Aug 29, 2014
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October 2009 Archive for 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 Weekly Grain Wrap-Up 10/30/09

Oct 30, 2009
 
 
SETTLEMENTS 10/30
         
 
Dec 09 Corn
366     
- 13 ½ 
Nov 09 Beans
978 
- 7 ½
Dec 09 Wheat
494 ¼    
- 9 ½ 
Dec 09 KC Wheat
499  
- 9
Dec 09 Min Wheat
513 ½      
- 10 ¼ 
Dec 09 Meal
297
+ 1.7
Dec 09 Oil
36.40
- 1.12
 
 
 
 
 
 
 
 
 




 
 
Corn closed 13-½ -cents lower on the day, 32-cents lower on the week and 22-cents higher on the month. This week, the “outside markets” dictated grain prices more than anything else. The U.S. dollar and the stock market have been trading in very large and choppy ranges. There has been a lot of money poured into commodities on the expectation of a weakening U.S. dollar and a recovering global economy. The U.S. dollar and the stock market seem to be looking for direction at current levels. This “choppy” trade in the outside markets is causing violent price swing in all commodities including grains. At the same time, harvest has had the slowest start in 30 years. This late harvest combined with “new money” entering the commodities, helped rally corn prices sharply during the month of October. Although this may be of relief to some farmers, this rally also caused some negative side effects. One side effect was that the U.S. has lost export business as corn out of South America became sharply discounted to U.S. corn. The largest negative of this rally is that it eliminated crop insurance payments for many farmers (those with GRIP or CRC). The average December futures price for the month of October was $3.72. With corn harvest likely to last into December, many farmers have been reluctant to make cash sales until the bushels are out of the field. Without the protection of crop insurance, there are now billions of un-priced and unprotected bushels hanging over the market. Because this crop has been very difficult to store, we could see a lot of bushels move directly to the market between now and Christmas. If the outside markets turn lower, this could be a very bad combination for the grains. I don’t know if the outside markets will turn lower or not, but as a producer I would be very cautious here. You should at least own some December puts until you can make cash sales. All of our customers should be caught up on our recommendations, please call if you have any questions.
 
Soybeans closed 7 ½ -cents lower on the day, 28-cents lower on the week and 51-cents higher on the month. November soybeans have been going mostly sideways since last spring. They closed the month of June at $9.81, the month of July at $9.82, the month of August at $9.79 ½ and the month of October at $9.78. As with corn, most producers will not be receiving crop insurance payments for soybeans. Besides the outside market influences, the soybean market has been pulled in two directions all year. The tight old crop stocks and record Chinese purchases have fought with the record new crop supplies from the U.S. and potential record crops in South America. This transition has proven very difficult especially with the constant harvest delays throughout the Delta. Currently, the weather outlook looks good for harvest progress. There was a strong system that moved through the Midwest and Delta over the past couple of days. This will further slow harvest, but the outlook calls for mostly dry weather over the next 10 days or so. If this forecast proves accurate, soybean harvest should wrap up in many areas of the Midwest. This should be enough to “turn” the soybean market lower as we head into January. With a great start to the South American growing season and a likely increase in acres here, we could see a massive increase in global stocks this coming year. I know there are still some obstacles ahead, but there is a good chance that soybeans will be the weakest grain/oilseed in 2010. 
 
SRW wheat closed 9 ½-cents lower on the day, 53-½ -cents lower on the week and 37-cents higher on the month. Massive short covering helped rally wheat $1.35/bushel in October. The wheat market is also being pulled in two directions. Huge global stocks have pushed prices to three year lows. However, the big picture seems to be changing. Wheat has already lost acres in South America and looks to lose acres in the U.S. this fall. The late corn and soybean harvest will prevent acres from being sown into wheat. If corn and soybean prices break sharply from here, wheat prices should follow. However, I think that the wheat market has already seen the most bearish fundamentals. The fundamentals are not necessarily bullish, but they are improving. For this reason I am looking to buy wheat on breaks from here. I will put some recommendations out next week for producers interested in buying some calls. 
 
 
 
 
 
 
Get More From EHedger.
 
