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December 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 Closing Grain Commentary 12.31.09

Dec 31, 2009

Market Settlement Change Low High 
March corn 414 1/2  3/4 412 418.25
March wheat 541 1/2    -3 1/4    540 550
Jan soybeans 1039 3/4 3 1/2    1032.75 1052.25
Jan soymeal 313.90 -2.30 313.9 319.9
Jan soyoil 40.35 0.86 39.32 40.54
Feb live cattle 86.175 1.125 85.60 86.70
Feb lean hogs 65.600 -0.025 65.50 66.25




Soybeans and corn closed higher while wheat closed lower. The bean market was strong most of the session but the market sold off going in to the close. Export Sales were strong for both corn and beans today. The volume has been thin all week it should pick up next week but many traders may stay on the sidelines until after the January 12th report. Many people are expecting large allocations of money the first half of Jan. We should see farmer-selling pick up dramatically (especially corn) after the start of 2010 as farmers free up some cash for tax season. Also, many of the allocation people are waiting for may already be priced in the market. For these reasons farmers should make sure they are all caught up on sales. The calls that we bought a couple of weeks ago should give you the confidence to fire off cash sales at these levels and higher. January will be a very important month and the information we receive will help structure our market for 2010. If we continue to see a run-up in prices ahead of these reports, it will be a good idea to have some good sales on the books before this time.

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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 12.29.09

Dec 29, 2009
Market Settlement Change Low High 
March corn 417    1    413.25 418
March wheat 541    -9 3/4 540 554.75
Jan soybeans 1038    9    1020.25 1040
Jan soymeal 314.90 4.50 306.6 316.3
Jan soyoil 39.43 -0.20 39.21 39.57
Feb live cattle 85.125 -0.25 84.80 85.33
Feb lean hogs 65.425 0.72 65.10 65.625

Soybeans closed higher, wheat closed lower and corn closed mixed.  The grain markets remain thin ahead of the New Year.  As I have said before, we will be receiving a lot of information on the January 12th reports and this has many traders on the sidelines for the time being.  Also, the market is waiting to see how much “new money” enters after Jan.1st.  The expectation for large allocations of money in this timeframe has kept support in the markets for now and provided a good selling opportunity for farmers.  We have seen a lot of farmer selling in the past few trading sessions and expect this to continue at the start of the year.  We should see farmer selling pick up dramatically (especially corn) after the start of 2010 as farmers free up some cash for tax season. Many farmers sold soybeans “off the combine” and stored corn.  A lot of this corn is not storing well and these bushels will be moved shortly.  For these reasons alone, I would make sure you are all caught up on sales by January 1.  If we do see a lot of farmer selling in January, it will be hard to find enough buying to accommodate this selling at current prices.  The calls that we bought a couple of weeks ago should give you the confidence to fire off cash sales at these levels and higher.  January will be a very important month and the information we receive will help structure our market for 2010.  If we continue to see a run-up in prices ahead of these reports, it will be a good idea to have some good sales on the books before this time.

 

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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.

 

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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 12.23.2009

Dec 23, 2009
Market Settlement Change Low High 
March corn 404 3/4 6    397.25 405.25
March wheat 529    6    518.75 529.75
Jan soybeans 1001 1/4 10 1/4 990 1001.75
Jan soymeal 303.90 5.40 298.5 303.7
Jan soyoil 38.08 0.03 37.88 38.29
Feb live cattle 85.375 0.7 84.90 85.50
Feb lean hogs 65.675 0.92 65.05 65.75
 
Corn, soybeans and wheat all closed higher. Holiday markets. Low volume and choppy markets will be common in the remaining days of 2009. I recommend producers have resting orders in above the market if the need to catch up on sales exists. We often see sharp breaks and sharp rallies on low volume during the holidays. Census crush came in as expected at a record 168.6 million bushels for November. Unexpected however, was the sharp build in both soybean meal and soybean oil stocks. This implies weaker domestic demand for soybean meal and much weaker domestic demand for soybean oil. 
 
South America remains in good condition and Informa estimates that 2009 soybean production is 100 million bushels higher than the last USDA estimate. I would say that I agree with most of these statements. As I have been saying, I expect soybeans to be the weakest of the grains/oilseeds in 2010 if South America has a good crop. We are quickly approaching the end of the year, and after months of hoarding soybeans, we could see a sudden shut-off in Chinese demand (especially out of the U.S.) This would be a dramatic change from the last 12 months and could cause a very large sell-off this spring. However, we are on a large break and are due for a rally. New money allocations (if they occur) could give us another rally at the start of the year. This would be a great selling opportunity in my opinion, and I suggest being an aggressive marketer during this timeframe. We will be receiving a lot of useful information in January. We will know how much “new money” was placed into commodities, we will get updated production figures for corn and soybeans, we will get winter wheat plantings, we will have a good idea on the size of the South American crop, we will get a quarterly stocks report and know more about feed demand, and we will have a good idea what the crop insurance prices will be for corn and soybeans. All of these a large factors and will set the direction of the market for 2010. With so many unknowns, the market will likely build some premium back into the markets ahead of these events. Hopefully this will provide the opportunity to lock in even more attractive prices for the 2010 crops. Have a great Holiday season and give us a 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 Closing Grains Commentary 12/17/09

