Jul 23, 2014
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August 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.

Soybeans sell-off after "frost" fails to materialize 8/31/09

Aug 31, 2009
 
SETTLEMENTS 8/31
         
 
Sep 09 Corn
326 ¼    
+ 5 ¼
Dec 09 Corn
329 ¾
+ ¾
Nov 09 Beans
979 ½ 
- 31 ½
Sep 09 Wheat
471
+ 4
Sep 09 KC Wheat
505
+ 5
Sep 09 Min Wheat
521 ¼ 
- ¼
Dec 09 Meal
297.5
- 11
Dec 09 Oil
35.60
- 1.09
 
 
 
 
 
 
 
 
 
 
 
 





 
            December corn closed slightly higher on the day and 20-cents lower on the month. Good August weather and good yield outlooks weighed on prices this month. High feed wheat supplies, the potential for record corn yields and lower animal numbers should keep prices on the defensive heading into harvest. The crop is still lagging in maturity and this has kept prices stable as the market is waiting to see when the first frost/freeze hits the Midwest. There were some areas of the northern Midwest that saw temps reach the mid to upper 30’s over the weekend, but not cold enough for a frost to occur. Temperatures now look to warm back into the 70’s and 80’s with no frost threats seen for the next 14 days. There are a lot of people waiting to sell their crops once we “get by” without an early frost. This could cause another large sell-off as we head into the end of the month. Corn yields look to be very large as long as an early freeze does not hit before the end of September. The market will still be sensitive to “early” frost forecasts, but there are a lot of bushels that need to be sold/ moved in the next 45 days. On the positive, the demand front looks to be improving for corn. Ethanol margins are at the highest levels in over a year. As long as energy prices remain strong, this should continue. 28-year highs in sugar prices could also add support to the global ethanol market as less sugar is used for ethanol production in South America. Corn also looks to lose acres to soybeans in South America this fall. So, although I still think corn prices could break another 40 or 50-cents from here, there are some positive signs ahead. 
 
            November soybeans closed 32-cents lower on the day and 2 ½- cents lower on the month. November soybeans have been trading in a very wide trading range for the past 3 months. Large Chinese purchases, tight old crop supplies and the fear of having an early frost have been keeping the market supported. Good weather and weak domestic demand have been keeping prices capped. Tight old crop supplies have kept the soybean market very sensitive to any adverse production news. The possibility of an early frost is keeping the market supported for now. However, I still believe that without an early frost soybean prices could head much lower this fall/winter. Traditionally, cool and wet conditions during August result in very large yields. I know that a lot of people will disagree with me on this one. I know that there are some disease problems (white mold, SDS, ect.), there always are. I do believe that heavy rains throughout August will more than offset these problems. An early frost would change my opinion, but even with a normal frost I think we could see a record national yield. That’s just my opinion and only time will tell. If I am right, there are very few people even talking about the possibility of a record national yield. Right now, most people are trying to figure out if the USDA’s current yield estimates are too high or if their demand numbers are too low, or both. The entire marketplace from the hedge fund to the farmer is convinced that the soybean market is going higher. Again, maybe everyone is right. Either way, as a producer I would still have downside protection from here just in case we do have a very large sell-off. 
 
            Wheat closed 4-cents higher on the day and 57-cents lower on the month. I hate to sound like a broken record, but large global stocks and weak demand continue to weigh on prices. High crop ratings for the spring wheat and large supplies of winter wheat are helping the carryout continue to grow. Global stocks continue to grow, and domestic wheat prices are trying to find additional demand. Cheap wheat out of the FSU and cheap corn and DDG prices in the U.S. are making that a difficult task.  Wheat made fresh 2 1/2 –year lows today before closing higher. End of the month buying helped wheat prices rebound sharply late in the day. The funds are holding very large “short” positions, so at any time we could see a 30 or 50-cent rally off of the lows (like we had from 8/24 to 8/25). However, at this time a producer needs to be in the position to sell those rallies.
 
 
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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 Grain Commentary 8/27/09

Aug 27, 2009
 
SETTLEMENTS 8/27
         
 
Sep 09 Corn
323  
+ 2 ½
Dec 09 Corn
329 ¼
+ 3 
Nov 09 Beans
996
- ½
Sep 09 Wheat
475
- 3 ¾
Sep 09 KC Wheat
508 ½  
- 2 ½
Sep 09 Min Wheat
538 ¾  
- 4 ½  
Dec 09 Meal
296.5
- 2
Dec 09 Oil
36.83
- 0.26
 
 
 
 
 
 
 
 
 
 
 
 






Soybeans, Corn End Mixed In Low-Key Trade; Friendly Weather Weighs
 
  • Nov Soybeans Slump Despite Heavy US Dollar Fall, Strong Export Sales
  • End-Of-Month Fund Activity Expected To Keep Activity Choppy
 
Soybeans:
 
The soybean market got off to a solid start Thursday and initially built on overnight firmness thanks to strong US export sales reported in the pre-market. However, as a decent sales total had been anticipated, the early support soon gave way to profit taking which served to keep Nov prices on the defensive for most of the rest of the session.
 
More profit taking and general selling pressure can’t be ruled out Friday, but we are also expecting a fresh round of month-end position allocations into the commodities arena that could well serve to boost all raw material markets, soybeans included. As a result, we need to allow for quite wide trading ranges in the sessions ahead as this market tries to transition from a tight old crop scenario into a likely ample new crop environment over the coming weeks.
 
We appreciate that worries about an early frost nipping national yields will likely prevent new crop prices from cascading lower any time soon, but also believe that friendly weather conditions so far have certainly endowed this crop with huge potential as long as the closing stages of the growing season avert widespread frost.
 
Overall, it is clear that prices here are going to stay lively for some time yet, but given that an early frost is at best only a ‘possibility’ rather than a ‘probability’ right now, we continue to advise producers to use periods of price strength as opportunities to top up sales ahead of harvest.
 
Corn:
 
Corn managed to score a modest gain on the day but lacked clear direction overall as prices explored both sides of their recent trading range.
 
From a technical perspective, Dec futures nearly etched a ‘bullish outside day’ as prices extended beyond Wednesday’s trading range and closed just shy of Wednesday’s highs. Had today’s close bettered Wednesday’s high, that would likely have triggered follow-through buying, but given that the late rally petered out just shy of there, we expect the recent sideways bias to be maintained Friday.
 
Weather conditions remain key, but as we get closer to the end of the growing season we need to brace for very strong yield reports and projections. August has been nearly perfect for most of the crop, and if we get more of the same weather in September a record national yield cannot be ruled out. Such a big crop projection will force a closer look at the demand side of the story, which remains patchy outside the ethanol industry.
 
So, once again, if there are producers out there who have not yet made a meaningful amount of sales of the upcoming crop, we encourage you to give us a call to discuss your ag marketing opportunities and how you can get caught up ahead of a potentially steep price decline going into harvest.
 
Wheat:
 
Chicago Dec wheat had a choppy day, and spent most of the session down near recent lows around $4.92-4.94 before staging a late rally on the back of crude oil’s recovery and the weaker US dollar. More choppy trade is expected ahead, but the overall bias of this market is likely to stay lower as long as global inventories continue to climb and overall usage remains soft.
 