Our commentaries are just one part of our whole risk management service. Please go to http://www.ehedger.com/getmore.html for a free two-week trial of our full member website that gives you access to all our hedge and marketing recommendations, educational tools, market snapshots and much more.
Also learn about our acclaimed AMMO Program that helps producers optimize their marketing strategies using the premier tools and insights in the industry.
 
Get Organized. Get Ahead. Get EHedger
 
Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. 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 E Hedger, its affiliates, officers, directors, employees, or agents. Recipients assume the risk of reliance on and indemnify and hold E Hedger harmless for any and all losses, costs, or tax consequences incurred as a result of their use of market information.

EHedger Closing Grains Commentary 10/29/09

Oct 29, 2009
SETTLEMENTS 10/29
         
 
Dec 09 Corn
379 ½      
+ 10 ½ 
Nov 09 Beans
985 ½  
+ 17
Dec 09 Wheat
503 ¾    
+ 9
Dec 09 KC Wheat
508  
+ 5 ¾ 
Dec 09 Min Wheat
523 ¾      
+ 4 ¾ 
Dec 09 Meal
295.3
+ 4
Dec 09 Oil
37.52
+ 0.66
 
 
 
 
 
 
 
 
 
 
 




 
Corn, soybeans and wheat all closed higher. The U.S. dollar index turned sharply lower and the stock market turned sharply higher after positive GDP data. This caused large rallies in the commodities. This is yet… For more…
 
 
 
 
Get More From EHedger.
 
Our commentaries are just one part of our whole risk management service. Please go to http://www.ehedger.com/getmore.html for a free two-week trial of our full member website that gives you access to all our hedge and marketing recommendations, educational tools, market snapshots and much more.
Also learn about our acclaimed AMMO Program that helps producers optimize their marketing strategies using the premier tools and insights in the industry.
 
Get Organized. Get Ahead. Get EHedger
 
Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. 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 E Hedger, its affiliates, officers, directors, employees, or agents. Recipients assume the risk of reliance on and indemnify and hold E Hedger harmless for any and all losses, costs, or tax consequences incurred as a result of their use of market information.

EHedger Closing Grains Commentary 10/28/09

Oct 28, 2009
 
 
SETTLEMENTS 10/28
         
 
Dec 09 Corn
369     
- 1 ¾ 
Nov 09 Beans
968 ½  
- 5
Dec 09 Wheat
494 ¾    
- 8 ½ 
Dec 09 KC Wheat
502 ¼   
- 8 ¼ 
Dec 09 Min Wheat
519     
- 7 ½ 
Dec 09 Meal
291.3
+ 3.7
Dec 09 Oil
36.86
- 0.62
 
 
 
 
 
 
 
 
 
 
 



 
 
Corn, soybeans and wheat all closed sharply lower. Today was similar to yesterday. Another rally in the U.S. dollar caused a sell-off in the equities and the commodities. The Delta and Midwest look to get some additional rains late this week, but next week looks mostly dry. Corn, soybeans and wheat have all setback to key technical levels. Weather and the U.S. dollar will likely dictate which direction we head from here.   Due to the rally in October... For more…
 
 
 
 
 
Get More From EHedger.
 
Our commentaries are just one part of our whole risk management service. Please go to http://www.ehedger.com/getmore.html for a free two-week trial of our full member website that gives you access to all our hedge and marketing recommendations, educational tools, market snapshots and much more.
Also learn about our acclaimed AMMO Program that helps producers optimize their marketing strategies using the premier tools and insights in the industry.
 
Get Organized. Get Ahead. Get EHedger
 
Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. 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 E Hedger, its affiliates, officers, directors, employees, or agents. Recipients assume the risk of reliance on and indemnify and hold E Hedger harmless for any and all losses, costs, or tax consequences incurred as a result of their use of market information.