Dec 17, 2009
Settlements 12/17

Market Settlement Change Low High 
March corn 397    -13 1/4 393.25 410
March wheat 518 1/2 -18 3/4 514.25 539.25
Jan soybeans 1022    -37 1/2 1015.5 1063.25
Jan soymeal 307.40 -9.50 306.6 317
Jan soyoil 38.64 -1.69 38.45 40.38
Dec live cattle 81.425 -0.7 81.35 82.25
Feb lean hogs 65.550 -1.28 65.30 66.575
 
 
Corn, soybeans and wheat all closed sharply lower. Weekly sales figures were good for corn and the soybean complex and remain weak for wheat. This helped support prices early but a sharp rally in the U.S. dollar and sharp break in the outside markets helped grains break sharply. As I have said before, at these prices the grain markets will need a continual flow of investment money to keep prices supported. Corn and soybeans rallied back to the high ends of their ranges. Corn demand suffered and South American soybeans have become discounted to U.S. beans. The U.S. dollar is now at the highest level in over 3 months. There are a lot of “new longs” in our markets due to the falling dollar and expectations of new money flows at the start of 2010. The expectation of “new buying” in 2010 could have been the main driver of the recent rally in prices. Bears and Bulls alike have agreed that a strong round of buying will indeed occur at the beginning of the year. Bulls are long and waiting and the bears are flat and waiting. Usually the market doesn’t let everyone be right. It could be that we have already experienced the run-up that everyone is hoping for in January. Or, this could merely be a setback in a holiday market. Either way, the market has become unpredictable for now. As producers you should be caught up on your sales. I don’t know whether or not buying will continue to push prices higher from here or not. I do know that the demand has suffered at current prices and it would be easy to see a major break as we head into the spring. I will continue to recommend selling new crop corn and soybeans if we make new highs at the beginning of the year. Prices are good and a producer can lock in sales at very profitable levels. As always, 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.

E Hedger Weekly Grain Wrap-Up 12/11/09

Dec 11, 2009
Settlements 12/11

Market Settlement Change Low High
March corn 404 1/2 11 1/2 390.25 406.25
March wheat 537 1/2  1/2 530.25 544.75
Jan soybeans 1035    8    1020 1041.25
Jan soymeal 306.50 0.90 301.4 308.4
Jan soyoil 39.57 0.12 39.25 39.92
 
 
December corn closed 12-cents higher on the day and 16-cents higher on the week.   Poor export demand, weak feeding margins, increased hedge pressure and weak outside markets all helped corn prices break back to the low end of the current trading range. We are now back to the middle of the trading range and could easily see the market rally towards the high end of the range ($4.05-4.20) or break back towards the lows ($3.60 area) by the end of the month. The liquidity is weakening every day as we quickly approach 2010. Market players from all sectors are stepping aside and will likely return early next year. This will make the market become increasingly “thin” with each passing day. It will take larger inter-day moves for funds to move in and out of large positions. This combined with very volatile outside markets, should create more and more choppy markets for the grains. Fundamentally, corn looks to have found a trading range. Above $4, corn looks to be overvalued as the livestock industry is unable to “pay up” for grain and the world exporter becomes uninterested. Conversely, as cash corn prices get towards the $3.25-3.50 levels we see aggressive purchases by ethanol plants, investors and importers. The market is anticipating a large influx of “new money” in the beginning of January. If this happens and pushes the corn market to new highs, I am looking to lock in another rounds of good sales for the 2010 crop. The calls that we bought this week will help us capture some upside on the 40% of the 2010 crop that we have already sold. If you have not yet followed this recommendation, give us a call and we will help you find a suitable alternative. 

January soybeans closed 8-cents higher on the day and 8-cents lower on the week. The soybean market is now trading back at the highs of this year’s $2-3 trading range (weird saying a $3 trading range!). As soybeans approach $11, we are seeing Chinese demand switch towards South America as they become discounted to U.S. in the February and forward time slots. We are also seeing soybean meal and soybean oil demand drop off as price reach the $350/ton and 40-cent/pound prices respectively. As with corn, the market is anticipating a large influx of money to enter the market in early January. This combined with aggressive Chinese buying on large breaks has helped soybean prices remain strong. Currently, the weather looks ideal for the South American growing season. If this trend continues, we could see a meaningful break in soybean prices during the first quarter of 2010. There are more available acres for both corn and soybeans here in the U.S. next spring. If South America has a good growing season, we will see our export demand drop SIGNIFICANTLY after the first of the year. With the potential for more corn and soybean acres next spring, $10 soybeans will look high priced. Please make sure you are caught up on your sales. 