 
 
 
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Our commentaries are just one part of our whole risk management service. Please go to http://www.ehedger.com/sign-up/ 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.

Grains end in choppy trade 8/26/09

Aug 26, 2009
 
SETTLEMENTS 8/26
         
 
Sep 09 Corn
320 ½   
- 1
Dec 09 Corn
326
- ¾
Nov 09 Beans
997 
- 2
Sep 09 Wheat
478 ¾
+ 7 ¾
Sep 09 KC Wheat
511 
+ 6 ¼
Sep 09 Min Wheat
543 ¼   
+ 7
Dec 09 Meal
297.7
- 0.8
Dec 09 Oil
37.06
- 0.11
 
 
 
 
 
 
 
 
 
 
 
 







            Corn and soybeans closed lower and wheat closed higher. The grains were choppy today and looking for direction. Good August weather and good outlooks are weighing on prices and the fear of an early frost and strong Chinese buying are keeping prices supported. Tomorrow’s weekly sales should be large for soybeans once again.   New crop sales to China could be as high as 1.5 million MT. Again, this is obviously bullish as the buying is taking place, but if the crop is large, I think it is ultimately very bearish. The Chinese have already bought a lot of their needs upfront. The fear of tight global supplies has convinced the Chinese buyer to “lock up” their needs early. With the farmer holding on to the majority of the new crop, there could be little buying left under the market this fall/winter. Chinese purchases are already close to 11 million MT for new crop. The USDA is currently estimating that they will take a total of 16 million MT during the 2009-10 crop year. If this is accurate, the Chinese importer has already purchased nearly 70% of their total needs before we have even harvested a bushel! Again, we will still have to end up with a good crop. If the crop gets hurt badly in the next couple of weeks, the Chinese will look very smart locking up their supplies early. However, if we have a large crop this year, prices could fall sharply by next spring. South America looks to increase soybean acres sharply. If this is does indeed happen, our exports should be close to zero from March 2010 to September 2010 as South America picks up the slack. I’m just afraid that without a weather problem, the bull soybean market has already used up most of its “bullets”. The consequences of an early frost are so great however that having some upside protection for the next 30 days should be used to help make some good sales at these levels. 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/sign-up/ 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.

Good crop ratings weigh on prices 8/25/09

Aug 25, 2009
 
SETTLEMENTS 8/25
         
 
Sep 09 Corn
320  
- 9 ½
Dec 09 Corn
325 ¼
- 10 ¼  
Nov 09 Beans
996 ¾
- 10 ¾ 
Sep 09 Wheat
468 ¾
- 3
Sep 09 KC Wheat
502 ½  
- ¾
Sep 09 Min Wheat
537 ¾   
- ¼ 
Dec 09 Meal
298
- 1.9
Dec 09 Oil
37.18
- 0.54
 
 
 
 
 
 
 
 
 
 
 
 






Corn, soybeans and wheat all closed lower. After yesterday’s sharp gains, a sharp jump in corn and soybean crop conditions helped weigh on prices overnight and during the day. Crop conditions are now among the highest on record for both corn and soybeans. Strong September soybeans and soybean meal prices helped pull the entire complex higher early in the day. September soybean futures are the last “old crop” contract. There are very few “players” left in these contracts and the price is disconnected from new crop soybeans. What the September contract does depends on who NEEDS to buy some soybeans before harvest or who NEEDS to sell some before harvest. Last year, for example, September soybeans rallied $2.70/bushel on the last day to close at $14.90! (November soybeans then broke $4/bushel heading into harvest!) So, looking at September soybeans as a barometer for November soybeans is not a good strategy.
            Very favorable growing conditions look to persist over the next two weeks. There is still a slight chance for a frost in the extreme northern areas this weekend. This is keeping prices supported for now and the situation will need to be monitored. Obviously a frost this early would be bad for any areas affected. However the crops are getting bigger and without a frost, prices are heading lower. If instead of an early frost we get a late summer, I believe both corn and soybean yields will be records. Many people are already talking about the potential of a record corn crop, but very few are even hinting at the possibility of record soybean yields (I think because corn prices have broken but soybeans haven’t). August weather has been ideal and if we have a late frost we will have a record crop. Again, this all depends on when our first frost takes place. If we have an early frost, everything I said is irrelevant. Soybeans are at $10/bushel. As a producer, you need to do something to protect these levels. By the time you are “sure” your crop looks good and there aren’t any production risks ahead, it will be too late. There are some very reasonable options to buy if you are worried about making cash sales. 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/sign-up/ 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.

Soybeans lead grains higher on frost fears 8/24/09

Aug 24, 2009
 
SETTLEMENTS 8/24
         
 
Sep 09 Corn
329 ¼   
+ 7 ½
Dec 09 Corn
335
+ 8 ¾
Nov 09 Beans
1006 ¾
+ 33 ¾
Sep 09 Wheat
471
+ 11 ½
Sep 09 KC Wheat
503 ¼  
+ 9 ½ 
Sep 09 Min Wheat
539  
+ 7
Dec 09 Meal
299.8
+ 9.8
Dec 09 Oil
37.66
+ 0.72
 
 
 
 
 
 
 
 
 
 
 
 





All three grains closed sharply higher. Soybeans were the clear leader today with September closing 57-cents higher and November closing 35-cents higher. Corn and wheat followed late in the day. The main feature was a forecast calling for a possible frost this coming weekend in the upper Midwest. This seems very unlikely; put there is a possibility. A frost/ freeze this early would obviously be devastating, so many people are positioning themselves accordingly. We will likely see this forecast change several times as we head throughout the week, so expect a VERY volatile trade. If you want some protection against a frost, buy some October soybean and/or corn calls to get you through this timeframe. This is the type of “scare” that we should be used to catch up on some sales. There are also some cheap put options that you can buy if you do not want to make any more cash sales. There is now $2/bushel of risk premium in the soybean market (in my opinion). If we see a frost this early, we will likely have a sharp rally from here. If we do not see a frost, and the weather outlook remains good, we will likely see a sharp break ahead of harvest. As a producer, this is a very difficult position. If you are completely unsold, I would either make sales and buy some calls (for upside protection), or I would buy some puts (to protect unsold bushels) at this time. At least this will help give you some comfort over the next month. Please 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/sign-up/ 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 8/21/09

Aug 21, 2009
 
SETTLEMENTS 8/21
         
 
Sep 09 Corn
320 ¼   
+ 1 ¾
Dec 09 Corn
324 ¾
+ ¾
Nov 09 Beans
976 ¼
+ 19 ¼
Sep 09 Wheat
459 ¼ 
- 9 ¾
Sep 09 KC Wheat
493 ¼ 
- 5 ½
Sep 09 Min Wheat
530 ½   
- 8 ¼
Dec 09 Meal
290.5
+ 7.1
Dec 09 Oil
36.91
+ 0.52
 
 
 
 
 
 
 
 
 
 
 
 
 





Corn closed 2-cents higher on the day and 2-cents lower on the week. Corn traded down to contract lows on Monday, but prices recovered throughout the week. Favorable weather outlooks continue to weigh on prices. However, corn remains cheap relative to wheat and soybeans and with the flat price of corn at 2 1/2 –year lows, the farmer has been reluctant to sell. Shortly, the farmer will be forced to sell the remaining old crop bushels. Without a weather scare next week, prices should be under pressure as we approach harvest. With large “carrying charges” in the corn market and cheap flat prices, the farmer will have a large incentive to store corn. This could help basis levels after harvest. End-users should look at taking advantage of a sharp break in basis levels as farmers move old crop bushels. Once this grain is moved, it might be hard to get the bushels after harvest if flat price is still low.
 