EHedger Closing Grains Commentary 10/27/09

Oct 28, 2009
 
 
SETTLEMENTS 10/27
         
 
Dec 09 Corn
370 ¾     
- 7 ¼
Nov 09 Beans
973 ½ 
- 13
Dec 09 Wheat
503 ¼   
- 23 ¾
Dec 09 KC Wheat
510 ½  
- 20 ½
Dec 09 Min Wheat
526 ½     
- 19 ¼
Dec 09 Meal
287.6
- 7.2
Dec 09 Oil
37.48
- 0.15
 
 
 
 
 
 
 
 
 
 




 
 
Corn, soybeans and wheat all closed sharply lower. Today was similar to yesterday. Another rally in the U.S. dollar caused a sell-off in the equities and the commodities. The Delta and Midwest look to get some additional rains late this week, but next week looks mostly dry. Corn, soybeans and wheat have all setback to key technical levels. Weather and the U.S. dollar will likely dictate which direction we head from here.   Due to the rally in October, many producers will not receive crop insurance payments and will not have any downside protection. If you fall into this category, I would certainly make sure to make sales and/or have protection through the winter. There are a lot of "new longs" in the commodities because of the falling dollar. If the dollar continues to rally, this could cause a large sell-off in the commodities. Because harvest is late and the moisture is high, we will see a lot of bushels be sold off of the combine rather than stored. If the funds decide to sell at the same time, we could have a very sharp sell-off. I have no idea if this will happen or not, but so far the market has done whatever it can to hurt the most people.... and that would hurt the most people. For more…
 
 
 
 
Get More From EHedger.
 
Our commentaries are just one part of our whole risk management service. Please go to http://www.ehedger.com/getmore.html for a free two-week trial of our full member website that gives you access to all our hedge and marketing recommendations, educational tools, market snapshots and much more.
Also learn about our acclaimed AMMO Program that helps producers optimize their marketing strategies using the premier tools and insights in the industry.
 
Get Organized. Get Ahead. Get EHedger
 
Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. 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 E Hedger, its affiliates, officers, directors, employees, or agents. Recipients assume the risk of reliance on and indemnify and hold E Hedger harmless for any and all losses, costs, or tax consequences incurred as a result of their use of market information.

Grain markets liquidate with rally in U.S. dollar 10/26/09

Oct 26, 2009
SETTLEMENTS 10/26
         
 
Dec 09 Corn
378    
- 19 ¾    
Nov 09 Beans
986 ½ 
- 19 ½ 
Dec 09 Wheat
527  
- 20 ¾ 
Dec 09 KC Wheat
531 
- 18 ½
Dec 09 Min Wheat
545 ¾      
- 15  
Dec 09 Meal
294.8
- 8.5
Dec 09 Oil
37.63
- 0.31
 
 
 
 
 
 
 
 
 
 
 





 
 
Corn, soybeans and wheat all closed sharply lower. A sharp rally in the U.S. dollar caused a sell-off in the equities and the commodities. Managed funds have built massive long positions in the grains and commodities and we saw some liquidation today. This came despite forecasts of wet weather throughout the Midwest this week. This is a great example of how our markets have become financial instruments lately. Harvest progress came in below expectations for both corn and soybeans. Soybeans were 44% complete vs. 30% last week and corn was 20% complete vs. 17% last week. Many were looking for around 50% and 25% respectively. This could add some support to overnight prices. As I have been saying, these markets are very difficult. There are a lot of factors moving our markets that we have never seen before. The uncertainty in the fate of the U.S. dollar, and the state of the economy is causing vast sums of money to move quickly between markets. This is causing increased risks and increased opportunity... 

 




For access to today's entire commentary, please go to http://www.ehedger.com/getmore.html for a free two-week trial.

Also learn about our acclaimed AMMO Program that helps producers optimize their marketing strategies using the premier tools and insights in the industry.
 
Get Organized. Get Ahead. Get EHedger
 
Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. 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 E Hedger, its affiliates, officers, directors, employees, or agents. Recipients assume the risk of reliance on and indemnify and hold E Hedger harmless for any and all losses, costs, or tax consequences incurred as a result of their use of market information.
 

EHedger Weekly Grain Wrap-Up 10/23/09

Oct 23, 2009
SETTLEMENTS 10/23
         
 
Dec 09 Corn
397 ½     
- 6   
Nov 09 Beans
1009 ½ 
+ 4
Dec 09 Wheat
547 ¼   
- 4 ½ 
Dec 09 KC Wheat
549 ½  
- 3 ½
Dec 09 Min Wheat
559     
- 1 ¼
Dec 09 Meal
304.1
+ 3.3
Dec 09 Oil
37.97
- 0.33
 
 
 
 
 
 
 
 
 
 
 






