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Grain Hedge

RSS By: Brock Schimbeno,

Grain Hedge is a self-directed discount brokerage that saves farmers money when trading in the futures and options market. For $7 commissions per side producers can execute their marketing strategy with authority, any time the markets trade.

New Year Starts Out Mixed for Grains

Jan 05, 2012

The equity and commodity markets have started the New Year going in opposite directions.  Solid macroeconomic data has propelled the Dow higher by 180.73 as of Thursday to close at 12,415.70.  Oil has followed as demand prospects have increased and turmoil in Iran has boosted prices by $1.80 a barrel finishing trade today at $101.55.  Gold continues its volatile trade of late and has tacked on $55.90 an ounce to settle at $1,622.90 today.  The dollar index has risen sharply as continued sovereign debt concerns arise out of Europe.  This has pressured the grain complex.

Corn has benefited from dry and hot South American weather to rally sharply higher in the last couple of weeks, but some relief is in the forecast for the Southern Hemisphere.  The grain fell sharply Thursday and is down 3 cents overall to start the New Year settling at $6.43 ½ on the March contract today.  Adding to the sell off is a sharply higher dollar index which makes our grain more expensive in the world market.  Export sales have fallen off of late and the latest information will be released Friday, a day late due to the holiday Monday.

Soybeans have been positive despite suffering a 21 cent decline Thursday.  For the week, the oilseed is up only 1 ¼ cents to finish trade at $12.09 on the March contract.  As with corn, this market has been supported by unfavorable weather in the key growing areas of Brazil and Argentina.  This is especially concerning as the crop is approaching critical development stages. Several local forecasters have already reduced the projected crop size recently.  The upcoming WASDE reports on January 12th will provide some information surrounding the weather affects on yield for those areas.

Wheat has been the weakest of the agricultural commodities and is down 23 ½ cents for the week to settle at $6.29 ¼ on the CBOT March contract.  Wheat has suffered the most from a strong dollar index which greatly reduces our competitiveness on the world market.  Adding pressure to the wheat market is ample world supplies.  Export sales continue to be routine with the latest information being published tomorrow.

The markets have been mixed to start the year, but there has been some positive news for the markets to digest.  Sovereign debt issues in Europe remain a concern as does hot and dry weather in key growing regions in South America.  Export sales will be published Friday, a day late due to the holiday on Monday.  The next major report comes January 12th when the USDA releases its annual Supply/Demand and Crop Production report.

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