Although I think corn prices will continue to break for now, there are some bright signs ahead. Profitability is slowly returning to the end-users. The ethanol industry is running strong again and near capacity. Operating margins are strong and blending margins (used to determine discretionary blending) are also strong. Exports are picking up and should continue if prices remain low. Cattle feedlots are close to break-even levels in some areas after being deep in the red. Corn looks to lose acres to soybeans in South America. This is not enough for a bull market right now, but they are positive signs nonetheless.   Without the crop getting hurt by a frost, we look to have a big crop. With global wheat supplies continuing to grow, global feed grains will be up sharply on the year. Oilseeds should gain a lot of acres next year versus coarse grains and this will eventually matter. However, demand is still weak and it will take time to fully rebuild. Ample stocks of corn, feed wheat and cheap DDG’s combined with lower animal numbers should keep prices cheap for now. 
 
Soybeans closed 16-cents higher on the day and 9-cents lower on the week. Good rains throughout the Midwest caused the soybean market to quickly take $1 of risk premium off the price. Strong purchases from China combined with continued fears of a frost are keeping prices supported. Although I can’t argue with prices remaining supported now, I do not think this will last without a frost. First, let’s talk about production. The crop is behind on maturity. This has many worried about having a frost that will hurt the crop. I couldn’t agree more, an early frost would be devastating to many acres and a normal frost would hurt some. No argument there. However, many plants are still adding pods and filling. The majority of the Midwest has seen 2-8” of rain in the past 7 days. This will greatly improve yields if there is not an early frost. With soybean prices historically high relative to other crops, acres look to skyrocket in South America. Without an early frost in the U.S. and without a drought in South America, global stocks of soybeans look to increase to the extent that global wheat did last year. 
 
Now, let’s talk about demand. China continues to be a very aggressive buyer of soybeans, again no argument there. With a drought in Argentina last year, 750 million farmers to support and a lot of cheap U.S. dollars to get rid of, who can blame them? The combination of the Argentine drought and Chinese stockpiling took nearly 30 million MT off of the market. This obviously put all of the pressure on the U.S. for Chinese exports. Exports will likely remain very strong from Sept.-March as the U.S. will be the only supplier. But once South America comes online, our exports could be close to zero. This was a very unique year as we continued to export throughout the year. I guess China could always decide to stockpile more soybeans, but who knows? This buying spree created a very “tight” world situation. (Actually, the carryover was just transferred from the U.S. and South America over to China). The need to “ration” soybeans forced soybean meal to rally to all-time highs versus all other feed ingredients. However, not only did old crop soybean meal do this, but so did new crop. With much cheaper alternatives and a weak animal industry, soybean meal demand fell sharply. This will be a continued theme in my opinion. Soybean meal still remains expensive and we are way overestimating soybean meal demand for next year. Cheap corn, cheap feed wheat, and cheap DDG’s are all replacing as much soybean meal as possible. With most end-users trying to “get by”, most have substituted what ever they can to achieve this task. So, if we get into September and it looks like we won’t have an early frost I believe the soybean market will have another sharp sell-off.
 
            Wheat closed 9-cents lower on the day and 21-cents lower on the week. After 2 years of grossly overpriced wheat, the global producer has helped stocks increase dramatically. Cheap competition from global suppliers and pressure by the CFTC to “fix” the wheat contract and cause convergence continues to weigh on prices. “If” the wheat market does break to cash levels, we could see prices fall another $1/ bushel. The wheat market hasn’t been a legitimate contract for some time, so your guess is as good as mine. Hopefully it does get “fixed” and we do finally see convergence.
 
 
 
 
Get More From EHedger.
 
Our commentaries are just one part of our whole risk management service. Please go to http://www.ehedger.com/sign-up/ 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.

Grains end the day in choppy trade range 8/20/09

Aug 20, 2009
 
SETTLEMENTS 8/20
         
 
Sep 09 Corn
318 ½  
- 1 ½ 
Dec 09 Corn
324
- 3 ½ 
Nov 09 Beans
957 
- 1
Sep 09 Wheat
469 
+ 3
Sep 09 KC Wheat
498 ¾ 
+ 1 ½
Sep 09 Min Wheat
538 ¾  
+ ¼
Dec 09 Meal
283.4
+ 0.1
Dec 09 Oil
36.39
- 0.31
 
 
 
 
 
 
 
 
 
 
 
 







The grains closed mixed. Soybeans and corn closed mostly lower and wheat closed higher. All three markets traded both sides of unchanged. Not much fresh news. Export sales were good for corn and soybeans and decent for wheat. Weather outlooks remain favorable and this is pressuring prices. The crushing industry is slowing down the crush pace, and this is helping margins improve. With new crop supplies close, the crusher is unwilling to pay up for “old crop” soybeans. Instead, they are slowing the crush and increasing their margins. This is why we are seeing nearby meal prices rally. Although this could be very bullish for September soybean meal and maybe even October meal, it isn’t bullish for new crop soybeans. Soybean meal is being rationed with cheap alternatives (ddg’s, corn, feed wheat, ect.) and lower animal numbers. With good rains catching the majority of the belt, the last “weather hurdle” will be the frost date. If we get an early frost, the market will rally and if we don’t, it will break. I don’t want to over simplify it, but that is the fact. The weather has been good since the late start, and a good finish will result with big crops and cheaper prices. Eventually, these cheaper prices will help build back demand and help prices recover. Building demand takes time however, and without hurting production (i.e. freeze) it will be hard for prices to rally until after harvest. We have adjusted some of our recommendations and added some new recommendations. Please make sure you are current on these recommendations and/ or have spoken with your broker.
 
 
 
Get More From EHedger.
 
Our commentaries are just one part of our whole risk management service. Please go to http://www.ehedger.com/sign-up/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 8/19/09

Aug 19, 2009
 
SETTLEMENTS 8/19
         
 
Sep 09 Corn
320 
+ 5 ½
Dec 09 Corn
327 ½
+ 5
Nov 09 Beans
958 
- 1
Sep 09 Wheat
466 
- 4 ½
Sep 09 KC Wheat
497
- 1 ½
Sep 09 Min Wheat
538 ½  
- 2 
Dec 09 Meal
283.3
- 0.9
Dec 09 Oil
36.70
+ 0.15
 
 
 
 
 
 
 
 
 
 
 
 
 




Corn:
 
Corn traded on both sides today in decent trade before closing the session with a 5-cents gain in the Dec contract. At face value, the firmer tone of the crude oil market (up over $2 a barrel in Dec futures) and the weaker dollar were supportive factors that aided in corn’s climb. However, some short corn / long soybean position tweaking was clearly also a major factor as those markets diverged on the day despite both facing the same generally supportive macro conditions.
 