 
Corn and wheat closed mostly lower and soybeans closed mixed. Continued strength in energy and the stock market and continued weakness in the U.S. dollar is drawing more money into commodities. With harvest still very slow, there is not enough selling to accommodate the huge inflow of money. The forecast continues to call for rains late next week and this has the market very nervous. Soybean harvest picked up at the beginning of the week, but recent rains have stalled harvest for the next couple of days. Many cornfields are still running close to 30% moisture and this is limiting harvest. Right now, it looks like corn harvest will not finish up until late November at least. Until harvest pace picks up, it will be hard for our markets to setback. If money continues to pour into our markets during this time, we could see corn and soybeans continue to rally. We have already rallied much further than I thought possible during this timeframe. These markets are very complicated and money is trying to find a place to go. The falling U.S. dollar and volatile stock market has Hedge funds moving large amounts of money around. This is causing extreme volatility and has quickly turned our markets into financial instruments. As I have said before, the markets have already rallied more than I thought they would ahead of harvest, and I guess they could keep going. I still want to use this rally as a selling opportunity for the 2010 crops. Hopefully we can see a rally towards $4.50 in Dec.2010 corn and $10.50 in Nov.2010 soybeans. These are levels that should be very profitable to farmers. Input costs are down dramatically and when you can lock in large profits, you should. We have resting orders to sell both corn and soybeans if we approach these levels. Many producers will not receive any crop insurance payments and will not have any downside protection from here on out. If you fall into this category, I would certainly look at selling what you can and/or buying some protection through the winter. I know I continue to put this in the afternoon letter, but nothing has changed and I want to stress this. Until harvest pace can pick up, it will be hard for our markets to have a large break. However, this is very similar to the rally we had last spring. The markets would not setback until the crop was finally planted and then we had a very sharp break. With many unsold bushels and a large crop, the market will have difficulty at these prices once the crop is finally harvested. I realize this will take many producers (my family farm included) until December to finish up corn harvest. Hopefully the weather will finally cooperate and we can finally get this crop out of the ground. Good luck and please call if you have any questions.
 
 
 
 
 
Get More From EHedger.
 
Our commentaries are just one part of our whole risk management service. Please go to http://www.ehedger.com/getmore.html for a free two-week trial of our full member website that gives you access to all our hedge and marketing recommendations, educational tools, market snapshots and much more.
Also learn about our acclaimed AMMO Program that helps producers optimize their marketing strategies using the premier tools and insights in the industry.
 
Get Organized. Get Ahead. Get EHedger
 
Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. 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 E Hedger, its affiliates, officers, directors, employees, or agents. Recipients assume the risk of reliance on and indemnify and hold E Hedger harmless for any and all losses, costs, or tax consequences incurred as a result of their use of market information.

EHedger Weekly Grain Wrap-Up 10/16/09

Oct 16, 2009
 
 
SETTLEMENTS 10/16
         
 
Dec 09 Corn
372   
- 1  
Nov 09 Beans
977 ½
- 5 ½
Dec 09 Wheat
498 ¾  
- 6 ¼ 
Dec 09 KC Wheat
510 ½ 
- 7 ½
Dec 09 Min Wheat
526 ½     
- 4 ¾   
Dec 09 Meal
294.7
- 1.5
Dec 09 Oil
36.94
+ 0.16
 
 
 
 
 
 
 
 
 
 
 
 



The decline in the US dollar index to its lowest level in more than a year gave the commodities arena a broad boost this week, and accounted for a majority of the gains seen in the grains and oilseeds markets in recent sessions. Fresh inflows of investor money were seen in several arenas, with gold scaling fresh all-time highs above $1,070 an ounce and crude oil pushing above $79 a barrel for the first time in close to a year.
 
This influx of speculative interest also steered the ag markets higher, with Dec corn hitting its highest level since June and Nov soybeans climbing to their highest level since late August. CBOT Dec wheat also made an impressive advance, and resurfaced above $5 a bushel after having spent most of September below that level.
 
Given how close we are to cranking up the US harvest, we think this recent price advance provided growers with a terrific sale opportunity - even with the lingering concerns about crop quality due to pockets of disease and ‘early-frost’ impact. We appreciate the slow harvest pace so far is preventing most growers from getting a solid feel for overall crop quality and yield totals, but are very concerned that even a modest improvement in weather conditions will unleash a wave of aggressive harvest activity that could dent prices quite suddenly. We feel the soybean market is especially vulnerable to aggressive sales given that the crop is now fully ready for cutting across the country while corn remains a touch too wet in many areas for widespread harvesting.
 
