Apr 18, 2014
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August 2011 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 Afternoon Grain Commentary 8-31-2011

Aug 31, 2011

First notice day for September grain futures brought a softer corn market and slightly higher soybean market while wheat was lower for September and slightly higher in December. December corn finished just off its low, down 7¾ at $7.67½. November soybeans were a half cent higher, finishing at $14.57½. September Chicago wheat finished 5 cents lower, at $7.45¼. 

Much of today’s trade was focused on the higher than expected deliveries for wheat and soy oil. Also released today was another private estimate ahead of September’s USDA report. A private group estimated that the corn yield is 149.1 and the soybean yield is 41. We will continue to hear estimates ahead of this report; however, at the forefront of the market is the current weather pattern as soybeans are reaching a critical point in their maturation process. Overnight rains were solid for the northern part of the Corn Belt and were disappointing for the central to southern sections that have had a tough time getting rains all season. Without the needed rains in these growing areas, soybeans should be supported at these levels.

We continue to hear discussions about the final yields, and today’s private estimate was no different. This week’s crop progress lowered the corn rating by 3% and the bean rating by 2%.  Until we get more definitive information from the upcoming harvest, the market could remain supported on production fears. If corn yields are lowered from current guesses, obviously we can still see this market take out the highs. By the same token, in a year with this much variability the market will be very anxious (volatile) if yields start coming back better than expected. We also need to be careful about observing the demand issues that high corn is presenting to the cattle industry. Weekly export sales will be released tomorrow morning (estimates are below) and the market will be watching to see if export business has been scaled back as a result of these high prices.   

What does this all mean to the producer? We recommend being cautious with marginal positions and look to move short positions over to cash sales if possible to make sure we have sustainability. We can also look at a wide range collar spread (selling a call and buying a put), which will allow for more upside potential if needed. For those reluctant to sell due to production uncertainty, we like December $7 corn puts, which are a relatively inexpensive way to get protection on for harvest.

Please call your broker for details.

Chart 8.31.11

Best Regards,

EHedger

 

For a free trial of EHedger services including the morning automated phone call, daily afternoon market commentary, and/or a free consultation, please contact EHedger at 866-433-4371. You can also visit us at www.EHedger.com.

 

Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. The market information contained in this message has been obtained from sources believed to be reliable, but is not guaranteed as to its accuracy or completeness. Market information may not be consistent with current or future market positions of EHedger LLC, its affiliates, officers, directors, employees, or agents.

 

 

EHedger Afternoon Grain Commentary 8-30-2011

Aug 30, 2011

Corn and beans finished stronger while wheat was lower.  December corn didn’t make new contract highs but finished up 5 ¼ cents at $7.75 ¼. November soybeans finished 10 cents higher at $14.57, and December wheat down 4 ¼ cents at $7.90 ¾. 

Despite yesterday’s bullish crop ratings data the market came into the day sharply lower.  We did have headlines talking about Ukraine expecting a record maize production this year of 18-20 Mill MTs, but this should have already been somewhat discounted in the market.  Despite starting out weak grains eventually found support starting with the beans and towards the end of the session corn made its way back higher.  Corn’s trendline resistance remains at about the $7.87 level for December.

Yield is still the major question and there is a wide difference of opinion still.  Yesterday crop progress lowered the corn rating by 3 percent, and the bean rating by 2%.  Until we get more definitive information from harvest the market could remain supported on production fears.  If corn yields are lowered from current guesses obviously we can still see this market take out the highs.  We like remaining in sustainable hedges and are cautious at these levels.

Chart 8.30.11

Best Regards,

EHedger

 

For a free trial of EHedger services including the morning automated phone call, daily afternoon market commentary, and/or a free consultation, please contact EHedger at 866-433-4371. You can also visit us at www.EHedger.com.

 

Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. The market information contained in this message has been obtained from sources believed to be reliable, but is not guaranteed as to its accuracy or completeness. Market information may not be consistent with current or future market positions of EHedger LLC, its affiliates, officers, directors, employees, or agents.