December wheat closed 1 ½ -cents higher on the day and 17-cents lower on the week. A large round of short covering and the fear of losing too many SRW acres helped wheat stage a $1.40/bushel rally. However, demand remains pathetic for wheat and global stocks continue to build. The latest USDA report increased the U.S. carryover estimate up to 900 million bushels. This is the highest carryout in 10 years! Although the wheat market will certainly have large rallies. It remains difficult to build a fundamental bull case for the next 12-18 months. As with corn and soybeans, we should see a new round of buying after the first of the year. This should be a great selling opportunity for the producer and should be taken advantage of. The calls that we bought several weeks ago will hopefully give you the confidence to make aggressive sales on any rallies through this winter. Good luck and as always give us a 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.

E Hedger Closing Grain Commentary 12/10/2009

Dec 10, 2009
 
Settlements 12/10
Market Settlement Change Low High
March corn 393    9 1/2 380.75 396
March wheat 537    1 3/4 530 544
Jan soybeans 1027    -1 1/2 1019 1033.5
Jan soymeal 305.60 0.00 302.5 307.5
Jan soyoil 39.45 0.18 39.19 39.79

Ag markets closed mixed on the day. Corn settled nearly 10 cents higher, while beans were lower. Meanwhile, wheat closed mixed with Chicago slightly higher and Kansas City and Minneapolis slightly lower. Outside markets ranges were less volatile then previous days this week and did not provide a clear direction. This mornings USDA supply/demand and crop production report showcased the growing ending stocks for corn and wheat. See below figures. All three numbers, including soybeans were larger than the estimated levels. The report confirmed that the ending stocks are not a problem for corn and wheat, while providing a bit of relief in beans from the standpoint that demand has remained very high. Wheat stocks are massive, but prices look to be a follower to corn. I think corn supplies are sufficient, but are not going to grow like beans (South American production) and this may allow corn to lead the way to finish up the year. Yesterday and today’s market action certainly showcased corn as the leader. However, the affect of today’s report was not significant. Near term focus has shifted to the winter weather and there are some concerns over the last corn acreage to be harvested. The freezing temperature will harden ground to help in the final acres to be harvested IF producers can run the combines with the snow conditions. For now this looks to support breaks, but rallies beyond last month’s high look unreasonable with the stocks available. Weather outlooks continue to show favorable South American growing conditions, while Midwest weather remains cold. Of course money flow to wrap up 2009 and in the beginning of 2010 will be a major factor. If the short U.S. dollar/ long commodities trade unwinds further, we could see some fund liquidation before the end of the year.  I would make sure you are caught up on your sales.  Please call if you have any questions.
 
USDA Supply/Demand Report
 
Corn 09/10 ending stocks 1.675 billion MT vs. 1.646 (estimate) and 1.625 (November)
Bean 09/10 ending stocks 255 million MT vs. 235 (estimate) and 270 (November)
Wheat 09/10 ending stocks 900 million MT vs. 886 (estimate) and 885 (November)
 
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 12/02/09

Dec 02, 2009
 
 
 
SETTLEMENTS 12/02
         
 
Dec 09 Corn
391 ¾        
- 8   
Jan 10 Beans
1034  
- 25 ½  
Dec 09 Wheat
554 ½        
- 8
Dec 09 KC Wheat
551
- 5 ¾   
Dec 09 Meal
317.3
- 7.4
Dec 09 Oil
39.75
- 0.83
 
 
 
 
 
 
 
 
 





 
Corn, soybeans and wheat all closed sharply lower. Yesterday’s poor closes and the lack of “new money” to start the month allowed the grains to break throughout the day. As I have been saying, the recent run-up in prices has cut-off demand. Without more investment money flowing into our markets, the grains will have a hard time holding these lofty levels. Again, I have no idea when or if this investment-buying spree will stop. I hope the money continues to push prices higher and allow us to make even better sales. We are now up to 40% sold on 2010 corn and soybeans. I recommend selling another 10% of your 2010 wheat production. This should put your sales up to 20%. We still have orders in above the market, so make sure to check our recommendations. The key going forward will still be money flow in my opinion. Without more money flowing in, our market will likely break from here. Demand has weakened at current levels, and it seems apparent that corn, wheat and even soybeans will need to break from current levels to reach the USDA’s current demand targets. With a good start to the South American growing season, a slow down in fresh investment buying could cause a quick break in prices as we head in to the next year. This is when it will pay to be a disciplined marketer and have some VERY good sales on the books. As always, give us a 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.
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