Further, as the meat of the US harvest nears, many soybean market watchers are now turning their focus to South America and to how crop plantings are progressing in that region. In general, planting conditions have been very favorable and analysts are forecasting a substantial jump in production from that region over a year ago. Current estimates are calling for an increase of more than 1.1 billion bushels of soybeans from the region, which if confirmed has the potential to flood the global market with excess soybean supplies during the first quarter of 2010. This prospect worries us greatly, which is why we have been urging customers to fire off sales during rallies throughout this past summer. Producers who have not yet caught up on sales are strongly encouraged to do so before a potentially steep price break is seen.
 
Corn may see a more gradual descent than soybeans, but is still expected to favor the downside once harvest does finally get into full swing. The prospect of a long, drawn-out harvest season should prevent an all-out corn price slump, but producers should be under no illusions that there will be not enough corn to go round. Ethanol and processing plants may be scrambling for supplies right now, but once we get 1-2 weeks of harvest under out belts the supply pipeline will be refilled and the current strong bids from those end users will dry up to leave cash corn prices susceptible to grinding back to $3 a bushel for lower.
 
Wheat prices managed to perform strongly on the week thanks to sustained speculative interest and bursts of global end-user buying. Generally speaking, sub $5-wheat is cheap, so we’re not surprised to see this market enjoy the odd rally, but it must be remembered that wheat inventories globally are still rising, which will mean rallies will be difficult to sustain. Further, a major commodity index fund is on the cusp of reducing its wheat position by half in order to comply with regulatory requirements, so waves of aggressive selling should be expected in the days ahead.
 
In all, while the slow US harvest pace combined with supportive outside markets have given the grains and oilseed markets a very positive vibe lately, we are concerned that a drier forecast for the Midwest next week will turn sentiment around fast, and set us up for a speedy return to below the price levels we saw at the beginning of October – around $3.40 for Dec corn, $9.15 for Nov soybeans and $4.45-4.50 for Dec wheat.
 
 
 
 
  
 
 
 
Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. 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 E Hedger, its affiliates, officers, directors, employees, or agents. Recipients assume the risk of reliance on and indemnify and hold E Hedger harmless for any and all losses, costs, or tax consequences incurred as a result of their use of market information.

EHedger Closing Grain Commentary 10/12/09

Oct 13, 2009
 
 

Soybeans, corn and wheat all closed sharply higher. Widespread frost/freeze over the weekend and a wet harvest outlook rallied prices overnight. Strong commodity buying and a weaker dollar added more buying. Wet weather continues to slow harvest and more rain is expected next week. Frost/freeze is expected across much of the belt next week and this is also causing some concern. With little grain harvested so far, this has caused many in the industry to question the size of the crop. This combined with strong commodity buying and a complete lack of farmer selling has helped rally our markets very sharply ahead of harvest. I will not claim to know what the crop size will be, but right now it still looks like we will see national yields for both corn and soybeans increase from today’s estimates. I have included a link to a story released by the University of Illinois and I think it is helpful for determining yield loss due to frost/freeze. The link is: http://www.ehedger.com/2009/10/12/u-of-i-report-on-corn-frost-damage/

Whether or not prices decline from here is a different story, but it does look like the crop is out there. Maybe I am completely wrong about the crop size, time will tell. However, as a producer you should look at your individual situation and decide what is best for you. If your crops look good and you can make good money at current levels then you should make some sales. You should also be looking making sales for next year’s crops. We have had our customers mostly sold for ’09/10 since the rally last spring, and now we are working on the ’10-11 crop year. Inputs are much lower than last year and many producers will have break-even levels around $3.25 or lower this year. This is another rally that should be taken advantage of. As a marketer this is when you should be locking in some profits and avoid having to sell below break-even levels. Once harvest picks back up, prices could really struggle once again. Corn is on an 80-cent rally and soybeans are on a 120-cent rally. Even if you are wildly bullish, it would not be a good idea to buy this rally right ahead of harvest. Wheat rallied $2/bushel right ahead of harvest only to break nearly $3/ bushel afterwards. People blamed disease and wet weather and quickly lowered their yield estimates. The fact was that money was entering the market and without hedge pressure the market rallied. Once harvest was underway, the market quickly broke back to contract lows. This is very similar to what the corn and soybean markets are doing. I am not saying that prices will go to new contract lows, but I am saying that prices have rallied very sharply because “new money” has poured into our markets and there hasn’t been any hedge pressure to cap the rally. Once harvest picks up (and it will), we will see hedge pressure pick up and this could create a quick break. I will be the first to admit that I didn’t see such a strong rally coming. But, I do think this rally is a gift to the farmers that missed last spring’s rally and for farmers to make sales for next year’s crop. Give E Hedger a call if you would like to discuss the best strategy for your situation.