Corn looks set for a period of mainly sideways trade for the coming days as we get through the rest of August and round out the development of the crop. The ongoing Pro Farmer crop tour relayed patchy crop assessments as expected today, but the overall theme remains that both the corn and bean crops have very strong potential as long as the weather remains non-threatening. Of course, there will remain a few out there who will worry about the impact of an early frost, but they might worry in vain for the next 2-3 weeks as the market focuses more on the likelihood of a near record-sized crop emerging before too long.
 
That will lead to a shift in attention towards the demand side of the equation, which right now remains quite soft. Profit margins have improved in the ethanol industry, but feeders remain in disarray and in a period of contraction rather than expansion, which means corn’s usage prospects look set to deteriorate for a while longer. In addition, corn will have to content with extra DDG’s and an abundance of feed wheat, which will further cloud corn’s demand outlook.
 
Overall, we suspect that corn is not done with its downwards probes yet, and would not be surprised to see Dec futures descend into the $2’s as harvest nears and if weather forecasts do not call for any early cold snaps. Followers of EHedger’s marketing advice are protected from such an event, but for those growers who have not yet taken sufficient precautions, please get in touch with us to chat about how we can help.
 
Soybeans:
 
Nov soybeans shuffled mainly sideways on the day before settling slightly lower. From a technical perspective this market appears to be finding support at $9.40 and the 200-day moving average, but in our opinion remains highly vulnerable to another downward leg before too long if the Midwest growing weather remains accommodating. Pro Farmer’s reports will be closely followed in the days ahead, but so far the main gist is that, given adequate time, this crop should finish up quite well.
 
This market remains highly responsive to demand, and of course we have another round of weekly export sales reported tomorrow. Estimates range from 250,000 to 750,000 tons, and have the potential to be quite high given China’s persistent interest lately. However, domestic crushers have put the brakes on lately, so if China’s appetite at the export table slows much at all, we anticipate the prospect of a very large fresh crop to apply quite serious pressure to the price. Whether that happens this month or next remains to be seen, but given what we know right now we expect to see Nov beans trade in the low to mid $8’s some time in the next several weeks.
Wheat:
 
CBOT Dec wheat continued to grind lower in lackluster trade and settled for the third consecutive day below $5. And as far as Dec prices have fallen since their early June high of $7.25 ¼, we anticipate even greater weakness in the weeks ahead as wheat prices try to get cheap enough to entice greater offtake. Wheat supplies globally continue to rise, and until that trend changes wheat prices will favor the downside. 
 
 
 
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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 8/18/09

Aug 18, 2009
 
SETTLEMENTS 8/18
         
 
Sep 09 Corn
314 ¾  
+ ½ 
Dec 09 Corn
322 ½
+ ¾ 
Nov 09 Beans
956 ½  
+ 2 
Sep 09 Wheat
470 
- 1 ¾
Sep 09 KC Wheat
498 ½ 
- 1 ¾ 
Sep 09 Min Wheat
540 ½  
- ¼ 
Dec 09 Meal
283.7
+ 1.8
Dec 09 Oil
36.47
- 0.01
 
 
 
 
 
 
 
 
 
 
 
 
 






Soybeans, Corn Edge Higher As Selling Pressure Wanes
 
  • Nov Soybeans Rebound 4 ½ c, Dec Corn 3/c4 c in Quiet Trade
  • Friendly Weather, Bearish Technicals Still Threaten More Weakness
 
Overview:
 
The soybean market finally managed to get out from under the recent torrent of selling pressure and catch its breath Tuesday. Overall conditions were very quiet across the board, and the commodities markets in general edged quietly higher on the day as the US dollar eased lower and the stock markets firmed a little.
 
The mood in the ag arena remains pretty solemn, as highly favorable weather conditions/outlooks dominate sentiment and raise expectations for hefty crops of both corn and soybeans. Meanwhile, key end users, such as the hog and cattle industries, remain on the defensive following a rough few months in which profit margins were erased or turned negative. The net result is a pair of markets unable to escape from the shroud of potential over-supply amid a patchy demand environment.
 
As long as that scenario prevails, prices of both corn and soybeans look liable to struggle holding on to any gains, and indeed look destined for lower levels. Corn may prove to be the more vulnerable of the two for the near term, as a majority of that crop looks now set to get through it’s most crucial developmental phase without any weather struggles. The soybean crop still has a few weeks to go before the same can be said for it, so until then we may see the beans ‘hang in there’ a bit better, and potentially stage the odd rally.
 
But, if the weather remains warm and moist across the Midwest into September, then the bean crop will likely be considered potentially very large, and that would set the stage for another downward leg in prices.
 
Of course, an early freeze would change the story, but then again that’s the case every year, and it seems a bit strange to worry about that now during the middle of August. So, unless the weather patterns change drastically, we expect rallies of both corn and soybeans to be limited for the rest of the month, and for the downside to stay the path of least resistance. 
 
Wheat’s outlook is similarly grim, if not more so, and indeed CBOT wheat prices ended the day lower despite the supportive influences of corn and beans on the day. Global wheat stocks continue to climb, and with demand a little sour we are expecting wheat prices to continue to grind mainly lower in the weeks ahead.
 
 
 
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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 8/17/09

Aug 17, 2009
 
SETTLEMENTS 8/17
         
 
Sep 09 Corn
314 ½  
- 4 ¾ 
Dec 09 Corn
322
- 5 ¾ 
Nov 09 Beans
950 ½  
- 31 
Sep 09 Wheat
471 ½  
-10 ¼  
Sep 09 KC Wheat
500 ¼  
- 8 ¼
Sep 09 Min Wheat
540 ¾ 
- 8 ½ 
Dec 09 Meal
281.6 
- 7.4
Dec 09 Oil
36.48
- 1.31
 
 
 
 
 
 
 
 
 
 
 
 




Grains Close: Soybeans, Corn Continue Downward Spiral
 
  • Nov Soybeans Retreat Another 27c To Below $9.60
  • Friendly Weather, Bearish Technicals Spur Broad Liquidation
  • Crop Conditions Little Changed In Corn & Soybeans
 
Overview:
 
Soybeans remained the most influential market on the CBOT Monday, and continued their recent downward spiral with another heavy setback. The 27-cent drop brings Nov’s losses to more than $1.10 a bushel in just three trading sessions (since August 13, the high of the recent move), and demonstrates the one-way nature of the recent trading traffic.
 
Deteriorating domestic demand coupled with improving growing conditions has ushered in waves of long liquidation and profit taking lately, while curbing the appetite of buyers. More weakness is expected in the days ahead, though a modest rebound can’t be ruled out before too long in light of the steepness of the recent slump. Further, from a technical perspective Nov futures managed to hold above the widely-watched 200-day moving average in place just below $940, which may spur some chart-based buying overnight.
 
However, the overall bias here remains negative, as right now it appears the market is bracing for a potential record-sized crop in the fall. (We’ve heard all the stories of yield-threatening early frosts potentially nipping crops in late September, but it’s August right now and the crop is growing nicely overall – and that’s what the market is concerned with at the moment.) As long as the weather remains non-threatening, it’s possible for this still heavily-long market to continue grinding lower until the end of the month. That means a retreat below $9 is on the cards, which would bring into view 2009’s lows of $7.84-8.00.
 