 

EHedger Afternoon Grain Commentary 8-29-2011

Aug 29, 2011

Grains finished mixed with soybeans leading the way higher.  November soybeans finished 23 ½ cents higher at $14.47, December corn 3 cents higher at $7.70, and December wheat down 2 cents at $7.95.

Soybeans continue their rally on dry weather concerns and continued technical strength after breaching a major trading range they have been stuck in.  If weather remains dry we could see much of the bullish attention switch to soybeans as carryout concerns start increasing.

Today’s crop conditions report was "bullish" again with declines in the ratings for both corn and soybeans.  We could see some strength on the overnight session from these numbers.

Crop Progress:

Corn                                                     August 29th                                         5 year average

Dough                                                         88%                                                        85%

Dented                                                         53%                                                        54%

Mature                                                         9%                                                          11%

Condition:  Down 3% from last week at 54% good-excellent

Soybeans                                               August 29th                                         5 year average

Setting pods                                                 93%                                                        94%

Dropping Leaves                                           2%                                                          6%

Condition:  Down 2% from last week at 57% good-excellent

I have included a chart of December corn with that shows the next trendline resistance level around $7.86.  With all of the crop downgrades recently the market seems to be targeting the all-time high around $8 for corn.  With corn and soybeans trying to ration demand, we can see short covering also take us higher. Ultimately high prices can be an "end" to high prices if we ration enough demand, but with supply still in question the market seems to want to stay supported.  We want to stay in sustainable positions and stay well hedged at these levels.  Soybean calls are still a good way to get upside protection in this market. If you are expecting bushels over and on top of your guarantee level and want to look at protecting these prices we have strategies available.  Please give your broker a call. 

Have a great week!

Chart 8.29.11

Best Regards,

EHedger

 

For a free trial of EHedger services including the morning automated phone call, daily afternoon market commentary, and/or a free consultation, please contact EHedger at 866-433-4371. You can also visit us at www.EHedger.com.

 

Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. The market information contained in this message has been obtained from sources believed to be reliable, but is not guaranteed as to its accuracy or completeness. Market information may not be consistent with current or future market positions of EHedger LLC, its affiliates, officers, directors, employees, or agents.

EHedger Afternoon Grain Commentary 8-26-2011

Aug 26, 2011

Grains finished sharply higher today after a large corn sale this morning to unknown destinations, the crop tour information, as well as short covering.  December corn finished 20 ¼ cents higher at $7.67, December wheat 9 ¼ cents higher at $7.97, and November soybeans 30 ¾ cents higher at $14.23 ½.

Today’s Pro Farmer crop tour shows most of what was expected which is a sharply lower corn yield.  They are estimating an average corn yield of 147.9 bpa with a + or – of 1%.  For soybeans the average was 41.8 bpa with a + or – of 2%.  These numbers are supportive but probably not enough to cause any major surprises for Sunday night’s trade.  Any changes in the precip forecast between now and Sunday night will be especially critical for the soybeans as many places still need rains.  Looking at the chart below soybeans made a technical breakout to the upside and we could see some follow through buying from this next week.

This morning’s corn rally started off after a large sale of 365,760 MTs of US corn to unknown destinations.  Even with this sale traders were calling the market unchanged to lower.  When the market started trading higher, large volume could be seen between $7.48 and $7.50 and stops were hit above these levels to help push us towards the session highs.

With the Fed Chairman’s speech at 9 am, the US dollar started to fall and equities and commodities were able to rally.  There weren’t any major announcements by Ben Bernanke besides the hint that another round of quantitative easing may come in September as they take an extra day to meet about their "tools".  The announcement was not significant but failing to provide any support for the dollar could eventually mean higher commodity prices in the long run.

Monday we will have crop progress and we will be heading into the end of the month which can be especially choppy on position squaring.  We want to stay in sustainable positions and remain well hedged at these levels.  Please call your broker with any questions. 

Have a great weekend!

Chart 8.26.11

Best Regards,

EHedger

 

For a free trial of EHedger services including the morning automated phone call, daily afternoon market commentary, and/or a free consultation, please contact EHedger at 866-433-4371. You can also visit us at www.EHedger.com.