 
Get Organized. Get Ahead. Get EHedger
 
Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. 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 E Hedger, its affiliates, officers, directors, employees, or agents. Recipients assume the risk of reliance on and indemnify and hold E Hedger harmless for any and all losses, costs, or tax consequences incurred as a result of their use of market information.

EHedger Closing Grains Commentary 10/12/09

Oct 12, 2009
 










































 
SETTLEMENTS 10/12
         
 
Dec 09 Corn
381   
+ 18 ¾   
Nov 09 Beans
999 ¼
+ 35 ¼
Dec 09 Wheat
495 ½  
+ 27 ½
Dec 09 KC Wheat
511
+ 26
Dec 09 Min Wheat
526 ¼     
+ 22 ¼   
Dec 09 Meal
306.1
+ 8.8
Dec 09 Oil
36.62
+ 1.42
 
 
 
 
 
 
 
 
 





 

 
Soybeans, corn and wheat all closed sharply higher. Widespread frost/freeze over the weekend and a wet harvest outlook rallied prices overnight. Strong commodity buying and a weaker dollar added more buying. Wet weather continues to slow harvest and more rain is expected next week. Frost/freeze is expected across much of the belt next week and this is also causing some concern. With little grain harvested so far, this has caused many in the industry to question the size of the crop. This combined with strong commodity buying and a complete lack of farmer selling has helped rally our markets very sharply ahead of harvest. I will not claim to know what the crop size will be, but right now it still looks like we will see national yields for both corn and soybeans increase from today’s estimates. I have included a link to a story released by the University of Illinois and I think it is helpful for determining yield loss due to frost/freeze. The link is: http://www.ehedger.com/2009/10/12/u-of-i-report-on-corn-frost-damage/   
Whether or not prices decline from here is a different story, but it does look like the crop is out there. Maybe I am completely wrong about the crop size, time will tell. However, as a producer you should look at your individual situation and decide what is best for you. If your crops look good and you can make good money at current levels then you should make some sales. You should also be looking making sales for next year’s crops. We have had our customers mostly sold for ’09/10 since the rally last spring, and now we are working on the ’10-11 crop year. Inputs are much lower than last year and many producers will have break-even levels around $3.25 or lower this year. This is another rally that should be taken advantage of. As a marketer this is when you should be locking in some profits and avoid having to sell below break-even levels. Once harvest picks back up, prices could really struggle once again. Corn is on an 80-cent rally and soybeans are on a 120-cent rally. Even if you are wildly bullish, it would not be a good idea to buy this rally right ahead of harvest. Wheat rallied $2/bushel right ahead of harvest only to break nearly $3/ bushel afterwards. People blamed disease and wet weather and quickly lowered their yield estimates. The fact was that money was entering the market and without hedge pressure the market rallied. Once harvest was underway, the market quickly broke back to contract lows. This is very similar to what the corn and soybean markets are doing. I am not saying that prices will go to new contract lows, but I am saying that prices have rallied very sharply because “new money” has poured into our markets and there hasn’t been any hedge pressure to cap the rally. Once harvest picks up (and it will), we will see hedge pressure pick up and this could create a quick break. I will be the first to admit that I didn’t see such a strong rally coming. But, I do think this rally is a gift to the farmers that missed last spring’s rally and for farmers to make sales for next year’s crop. Give E Hedger a call if you would like to discuss the best strategy for your situation.
 