We’re not stating that Nov prices will go back down there this month (though we’re not ruling it out), but are confident that those producers who…
 
Dec corn closed 6 cents lower at $3.21 ¾ - its lowest close in nearly a month. Bargain hunting and short covering managed to lift the market off its early lows of just above $3.10, but it appears the path of least resistance remains lower as long as growing conditions remain so friendly.
 
The $3.10 level is a key support target on the charts, and any breach of there would target $3.00. To the upside, the $3.40 region should now act as resistance.
 
Dec wheat closed below $5 for the first time since May of 2007 as the recent exodus continues. Swelling global stockpiles combined with soft end-user demand look set to keep this market under pressure, and make a retreat towards $4.50-4.60 likely in the weeks ahead.
 
 





 
 




 
 
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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 Weekly Grain Wrap-up 8-14-09

Aug 14, 2009

Sep 09 Corn
319 ¼  
- 5 ¼
Dec 09 Corn
327 ¾
- 4 ¼
Aug 09 Beans
1100  
- 87 ¼
Nov 09 Beans
981 ½
-37 ¼
Sep 09 Wheat
481 ¾
+ ¼
Sep 09 KC Wheat
508 ½
UNCH
Sep 09 Min Wheat
549 ¼
-1 ¼
Dec 09 Meal
289.0
-17.9
Dec 09 Oil
37.79
-0.48














Grains Close: Soybeans Continue Slump; Corn, Wheat Also Softer
 
  • Soybeans Retreat Another 35+c On Heavy Profit Taking
  • Bearish Technical Pattern Spurs Chart-Based Liquidation
  • Friendly Weather Outlooks Threaten More Weakness Ahead
 
Soybeans:
 
The soybean market saw an extremely volatile week. New crop prices closed more than 35 cents lower on the day and 57 cents lower on the week. November futures had over an eighty-cent range in the last two trading sessions alone, as jittery traders and mixed technical signals spurred heavy activity.
 
People continue to ask why we had such a large break the past two days. The real answer is that in the current soft demand environment, new crop beans had no business being over $10 in the first place! It appears people were taking tight old crop fundamentals and trying to apply them to the new crop. However, it now appears that old crop may not even be as tight as many people thought, as commercial players delivered beans today, and Aug beans closed 87 ¼ lower.
 
In addition, basis levels are not as strong as they would be if beans were genuinely as tight as many analysts have claimed. In the report this week, the USDA ending stocks were indeed a bit tight, but this was using a yield of 41.7. If friendly growing weather continues, and we have a normal frost date, the yield could be significantly higher than this, which will change the carryout number significantly.
 
Furthermore, we continue to believe that the USDA and many other analysts continue to overestimate demand for next year. Sure, demand could turn out to be pretty big, but it would take really cheap beans to accomplish this.
 
Obviously things could change if the weather suddenly gets drier and much hotter, but at this point November beans above $10:00 just does not make sense - and if the bean crop finishes well, we still have significant downside risk left in this market.
 
This does not mean we’re not going to see the occasional rally. This market is will continue to overreact to every rumor that hits the wires, but at this point farmers should take advantage of these rallies until something changes with the big picture fundamentals.
 
Corn:
 
Dec corn put in a quiet but soft showing to end the week, and closed 4 ¼ cents lower on the day and largely steady on the week. New crop corn has now settled below $3.40 but above $3.20 for five out of the past six weeks, and in our opinion is poised to take another leg lower in the coming days towards $3.00 given the still friendly weather outlooks and that fact that Wednesday’s hefty yield increase by the USDA is still fresh in traders’ minds.
 
The production side of this market clearly has the potential to be very large, so focus over the coming weeks will be on how well can the consumer side of the equation hold up. With the hog industry in historic disarray and cattle producers also struggling, corn’s prospects appear a little grim at the moment. But, if prices get low enough (into the $2s) then real demand will be re-invigorated, which may be what’s required to start the next bull market.
 
Looking forward, we believe corn prices have the potential to whip around for the near term on position adjusting, before heading quite steeply lower towards the end of the month and into the fall. Consequently, we once again urge producers who have not sold much of their 2009 crop to top up sales on near term rallies, and take protection from the upcoming slump.
 
We also have recommendations for your 2010 crop, so please call us for a full consultation about your positions and opportunities over the coming weeks.
 
Wheat:
 
Chicago Dec wheat futures resumed their recent downtrend and closed out the week at their lowest level in more than 2 years. A breach of the support in place around $5 looks likely very soon, and there’s a chance that a swift slide towards $4.50 takes place once that key psychological perch is lost.
 
Producers need to move fast to top up sales before a potentially painful stumble going into September.

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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 8/13/09

Aug 13, 2009
 
SETTLEMENTS 8/13
         
 
Sep 09 Corn
324 ¾  
- 6
Dec 09 Corn
332 ¼
- 4
Aug 09 Beans
1189 ¾  
- 26 ¼  
Nov 09 Beans
1020 ½  
-23 ½
Sep 09 Wheat
482 
- 8 ¼
Sep 09 KC Wheat
508 ½ 
- 10 ½ 
Sep 09 Min Wheat
551 
- 12
Dec 09 Meal
306.8
- 5.7
Dec 09 Oil
38.35
- 0.87
 
 
 
 
 
 
 
 
 
 
 
 
 






Grains Close: Soybeans Tumble Late After Jittery Trade
 
  • Soybeans Tumble Late After Early Gains Run Out
  • Corn Under Pressure All Day After Firm Night Session
  • Weather Outlooks Still Friendly
  • More Pressure Expected As Weekend Nears
 
Soybeans:
 
The soybean market got off to a firm start Thursday, and briefly scaled 11-month highs of $12.41 ½ in the August contract and 2-month highs in Nov futures on strong early buying spurred by supportive outside markets and decent weekly export sales. However, once that initial buying spree dried up, heavy profit taking emerged that dunked old and new crop prices quite aggressively as the session wore on.
 
More pressure is expected on both fronts Friday as traders pare back heavily long soybean positions ahead of the weekend. The recent gains in the beans have been fueled primarily by speculation of an imminent depletion in US inventories, and concern about the state of the currently emerging crop here. However, the USDA’s update Wednesday stated that US old crop stocks are still more than 100 million bushels, and that new crop supplies should handily top 3 billion bushels off a record planted acres figure.
 
All told, the combination of this more ‘roomy’ outlook by the USDA coupled with a lack of follow-through buying this morning set the stage for the profit taking seen late Thursday, and leads us to suspect that more is to follow in the days ahead.
 
Of course, more whippy two-sided trade must also be allowed for as traders here remain jittery, but overall producers should be prepared to use any remaining near term rallies as selling opportunities before a potentially steep retreat materializes.
 
Corn:
 
Corn exports were on the soft side Thursday, which limited this market’s upside momentum from the start and kept new crop prices largely on the defensive throughout.
 
Given the still friendly weather outlooks, and that fact that Wednesday’s hefty yield increase is still fresh in traders’ minds, corn’s softer tone is no surprise, and indeed we are anticipating additional selling pressure in the sessions ahead.
 
The production side of this market clearly has the potential to be very large, so focus over the coming weeks will be on how well can the consumer side of the equation holds up. With the hog industry in historic disarray and cattle producers also struggling, corn’s prospects appear a little grim at the moment. But, if prices get low enough (into the $2s) then real demand will be re-invigorated, which may be what’s required to start the next bull market.
 
