soybeans, wheat is on a very large break and due for a rally. Typically, wheat bottoms in July. Although this could certainly be the case this year, I wouldn’t expect a major rally off of the lows. The wheat market will need a new fundamental to turn prices higher from here.
 
 
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 close near limit down; drags corn and wheat lower 7/07/09

Jul 07, 2009
 
SETTLEMENTS 7/07
         
 
Sep 09 Corn
325 ½
- 9 ¼
Dec 09 Corn
335 ¾
- 8 ½
Aug 09 Beans
1053 ½
- 65
Nov 09 Beans
895
- 68
Sep 09 Wheat
512 ½
- 6 ¾
Sep 09 KC Wheat
544
- 7
Sep 09 Min Wheat
606 ¾
- 5 ¾
Dec 09 Meal
281
- 20
Dec 09 Oil
33.72
- 1.38
 
 
 
 
 
 
 
 
 
 
 
 
 





      Corn, soybeans and wheat all closed lower once again. Soybeans were again the weakest, closing 68-cents lower. Soybean meal led the soybean complex lower and closed limit down. Soybeans have now broken over $2 /bushel since June 1st and closed at the lowest level since April 1st. Corn and wheat were higher towards the end of the day, but the weak soybean market pulled them lower on the close. Good weather, weak outside markets and a lack of bullish news helped fuel the break today. I think we are seeing that although outside influences can determine the price of grains in the short-term, eventually the fundamentals do matter. Unfortunately, it seems that many farmers are now stuck holding onto unsold grain. There is a USDA report on Friday and maybe we will see some sort of rally before then. As a producer, you need to take advantage of any rallies to get caught up on sales. Soybeans gave you the chance to sell them 12-cents higher last night. If the soybean market liquidates like the corn and wheat markets did, those may be the only rallies we get for now. If the weather stays good and the outside markets remain weak, than corn, soybean and wheat should all continue to break. Nearby corn found support over the past few sessions as end-users have likely started to step up. Eventually, this could help the corn market find support but right now the market is in liquidation mode. Just like the market ignored bearish fundamentals on the way up, it will likely ignore bullish ones on the way down (once the bullish fundamentals show up). Hopefully those of you who read this letter have used our advice and hedged your crops before the break. If you need help in these markets, please give us a call. Although things look tough now, the market will always present opportunities. You just need to be ready when those opportunities present themselves.
   
 
 
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 close sharply lower on good weather outlook, weak outside markets 7/06/09

Jul 07, 2009

SETTLEMENTS 7/06
         
 
July 09 Corn
342 ¾
- 3
Dec 09 Corn
344 ¾
- 12 ¾
July 09 Beans
1198
- 45
Nov 09 Beans
961
- 45
July 09 Wheat
489 ¾
- 10 ½
July 09 KC Wheat
542 ¼
- 12 ½
July 09 Min Wheat
611 ½
- 6 ½
July 09 Meal
401.5
- 9.7
July 09 Oil
34.24
- 0.94
 
 
 
 
 
 
 
 
 
 
 
 
 





 
Corn, soybeans and wheat all closed sharply lower. The soybean complex led the way down today with soybeans closing 43-cents lower. Corn and wheat remained weak throughout the day as well. December corn closed 13-cents lower and at the lowest level since January 10, 2007. Good weather outlooks and weak outside markets were the main drivers today. Good rains over the weekend and a good forecast for the majority of the Midwest is driving prices lower. The global weather has also cooperated with India receiving the Monsoon rains 12 days ahead of schedule, good rains forecast for China and good rains falling in Australia. The one area of concern remains Argentina, but with so much wheat around the globe the market is not too concerned with Argentine wheat acres. Nearby corn prices remained supported today. The sharp drop in prices has helped nearby corn prices reach “value levels” for some importers. The funds have sold over 100,000 contracts of corn since June 1st, dropping the flat price by over $1/ bushel. This has drawn in some interest from the world buyer to secure some supplies. Nearby corn prices are now higher than for deferred months. This could help support prices in the short-term, but I would continue to use large rallies as selling opportunities. Although end-user buying could help support prices, a bearish weather outlook will likely dictate prices for now. The funds are now shorts in the corn, soybean oil and wheat and large longs in the soybeans and soybean meal. If the weather outlook remains good, we should continue to see the funds liquidate their soybean longs as well. As with corn, I would continue to use large rallies in soybeans as selling opportunities. Our markets had a very large sell-off today. With crop conditions coming in slightly lower on the week (listed below), we could see some kind of a recovery overnight/ tomorrow morning. The Commitment of Traders report showed the traditional funds had the following positions as of June 30th:
 
Long 74,000 contracts of soybeans; long 36,000 contracts of corn; and short 35,000 contracts of wheat.



