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EHedger Report

RSS By: Dustin Johnson

Dustin works with a wide net of large producers throughout the Midwest. His analytical market approach and objective hedge strategy development is specific to the needs of every individual.

EHedger Afternoon Grain Commentary 1/8/13

Jan 08, 2013

Grains and oilseeds closed mixed after a choppy trading session.  The funds have started their rebalancing which supported soymeal and Kansas City wheat while they sold corn, soybeans, Chicago wheat and soyoil.  Corn managed to hold support which may be attributed to the fact that we are once again competitively priced in the world market.  We have no major changes to our current hedge recommendations.

Soybeans had an intra-day market surge after rumors of China buying (up to 6) cargoes of beans started to circle. As always we want to wait for confirmation from the USDA before accepting these statements as fact. After we get through Wednesday and Thursday’s fund rebalancing all eyes will shift back to the January USDA reports.

Trade Estimates for Friday’s USDA Reports

Trade Estimates for US Dec. 1 Stocks    
  Average Range Dec 1, 2011 Sept 1, 2012
Wheat 1,684 1,553-1,750 1,663 2,104
Corn 8,219 8,000-8,750 9,647 988
Soybeans 1,981 1,800-2,100 2,370 169
         
Trade Estimate for US Crops      
  Average Range 2012 2011
Corn 10,650 10,325-10,800 10,725 12,358
Corn Yield 122.6 121.3-125.0 122.3 147.2
Harvested Acres 86.89 84.56-87.72 88 83.981
         
Soybeans 2,993 2,935-3,104 2,971 3,094
Soybean Yield 39.6 38.9-41.0 39.3 41.9
Harvested Acres 75.56 74.70-75.90 75.693 73.776
         
Trade Estimate for U.S. 2013 Ending Stocks    
  Average Range 2013 2012
Wheat 741 637-792 754 743
Corn 647 489-760 647 988
Soybeans 135 114-186 130 169
         
Trade Estimates for US Winter Wheat Acres    
  Average Range 2012-13 2011-12
All Winter 42.585 41.700-44.650 41.324 40.646
Hard Red 30.296 29.900-31.000 29.863 28.480
Soft Red 8.898 8.217-10.000 8.120 8.561
White 3.474 3.300-3.920 3.350 3.360

Friday is one of the most important report days of the year as it sets the tone for early 2013 trading.  The USDA will release their final acreage and bushels for 2012, Winter Wheat Seedings, and the December 1st grain stocks.  The January reports have resulted in a limit move in corn 4 out of the last 5 years!  Final acreage, final yield, a full quarter of demand, and estimating total bushels in transit make it almost impossible to get an accurate guess for final quarterly stocks in December for corn and soybeans.

Informa’s estimates for 2012 corn and soybean production are still much higher than the current USDA estimates. 

·         Informa corn production estimate = 10.8 billion USDA currently at 10.725

·         Soybean production estimate at 3.04 billion USDA currently at 2.971

Corn exports have been extremely dismal and ethanol’s production pace hasn’t been great either.  We believe the market has done its job rationing demand and we shouldn’t see an overly bullish response for corn unless it comes from lowered production.  With that being said we have already had a significant correction in the last 30 days and are once again competitive in the world market.

Soybean export pace has been running at a record from strong Asian demand, despite the recent cancellations.  Crush has been running very strong as well.  Any bullish market surprises would have to come in lowered production in my opinion because the strong demand has already been noted by the market.

Techincals

March Corn is in a downtrend and looks technically "bearish" but we are coming off of oversold levels.

March Corn

March Soybeans also in a "bearish" downtrend.  They have made a double bottom but watch out if that level is breached again.

March Soybeans

March Wheat has had the largest selloff and is very oversold.  Wheat techincals are still pointing lower but if an upside breakout does occur we expect it to be strong.

March Wheat

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Best Regards, 

EHedger 

www.EHedger.com 

Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge and financial resources. 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 EHedger LLC, its affiliates, officers, directors, employees or agents.

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