Looking forward, we believe corn prices have the potential to whip around for the near term on position adjusting, before heading quite steeply lower towards the end of the month and into the fall. Consequently, we once again urge producers who have not sold much of their 2009 crop to top up sales on near term rallies, and take protection from the upcoming slump.
 
We also have recommendations for your 2010 crop, so please call us for a full consultation about your positions and opportunities over the coming weeks.
 
Wheat:
 
Chicago Dec wheat resumed its recent downtrend and settled at its lowest level in more than 2 years. A breach of the support in place around $5 looks likely very soon, and there’s a chance that a swift slide towards $4.50 takes place once that key psychological perch is lost.
 
Producers need to move fast to top up sales before a potentially painful stumble going into September.
 
 
 
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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 8/12/09

Aug 12, 2009
 
SETTLEMENTS 8/12
         
 
Sep 09 Corn
330 ½  
+ 4
Dec 09 Corn
336
+ 5
Aug 09 Beans
1215 
- 1 ½
Nov 09 Beans
1044 
+ 5 ½
Sep 09 Wheat
490 
+ 4 ¾
Sep 09 KC Wheat
519 ¼ 
+ 2 ¼
Sep 09 Min Wheat
563 
- 5 ¾
Dec 09 Meal
312.7
- 1
Dec 09 Oil
39.24
+ 0.47
 
 
 
 
 
 
 
 
 
 
 
 
 





Grains Close: USDA Report Has Few Surprises; Mkts End Firmer
 
  • USDA Keeps Corn & Bean Acres Largely Flat
  • USDA Ups Corn Yield By More Than 6 Bu To 159.5/Acre
  • USDA Trims Soybean Yield From 42.6 To 41.7/Acre
  • Feed Demand Woes Persist As Hogs Fall To Fresh Lows
 
 
Soybeans:
 
The USDA increased US soybean planted acres by 200,000 to 77.7 million in today’s report, but trimmed the yield to 41.7 bushels an acre (from 42.6 previously). The acreage revision makes sense, as many producers who were unable to plant corn in certain areas were motivated to plant extra beans due to the attractive prices that prevailed in June. The yield adjustment, however, makes less sense, as the current weather conditions remain very conducive for crop growth. We have heard some ramblings from other analysts about early frost potentially nipping soybean yields in the Dakotas etc, but think it’s ridiculous to worry in August about the possibility of frost in October.
 
Also, the main problem with the bean crop so far has been a lack of heat units, so if the beans can catch up on that front over the next month, then their collective development will be more or less complete by the normal frost dates. In short, we think the lower yield estimate is pretty bogus, and will likely revert higher in due course as long as we get heat and the occasional rain over the rest of this month. And whether it’s 41.7 or 42.6, we’ll still have a record production total given the record planted acres total that is now in play.
 
Such a high output total (3.2 billion bushels) will force the market to shift its focus toward demand, and the more closely we look at the consumption side of this industry, the more worried we become about the downside potential of bean prices over the coming months. China has been the only strong buyer we’ve had, and to be sure they’ve bought enough lately for the rest of the world not to matter. But the rest of the World WILL matter going forward, especially once South American output rebounds and competes for business on the export stage as 2010 rolls around.
 
So, once again, we strongly recommend producers use any upcoming price rallies as selling opportunities before prices likely spiral lower as the US harvest gets underway.
 
Corn:
 
The USDA left corn planted acres flat at 87 million, but bumped the yield by over 6 bushels to 159.5/acre. The new production total of 12.761 billion bushels is big by anyone’s standards, and begs the question whether demand will be there to use it all.
 
The USDA took strides to claim the demand will be there, by boosting exports by 150 million bushels and feed demand by 100 million. However, we believe such projections are foolish given the grim state of the global feeding industry, and the fact that corn has to contend with an abundance of feed wheat and DDG’s over the next year.
 
Still, the USDA’s numbers are what they are, so we now have to look at what the price needs to do in order to entice more than 12.5 billion bushels of usage. In our opinion, the only way to motivate and sustain such aggressive demand is for prices to keep grinding lower so that corn becomes too cheap not to use. That’s not a pleasant prospect for any grower, we know, which is why we have been repeatedly stressing that producers top up sales during rallies over the past several months.
 
Looking forward, we believe corn prices have the potential to whip around for the near term on position adjusting, before heading quite steeply lower towards the end of the month and into the fall. Consequently, we once again urge producers who have not sold much of their 2009 crop to top up sales on near term rallies, and take protection from the upcoming slump.
 
We also have recommendations for your 2010 crop, so please call us for a full consultation about your positions and opportunities over the coming weeks.
 
Wheat:
 
The USDA repeated it’s generally bleak assessment of the wheat market Wednesday. World ending stocks rose again to 187.56 million tons – a fresh 8-year high – while demand remains patchy due to the tattered feeding industry and broad global economic malaise.
 
Chicago Dec wheat managed to score a 5 ¼ cents gain on the day nonetheless, but the strength seen was more to do with short covering and position adjusting than from fresh consumer buying, so our expectation is that wheat prices will favor the downside again soon. As we stressed on Tuesday, a drop into the mid to low $4s can’t be ruled out in the coming weeks.
 
 



 




Go to http://www.ehedger.com/sign-up/ for a free two-week trial that includes our hedging recommendations, trades of the day, market recaps or to simply open an account.
 
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 8/11/09

Aug 11, 2009
 
SETTLEMENTS 8/11
         
 
Sep 09 Corn
326 ¾ 
+ 2 ½
Dec 09 Corn
330 ¾
+ ¼
Aug 09 Beans
1210 ½  
+ 40 
Nov 09 Beans
1037 ½  
+ 27 ½  
Sep 09 Wheat
485 ¼  
- 9
Sep 09 KC Wheat
517 ½ 
- 7 ¾ 
Sep 09 Min Wheat
568 
- 7
Dec 09 Meal
311.8
+ 6.1
Dec 09 Oil
38.85
+ 1.65
 
 
 
 
 
 
 
 
 
 
 
 
 
 






Grains Close: Soybeans Bounce Back; Awaiting USDA Report
 
  • Aug Soybeans Surge 46c, Nov Beans 28 ½c On Pre-Report Biz
  • Weaker US Dollar Offers Support To Commodities
  • Weather Still Friendly For Crop Development
 
Soybeans:
 
Soybeans were the main attraction Tuesday and jumped back from Monday’s lows to recover all the ground lost at the beginning of the week. Aug futures pierced nearby resistance to draw follow-through short covering and secure its first close above $12/bushel for the first time since last September. Nov beans settled above $10.30 to stay within striking distance of the $10.50 level.
 
The beans are likely to remain the most active market here for a while, and plenty of last-minute positioning should be expected overnight ahead of tomorrow’s USDA report. Overall, there’s a growing assumption that the beans may gain acres in Wednesday’s revisions, but that a downward trimming in the bean yield may also be on the cards. Judging by the persistent price strength, it seems the general bias remains to the upside, so that the yield worries trump any concerns about a steep acres climb.
 
For our part, we see no reason to be more worried about the state of the bean crop than the corn crop. Both have had the same friendly weather, and with forecasts set to remain generally warm and wet, we expect crop development to continue nicely on both fronts. The only real difference between corn and beans is on the perception of tightness in the beans that doesn’t exist in corn. But even in this regard that tightness story only rests in the old crop – so Nov beans look plenty vulnerable to a steep setback at some point.
 
