Grain markets settled lower Wednesday after a choppy double sided trading session.  December corn closed 6 ¼ cents lower at $5.31 ¾, November soybeans 4 ¼ cents lower at $12.09 ¾, and July wheat down 17 cents at $6.93 ¾.  Now that the May grain and oilseed contracts are off the board, the ongoing fieldwork is starting to put downward pressure on crop prices.

As we climb the wall of worry we are getting past the obstacles that have keep a premium in new crop prices.  A lot of the points we have talked about are starting to catch steam.  We can all worry about late planting but when it gets to be 80 degrees outside soil moisture has been recharged, the rains can suddenly turn from a bullish story to bearish.  We have talked to many producers and industry contacts that have caught up or are nearly finished planting and it is still only May 15^th. The next crop progress report should show a large jump in planting progress.  December corn prices look poised to test their lows again in the near future.

December 2013 Corn Daily Chart – 5 and 34 day simple moving averages and exponential oscillator

Meanwhile November soybeans continue to find support near the $12.00 level.  NOPA crush was only 120.11 million bushels which proves that domestic demand is still being rationed at these prices.  The July –November soybean spread continues to have wild intra-day swings settling just above a $2 premium today (see chart below).  If we are importing South American soybeans and crush is slowing down, we could see this spread start to remove some of that premium.

July-November Soybeans 15-minute barchart – green line is prior day’s settlement

For now we want to stay the course with an emphasis on downside protection hedges.  If you would like to receive the EHedger grain commentary including complete hedge recommendations, please sign up using the link.

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. You may not place an order to buy or sell commodity futures contract by e-mail. 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. EHedger LLC will not disclose anyone's position due to their confidential and proprietary nature. Recipients assume the risk of reliance on and indemnify and hold EHedger LLC harmless for any and all losses, costs, or tax consequences incurred as a result of their use of market information. The contents of this e-mail message and any attachments are intended solely for EHedger LLC's customers and brokers. This communication is intended to be and to remain confidential. Any duplication or distribution without the express written consent of EHedger LLC and this disclaimer is prohibited. If you are not an intended recipient of this message or if this message has been addressed to you in error, immediately alert the sender by reply e-mail and delete this message, its attachments, and any related messages from your computer and destroy any hard copies. If you are not an intended recipient or this message has been addressed to you in error, you are prohibited from delivering, distributing, disclosing, printing, copying, or relying on this message and/or any attachments. Opinions are solely those of the author and subject to change at any time, and are not a solicitation or recommendation to buy or sell commodity futures or commodity options. Past performance is not indicative of future results.

We think December corn is headed lower but there is a chance that it tries to fill the technical gap shown below. If you need to catch up on sales, place orders at or below $5.52.

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. You may not place an order to buy or sell commodity futures contract by e-mail. 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. EHedger LLC will not disclose anyone's position due to their confidential and proprietary nature. Recipients assume the risk of reliance on and indemnify and hold EHedger LLC harmless for any and all losses, costs, or tax consequences incurred as a result of their use of market information. The contents of this e-mail message and any attachments are intended solely for EHedger LLC's customers and brokers. This communication is intended to be and to remain confidential. Any duplication or distribution without the express written consent of EHedger LLC and this disclaimer is prohibited. If you are not an intended recipient of this message or if this message has been addressed to you in error, immediately alert the sender by reply e-mail and delete this message, its attachments, and any related messages from your computer and destroy any hard copies. If you are not an intended recipient or this message has been addressed to you in error, you are prohibited from delivering, distributing, disclosing, printing, copying, or relying on this message and/or any attachments. Opinions are solely those of the author and subject to change at any time, and are not a solicitation or recommendation to buy or sell commodity futures or commodity options. Past performance is not indicative of future results.

Markets were lower ahead of the Weekly Export Sales Report tomorrow morning.  December corn settled 6 ¼ cents lower at $5.50 ½, November soybeans 14 ¼ cents lower at $12.09 ¼, and July wheat 10 cents lower at $7.21.

We are still in a weather market.  Prices were heading lower while everyone was expecting normal yields, now it appears that we have reversed that decline and have priced in some weather premium.  The next two weeks are going to be crucial for price action.  If we continue to see heavy rain amounts into late next week we can easily see corn taking out the highs of $5.70. If we get some warmer/drier weather we can see corn taking out the lows of $5.17.  The latest GFS model is forecasting a drier model in the 10-15 day range for much of the Midwest which helped contribute to today’s weakness.