 
 
 
 
 
Get Organized. Get Ahead. Get EHedger
 
Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. 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 E Hedger, its affiliates, officers, directors, employees, or agents. Recipients assume the risk of reliance on and indemnify and hold E Hedger harmless for any and all losses, costs, or tax consequences incurred as a result of their use of market information.

EHedger Closing Grains Commentary 9/30/09

Oct 12, 2009
 









































SETTLEMENTS 9/30
         
 
Dec 09 Corn
343
+ 2
Nov 09 Beans
926 ¼  
+ 9 ¼
Dec 09 Wheat
456 ¾ 
+ 9 ¼
Dec 09 KC Wheat
477
+ 8 ½
Dec 09 Min Wheat
490 ¼   
+ 7
Dec 09 Meal
285.3
+ 0.5
Dec 09 Oil
34.29
+ 0.44
 
 
 
 
 
 
 
 
 




 
 
 
Corn, soybeans and wheat all closed higher. Corn closed 14-cents higher on the month, soybeans closed 52-cents lower, and wheat closed 41-cents lower. The Sep.1 stocks report and wheat production report came out this morning. The report was bearish for wheat and soybeans and slightly bullish for corn. Wheat stocks came in 84 million bushels higher than expected and production came in 24 million bushels higher than expected. The wheat market has been breaking on anticipation of a larger spring wheat crop, so these numbers weren’t a huge surprise. The corn stocks figure was 45 million bushels less than the average guess, so again, no big surprises there. Soybean stocks came in 27 million bushels higher than the average guess at 138 million bushels. 
With the report out of the way, the market quickly switched over to trading outside markets. The dollar was down sharply and crude oil was up sharply. The stock market was all over the place, trading between sharply lower to higher all day. Most markets ended the day strong as end of the month buying came in late. This is the type of rally we have been looking for. We could still see some additional buying as the forth quarter begins and new money enters the marketplace. I would still use this opportunity to get caught up on sales by Friday. Our markets tend to rally going into the end of the month and then tend to sell-off. Unless something fundamentally changes, I expect the market to start selling off next week. So far, harvest pressure has been completely absent. Soybean harvest has been picking up, and we should see a lot of soybeans harvested in the next week. So far, yields have been running high on average. If this trend continues, we should see the national average continue to increase. With the ’08-09 ending stocks coming in at 138 million bushels, a higher production figure on the October USDA report could raise the ’09-10 ending stocks figure close to 300 million bushels. With soybean harvest picking up quickly and with China closed for the holidays next week, soybeans could remain the most vulnerable for a sell-off next week. To add to the confusion, COFCO (largest Chinese soybean buyer) reportedly announced that they would refuse delivery of any soybean cargo from the U.S. if that cargo contained GMO corn dust. This is likely in retaliation to the U.S. tariff on Chinese tires, but nonetheless very scary when there are a record amount of soybeans “on the books” to China. 
                 Corn harvest should pick up next week in the Midwest as well, but there are still many areas that will not be harvesting for 2 weeks or so. Most corn being harvested in Illinois is running around 30% moisture. Although the yields are coming in high, the time, money and effort in drying down the corn will be very troublesome for producers. Hopefully Mother Nature will be kind and let the crop dry down before too long. As far as prices go, I still look for this recent rally to top out shortly and for prices to break back towards the lows once harvest picks up. The fundamentals for corn are improving in my opinion, but there is a big crop on the way and there are a lot of unsold bushels. Most farmers have crop insurance and I am worried that the market will do what it does best and hurt most of the people. With the minimum price set at $4.04 last spring and with most producers likely to have yields that are above their APH, a rally in futures during the month of October into the $3.60-$3.70 area could be devastating. If the harvest price ends up around $3.60, many producers will not receive a crop insurance payment this year. This scenario would leave many producers with zero protection through the winter. With harvest delayed by a good 2-3 weeks, the market has not seen the normal harvest pressure by the middle of October that it would in a normal year. If the market doesn’t see harvest pressure until mid-late October, the producers will be forced to sell their bushels or sit on them and hope for a spring rally. This was a very long and drawn-out “what if” scenario, but since October is the month when most harvest prices are set fro crop insurance, it is something to think about.   Obviously the market could keep rallying or break tomorrow, but you should be looking at your crop insurance and develop a plan for the next 30 days.
 
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