Bottom Line: If the USDA’s numbers lift bean acres and leave the yield flat, we think a heavy sell off in Nov beans can’t be ruled out, so continue to urge producers to top up new crop sales while we’re above $10.
 
Corn:
 
Dec corn unable to build on Monday’s firmness and only squeaked to a ½ cent gain on the day. Even so, heavy selling pressure was largely absent, indicating that most traders are happy with their positions right now going into the report.
 
In general, it seems the market is bracing for a US corn acreage deduction tomorrow, as well as an upward revision in the national yield that reflects the broadly friendly weather conditions. The degree of shifts on either front remain up in the air, but for our part we think the hefty yield potential of this crop will continue to snuff out corn rallies until we get passed harvest.
 
Bottom Line: Producers should continue to look to sell into strong rallies as the potential for a drop below $3 is very strong if the weather remains non-threatening.

Wheat:
 
Chicago wheat resumed its recent downward march and settled 7 ½ cents down at its lowest level since May of 2007.
 
Bottom Line: Growing global stockpiles, diminishing feed demand and ample World production should all continue to point to lower wheat prices, and a drop into the mid to low $4s can’t be ruled out in the coming weeks.
 
 



 
 
 
Go to http://www.ehedger.com/sign-up/for a free two-week trial that includes our hedging recommendations, trades of the day, market recaps or to simply open an account.
 
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 8/10/09

Aug 10, 2009
 
SETTLEMENTS 7/10
         
 
Sep 09 Corn
324 ¼  
+ 2 ¼ 
Dec 09 Corn
330 ½
+ 4
Aug 09 Beans
1170 ½  
- 14 
Nov 09 Beans
1010 
- 28 ½  
Sep 09 Wheat
494 ¼  
+ 4 ¾
Sep 09 KC Wheat
526 ¼ 
+ 1
Sep 09 Min Wheat
575 
+ 1 ¾ 
Dec 09 Meal
305.7
- 13.3
Dec 09 Oil
37.20
- 0.29
 
 
 
 
 
 
 
 
 
 
 
 
 






Grains Close: Corn Rebounds On Short Covering
 
  • Corn Bounces, Soybeans Break On Position Shuffling
  • Wednesday’s USDA Report Eyed
  • Weather Still Friendly For Crop Development
 
Overview:
 
Dec corn reversed its recent tide Monday and closed out the day 4 cents higher – it’s first positive close in five trading days. Position juggling ahead of Wednesday’s USDA report was the main driver behind the firmness, and more could be seen overnight and Tuesday.
 
Overall, the USDA is expected to unveil a smaller corn planted acreage figure on Wednesday in response to its acreage resurvey in Illinois and other growing areas. However, in our opinion the market has moved on from worrying about the amount of planted acres, and is now much more interested in the size of the potential yield. After all, growing conditions since our late start have been very good, and there’s a strong chance that several key regions will produce record yields if conditions stay non-threatening for the rest of August.
 
So, if the USDA does indeed peel back corn acres, and the corn price rallies as a result, we strongly recommend that producers use such strength as a fresh selling opportunity as such gains will likely prove short lived.
 
Nov soybeans suffered a heavy setback Monday as traders unwound long soybeans versus short corn positions ahead of Wednesday’s USDA update. Given that the beans are liable to gain additional acreage in the USDA numbers, the softer tone of the bean price is no surprise, and we expect additional weakness in the sessions ahead. That trend may well persist for the next several weeks if growing conditions in the US Midwest remain friendly towards the crop, and overseas buying interest in US beans starts to cool.
 
So, once again, we suggest that producers look to top up hedge positions and sales sooner rather than later in case prices quickly give up their recent gains and return toward 2009’s lows.
 
Chicago wheat prices moved in line with corn, and mainly thanks to short covering rather than fresh buying interest. Wheat remains without a strong bullish story right now and could well encounter fresh selling interest as the month moves on if corn and beans come under renewed pressure themselves.
 
 







 
 
 
 
Go to http://www.ehedger.com/sign-up/ for a free two-week trial that includes our hedging recommendations, trades of the day, market recaps or to simply open an account.
 
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 8/07/09

Aug 07, 2009
 
SETTLEMENTS 8/7
         
 
Sep 09 Corn
321 ½  
- 11
Dec 09 Corn
326
- 14 ¼
Aug 09 Beans
1186 ¼  
+ 15 ¾  
Nov 09 Beans
1039 ½  
+ 9 ½  
Sep 09 Wheat
489 
- 11 ¼
Sep 09 KC Wheat
524 ¼ 
- 9 ¾ 
Sep 09 Min Wheat
571 ¼  
- 8
Dec 09 Meal
318.7
+ 4.2
Dec 09 Oil
37.57
+0.03
 
 
 
 
 
 
 
 
 
 
 
 
 




              Corn closed 14-cents lower on the day and 23-cents lower on the week. After a quick 60-cent rally off of the lows, corn quickly erased most of those gains this week. The USDA’s announcement of a revision to acres on the August 12 report and a strong soybean market caused a large short covering rally. We rallied all the way up to $3.75, which was higher than I anticipated. However, the market was not able to keep those gains as good weather and weak animal prices were too overwhelming. Hog prices are down 25% over the past three weeks. Forced liquidation in the hog industry, low cattle on feed numbers, low poultry numbers and a very weak dairy industry are all catching up to the corn market. Ethanol demand and export demand has been picking up, but hasn’t been enough to keep corn supported. The national corn crop looks good. Most areas have seen good rains and many areas could see record yields. There are still some problem areas across the belt (most notably Illinois), but many of those areas are improving as well. These areas will still need to get by without an early frost, but with most areas looking good the market isn’t willing to wait to see if a frost develops. I expect the corn market to remain weak as we head into the end of the month and the farmer sells the remaining old crop bushels. After those bushels are sold, we will have to see how/if demand picks up and how the crop finishes up. We have the USDA report on Wednesday. Most are looking for a reduction in planted acres of 500,000 up to 2 million. This has already been priced into the market, so the big surprise would be if acres are unchanged or higher. (I am not predicting this!) Hopefully you took advantage of the recent rally to get caught up on sales. If you are still behind, I would sell a rally ahead of the report if we get one. 
 
