EHedger Afternoon Grain Commentary 9-7-2011
Sep 07, 2011
Grains started the morning stronger but managed to turn lower during the day. December corn finished 7¾ cents lower at $7.48, November soybeans down 1¾ cents at $14.20¾, and December wheat finished 8½ cents lower at $7.51½.
The Stats Canada report was released this morning and was slightly bearish. This helped push wheat lower. Wheat traded down to a 2¾ cent discount to corn at one point during the day in the December contracts. Any further weakness in the wheat could result in further corn weakness. We have had wheat at a discount to corn multiple times this year and now that the December contract has breached this level we have to think we could still see plenty of wheat being fed in the world.
The next major report will be on Monday the 12th and is the September USDA Supply and Demand report. The Dow Jones poll of analyst expectations was released today and is as follows:
As you can see we have a wide range of guesses, but for the most part we can see that most generally believe that corn yields will fall below 150, with the average guess at 148.8. For soybeans, the average guess is 41 bpa. For the 2010-2011 carryout, they are projecting an average of 974 million bushels. Since we aren’t expected to finish out the year with a very tight "carry-in" to 2011, the weight is still most heavily weighted on final 2011 production. It is still anyone’s guess what final yield will be until we are through with harvest, but early harvested acres seem to be coming back better than expectations so far. At this point, we are factoring in such bullish crop production estimates and the market still feels heavy. We like remaining with adequate sales going into harvest and we may look at re-owning bushels on a harvest break. Please contact an EHedger broker today for a more detailed strategy of hedging in today’s volatile markets.
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