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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 2-13-2012

Feb 13, 2012

Grains finished strong with new day session highs made on the close for beans and wheat.  March corn opened up strong and finished 7 ¾ cents higher at $6.39 ½.  March soybeans rallied 13 cents in the last 15 minutes of trade to finish up 23 cents at $12.52. March wheat also had a large late day rally and finished up 11 ¼ cents at $6.41 ¼.

Today’s strength started with the outside markets overnight after the Greek Parliament approved the latest austerity measures which was seen as favorable for many asset classes.  Weather also played a factor with a dry forecast in Southern Brazil.  The Chinese trade delegation is also currently visiting and the expected soybean export business from this has got the market a little bit excited as well.

Baseline USDA acreage estimates for 2012-13 crops that were gathered back in November were also released today.   They have the market focusing on the fact that we may see more corn acres and less bean acres at these prices.  The main acreage report (Planting Intentions) won’t be out until the end of March.  The fact that corn is expected to gain much of the available acres is being looked at as "bullish" beans when it may really still be a "bearish" corn story.  Corn has had to "entice" acres as the stocks/use ratio is legitimately low for the US and the world and we need to replenish stocks.  World soybean stocks have not been as tight and this has been reflected in the corn/bean ratios.  Eventually this could be a repeat of the 2007 growing year, where we came into the year with corn/bean ratio that was around 2.0 and ended that winter at about 2.83 (formula=beans/corn).  Corn obviously needs to secure those extra acres first and we need to see a somewhat normal growing year.  With that said, the current new crop ratio is 2.22 and we think corn can still expect plenty of acres.  Our supply and demand tables will remain the same for now.  If you would like to check them out again please see the chart below.

Supply and Demand

Thanks and have a great week!

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Best Regards,

EHedger

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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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