August soybeans closed 14-cents higher on the day and 50-cents higher on the week. November soybeans closed 9-cents higher on the day and 57-cents higher on the week. Continued export sales to China was the dominating factor this week. Even with good growing conditions in the U.S. and the expectation of a large increase in acres in South America, soybeans continue to rally. The rally has caused soybeans to look good “technically” and this has caused a strong wave of fresh buying. Strong sales to China also have many increasing their demand estimates for the ’09-10 crop year. I still think we are overestimating demand in a big way. Although China has been a huge buyer of soybeans, demand around the rest of the world seems to be falling. Domestic demand is certainly getting worse and export demand (besides China) is lower. The drought in Argentina combined with stockpiling in China took a combined 30 million MT of soybeans off of the world market. This created a “tight” old crop situation and in the world. The fear of “running out” of soybeans has caused the world user to get coverage both in the old crop and in the new crop. China has a lot of US dollars that are becoming worth a little less every day. Since they know they will need a certain amount of soybeans anyway, why not buy them now to make sure they get what they need? It’s pretty obvious that this is going on. With Argentina and Brazil quickly running out of exportable soybean supplies, the U.S. will be the only supplier until South American harvest in March/April. This has many people nervous and no one wants to get caught without supplies this spring. Although this has proven to be bullish now, it could turn out to be very bearish later. 
This reminds me of what happened in the wheat market two years ago. Short global supplies caused end users across the globe to get coverage for the fear of “running out”. This caused wheat prices to rally sharply while this buying was taking place. However, this rally caused wheat to become expensive relative to every other crop and it rationed demand globally. Farmers responded across the globe and planted a record amount of wheat. The world user also stopped feeding wheat and demand plummeted. Wheat prices have been breaking ever since. In my opinion, this is happening in the soybean market right now. Soybean and soybean meal prices are at historical highs relative to other feed ingredients. With animal numbers falling and other feed ingredients much cheaper, soybeans are rationing demand globally. At the same time, acres should increase to record levels in the southern hemisphere as a result. I have been saying this for some time, and maybe I am dead wrong (wouldn’t be the first time!). 
I know there is still a long time until we know how large our crop in the U.S. is and how big the South American crop will be. A lot of things can change between now and then, and I realize that. Old crop soybeans could still do anything from here, and the weather could still do anything. Prices are within striking distance of the recent highs, and we could easily start another leg higher if we take out those highs next week I just want to point out some of the negatives of the soybean market (as I see them) going forward since very few people are.
 
               Wheat closed 11-cents lower on the day and 39-cents lower on the week. Large global supplies, good weather and weak demand continue to plague the market. Wheat continues to break in search of demand. The complete disconnect that the wheat contract went through 18-months ago is still weighing on the market. Prices remain too high to feed and too high relative to wheat from other exporting countries. Until we see demand pick up, it will be hard to see wheat start a bull market. With large short positions, we will continue to see short covering rallies, but for now those should continue to be sold. 
 
 
Go to http://www.ehedger.com/sign-up/ for a free two-week trial that includes our hedging recommendations, trades of the day, market recaps or to simply open an account.
 
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.
 
 
 

Soybeans make new highs; corn and wheat unable to follow 8/05/09

Aug 05, 2009
 
SETTLEMENTS 8/5
         
 
Sep 09 Corn
346 ½  
- 8
Dec 09 Corn
356 ¾
- 9
Aug 09 Beans
1174 ¾  
+ 9 ¾  
Nov 09 Beans
1045 ¾  
+ 14 ¼
Sep 09 Wheat
529 ¼  
- 13
Sep 09 KC Wheat
560 ¼ 
- 12 ¾
Sep 09 Min Wheat
605 
- 15
Dec 09 Meal
317.8
+ 6
Dec 09 Oil
38.11
-0.06
 
 
 
 
 
 
 
 
 
 
 
 
 






                Corn and wheat closed lower and soybeans closed higher. All three markets opened higher after a higher trade overnight. Lower outside markets and sharply lower meat markets drove prices lower shortly afterwards. The recent rally in grain prices and continued “collapse” in hog prices and Milk prices have quickly erased any hopes for those producers of having any profit margins. Eventually, something will need to “give”. Either the producers will need to liquidate more or grain prices will need to have a serious break. Right now, it looks like we could see a combination of the two.
 Informa also came out with some production estimates around 10:30. They estimate the national corn yield at 157 and the soybean yield at 41.6 currently. If weather remains favorable however, they estimate final yields at 164 bu./acre for corn and 43.5 bu./acre for soybeans. This had mixed reactions and caused the soybeans to trade from 10 higher to 10 lower and back to 15 higher on the close. Corn and wheat broke sharply after the Informa numbers and were never able to fully recover. Late buying in the soybean complex helped soybeans close on new highs for the move and pulled corn prices 8-cents off of the lows. Soybeans are still the favorite and buying continues to enter late in the day. Soybeans are still flirting with some very large technical price levels and the bulls are trying very hard to get prices above these levels in the hope of drawing in some additional buying. The dollar index made new lows for the move and the stock market rallied very sharply as we went into the close. Money continues to chase all of the markets in tandem, and this continues to provide opportunities in our markets. 
The extended weather models continue to struggle with a solid outlook for the weeks ahead. Most have a strong system over the next 60 hrs to impact 70% of the Midwest, with exact locations still fuzzy. Then most models have a “ridge” setting in over the Midwest during this coming weekend. Then the models differ. Some are calling for a continued ridge and others are calling for a return to cool and wet conditions. Obviously these two different scenarios will have very different impacts on the crops. These weather “runs” come out every 12 hrs. and this is responsible for some of the sudden moves we are seeing as well. We put out some new hedge recommendations today, so make sure you have read them and give us a call if you have any questions.
 
 
 
 
Go to http://www.ehedger.com/sign-up/ for a free two-week trial that includes our hedging recommendations, trades of the day, market recaps or to simply open an account.
 
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.
 
 
 

Grains explode higher 8/03/09

Aug 03, 2009
 
SETTLEMENTS 8/3
         
 
Sep 09 Corn
358 ¾  
+ 19 ¼
Dec 09 Corn
369 ½ 
+ 20
Aug 09 Beans
1173 
+ 39
Nov 09 Beans
1030 ¼  
+ 48 ¼
Sep 09 Wheat
549 ¾  
+ 21 ½
Sep 09 KC Wheat
579
+ 19 ¾
Sep 09 Min Wheat
625 ¼  
+ 20 ¼
Dec 09 Meal
310.1
+ 9.6
Dec 09 Oil
38.24
+ 2.44
 
 
 
 
 
 
 
 
 
 
 
 
 
 





-FC Stone estimates corn yield at 160, soybeans 42.4
 
Corn, soybeans and wheat all closed sharply higher. Soybeans led the rally early, closing 50-cents higher in the overnight trade. After last week’s sharp rally, forecasts calling for some ridging in the 6-10 day outlook and stronger outside markets helped draw in additional buying. This buying helped push soybeans and corn through some major technical levels and in turn caused more short covering and new buying. The U.S. dollar index made new lows for the year and the stock market made new highs for the year. These factors also helped attract new buying to the commodities markets. We typically see “new money” enter our markets at the end of the month and again during the first of the month. On Friday, I thought that another round of buying could help soybeans rally to $10.25 and corn to $3.60 sometime this week. Once again, the market surpassed those levels in one day! With the crop behind in many areas, the market remains very “touchy” to any adverse weather forecasts. This will likely keep our markets very volatile over the next two months. “Hot and dry” and “early frost” will be common talk and common worries as we head into harvest. We have rallied much higher (and faster) than I thought we could. Soybeans are back to some key technical levels (chart below), and how the market handles these levels should determine if more buying will come in or if we will start to liquidate. As a producer, I would make some sales today and some tomorrow. “First of the month” buying should be winding down and the CFTC will rule on how to “deal” with Index funds. This could cause another sell-off late tomorrow. How those hearings turn out will be very important.  
 
 

 
 
Go to http://www.ehedger.com/sign-up/ for a free two-week trial that includes our hedging recommendations, trades of the day, market recaps or to simply open an account.
 
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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