 

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 7/2/09

Jul 02, 2009
Weekly Grain Wrap-UP
 
SETTLEMENTS 7/02
         
 
July 09 Corn
345
- 6 ¾
Dec 09 Corn
357 ½
- 11 ¾
July 09 Beans
1241
- 17 ½
Nov 09 Beans
1003 ¾
- 11 ¾
July 09 Wheat
499 ½
- 6 ¾
July 09 KC Wheat
554 ¾
- 9
July 09 Min Wheat
618
- 8 ¾
July 09 Meal
412.9
- 5.3
July 09 Oil
35.22
- 0.60
 
 
 
 
 
 
 
 
 
 
 
 
 







Grains Close:
 
  • Bearish Outside Markets Weigh On Grains, Oilseeds
  • Friendly Weather, Large Acreage Projections Spurring Corn Long Liquidation
  • Large New Crop Bean Sales Announcement Limited Soybeans’ Losses
 
Corn:
 
New crop corn prices continued to spiral lower Thursday on heavy selling pressure, with the Dec contract settling at its lowest level since December 5, 2008. Spillover selling from the weaker crude oil market combined with friendly growing weather, bearish technical signals and the second highest planted acres total on record all served to hurt corn on the day. If the weather stays benign, more losses could well be in store next week, even though new crop prices are already more than $1 a bushel off their early June highs of over $4.70.
 
Many farmers appear to have been stunned by the USDA’s acreage projections from Tuesday, and several even doubt their veracity. For our part, we have been stating for the past several weeks (months even) that farmers always tend to plant what land they have available, and so saw no reason why they’d plant less overall acres this year versus last year - given that prices of both corn and soybeans have been very strong this Spring. As a result, even with the poor weather we saw, we had expected the overall corn planted acres number to be above the March 31 estimates, and so it has proved.
 
Now that we appear to have 87 million planted acres of corn developing amid quite friendly conditions, this market’s focus will shift to the demand side of the equation. Certainly the recent heavy corn price slide has improved the economics of several corn users, but it is important to note that large-scale demand for corn cannot be switched on and off like a light switch. Hog producers, for instance, have been badly damaged by the consistently strong corn and soy meal price over the past several weeks, and so may take a long while to fully recover a large appetite for corn again. The same applies in the cattle industry, although ethanol producers do appear to be ramping up interest as gas prices hold up. 
 
Overall, corn looks set to have a tough time putting on a sustained rally any time soon without the help of serious weather worries. So, for those producers...
 
Soybeans:
 
Soybean prices endured a choppy ride on the day, with Nov futures getting hit early on spillover selling from the outside markets before recovering later in the session as investors and traders continued to wade in on thoughts of tight supplies and continued strong demand. A pre-open report of a 660,000 metric ton sale of new crop beans to China gave the bulls fresh fuel early on, but it was clear that buyers lacked real conviction today as Nov prices settled nearly a dime lower.
 
Looking forward, now that the USDA has penciled in 77.5 million planted acres – the highest ever - it’s unclear how much more upside room this market has in new crop prices. Clearly there’s still tightness in nearby prices, but given that there’s a more than $1.50 premium in August prices versus November, any buyer that can afford to wait until new crop supplies emerge will do so. Meanwhile, aside from China, export sales announcements are very quiet, so once the Chinese buying spree stops prices have the potential to grind lower pretty quickly.
 
This all adds up to us recommending that producers... 

Wheat:
 
December CBOT wheat prices continued to spiral lower and recorded their fifth consecutively lower weekly close. Long liquidation by stale longs while the US winter wheat harvest cranks up continues to be the main source of pressure, and from our perspective there’s no reason to anticipate a major rebound any time soon. Diminishing feed demand domestically and overseas is muting overall demand, while growing global stockpiles continue to keep outside interest from emerging.
 
There’s certainly the possibility of fresh investor allocations into wheat over the summer that may offer a floor to prices, but until the demand side of the equation heats up, wheat prices look set to remain the least likely to succeed among its CBOT class.
 

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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