While many are touting a corn rally from the slow planting pace, we haven’t heard much chatter about how bearish this could be for November soybeans.  A 2-3 million acre swap from corn to soybeans would be very bearish for the November contract.  Where are the latest bullish headlines for soybeans?  We have bird-flu in China, lower than expected Chinese GDP, a large South American soy crop, and soybean export sale cancellations originally scheduled for China.

As a producer with guaranteed bushels we want to any rallies as opportunities to make additional hedges, especially if you were able to buy the short dated calls that we recommended last week.  Please feel free to sign up for our newsletter to get our recommendations emailed to you.  Have a great week!

EHedger  |  866.433.4371

Premier full service commodity brokerage offering risk management services for the agricultural sector as well as professional traders.

Monday’s limit up move was followed by more strength overnight but couldn’t hold through the day session for corn and soybeans. December corn closed 2 ¾ cents lower at $5.56 ¾, November soybeans 5 ¾ cents lower at $12.23 ½, and July wheat 14 ½ cents higher at $7.31.

Corn was only 5% planted as of Monday’s report which was slightly less than the market had been anticipating.  Despite this slow planting pace, corn was unable to close higher even after testing the critical $5.70 level in the December contract.  Yesterday we discussed the potential for this rally to be based on short covering.  Today that was confirmed with corn open interest down by a substantial 32,338 contracts!  This is on top of the 35,978 contracts of corn liquidated on Friday.  In a declining open interest market with sharp moves we can’t rely on the direction holding course.  This is because when we see that many contracts leaving the market in a disorderly "fear-trade" fashion it can result in mispricing as traders drive the market higher or lower than they would when they are not in liquidation.

Obviously the market has been pricing in a strong weather premium.  This can be seen in the new crop corn-soybean ratio as many acres are expected to switch from corn to soybeans. The new crop corn-soybean ratio is at the lowest it has been since January.

November Soybeans / December Corn

Meanwhile wheat was the strongest market on the board today. Much of the strength was based on crop reduction fears.  The latest crop ratings show wheat at only 33% good-to-excellent compared to 64% last year.  Spring wheat is only 12% planted compared to 37% on average.

Rains are still expected for much of the Midwest this week.  In a weather market sentiment leads the moves and right now the uncertainty seems to be enough for large money to flow to the buy side.  As a producer with guaranteed bushels we want to use these opportunities to make additional hedges, especially if you were able to buy the short dated calls that we recommended last week.  Please feel free to sign up for our newsletter to get our recommendations emailed to you.  Have a great week!

EHedger  |  866.433.4371

Premier full service commodity brokerage offering risk management services for the agricultural sector as well as professional traders.

It was another day of sharp losses for grains and oilseeds.  December corn closed 10 ¼ cents lower at $5.22 ¾, November soybeans 6 ½ cents lower at $11.96 ¼, and July wheat 7 cents lower at $6.95 ½.

Corn’s planting progress was reported at 4% yesterday afternoon, below the average guess of 5-6%. Although this is below estimates, the market is clearly telling us that this is not an issue as of April 24^th.  The heavy precipitation has recharged much of the drought areas of the Midwest.  The forecast is showing warmer and dryer weather in the extended outlook. December corn and November soybeans both hit new lows for the move today.  We expect markets to continue making a series of lower lows with small rebounds in-between barring any major weather concerns.

December Corn Daily - 1 step up, 2 steps down.

The next support for Dec corn looks to be at its June 2012 low of $5.11.

December Corn Weekly –approaching the June 12 lows.

November soybeans dropped to new lows for the move settling below the $12.00 level.  This is the lowest level since June 2012.

November Soybeans Weekly

The Short-Dated New Crop calls that we recommended to buy were filled today at 4 cents (please sign up using link for full recs).  These are a just-in-case trades to protect our hedge levels should we see unfavorable weather between now and early summer.  If you still would like to place these orders please call your broker.  This is a low-cost approach to re-owning your sold bushels between now and their expiration date on June 21^st.  Have a great rest of the week!

EHedger  |  866.433.4371

Premier full service commodity brokerage offering risk management services for the agricultural sector as well as professional traders.