 

Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. The market information contained in this message has been obtained from sources believed to be reliable, but is not guaranteed as to its accuracy or completeness. Market information may not be consistent with current or future market positions of EHedger LLC, its affiliates, officers, directors, employees, or agents.

 

EHedger Afternoon Grain Commentary 8-25-2011

Aug 25, 2011

Grains finished mixed today.  December corn finished a ½ cent higher at $7.43 ½, December wheat 10 ½ cents higher at $7.87 ¾, and November soybeans down ¾ of a cent at $13.92 ¾.

The Pro Farmer crop tour is wrapping up and continues to report variability in the estimated yields.  Yesterday they dropped their IL corn yield estimates by 6 ½ % from their 3 year tour average, and also dropped pod counts.  Today we heard reports of dryness in Northern Iowa into Minnesota.  This has been enough to keep the market supported, but we didn’t rally much today.

In the mean time gold has had a $200 move in 2 days, and the Dow Jones was sharply lower today.  Fed Chairman Ben Bernanke is expected to speak tomorrow, and we may see some large swings in the currency markets which may broadly affect commodities.

Export sales were out this morning and are as follows (in 1000’s of MTs)

                                             Estimated Range              Actual  

Corn                                      500-700                           536.1 –as expected

Wheat                                  450-750                            657.6 – lower than expected

Soybeans                              750-900                           347.1 – lower than expected

Source: Reuters

The crush numbers were in line with estimates this morning, but the meal stocks were higher than expected.  Despite this meal finished higher today while oil finished lower.  You can see by the Commitment of Traders report that the funds have started to get short oil and this may be just a positioning response.

Heading into the end of the week traders will be watching what the latest crop tour data says.  We are still supported by supply concerns while it is still a big question of how high demand will remain at these levels.  Corn has some room to ration demand from the USDA estimates.  Beans are tight but could have some leeway in the exports if S. America has a decent crop this winter.  For now we want to remain with sustainable positions.  If you have extra bushels you are expecting and want extra coverage, we have some strategies in place to protect these levels. 

Please call your broker for details.

Best Regards,

EHedger

 

For a free trial of EHedger services including the morning automated phone call, daily afternoon market commentary, and/or a free consultation, please contact EHedger at 866-433-4371. You can also visit us at www.EHedger.com.

 

Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. The market information contained in this message has been obtained from sources believed to be reliable, but is not guaranteed as to its accuracy or completeness. Market information may not be consistent with current or future market positions of EHedger LLC, its affiliates, officers, directors, employees, or agents.

EHedger Afternoon Grain Commentary 8-24-2011

Aug 24, 2011

Grains finished lower today after a small range.  December corn finished a ½ cent lower at $7.43, December wheat 7 ¼ cents lower at $7.77 ¼, and November soybeans down 3 ¾ cents at $13.93 ½.

Today there was not much for fundamental changes to go off of besides more crop variability coming out of the Pro Farmer crop tour.  The Indiana yield estimates were considered "bullish."  They will release the IL and IA numbers tonight.

Outside markets were very mixed with the Dow Jones sharply higher but gold having the largest drop since 2008, down over $100.

November soybeans came up against resistance again hitting a day high of $14.03 ¼ before coming well off the highs.  The contract high remains intact at $14.11 ¼.

Export sales will be released tomorrow and are as follows (in 1000’s of MTs)

Corn                                    500-700

Wheat                                  450-750

Soybeans                            750-900

Source: Reuters

With so much supply uncertainty this market seems to want to remain supported and we may see soybeans make the next move higher if we don’t see some adequate rains soon in the problem areas of the Midwest.  As we can see by the chart below, soybeans have been stuck in a trading range since the early part of this year and we are right at previous resistance points.  If we can push through contract highs at $14.11 ¼, we may see this rally extend on technical buying.

We also have the Jackson Hole summit where we can expect Fed Chairman Bernanke to speak about Fed policy.  Last year at this time he announced QE2 at the end of the week.  This year the market is speculating that he could announce a third round of quantitative easing during his speech.  We will have to wait to find out.

Please call in if you have any questions.

Chart 8.24.11

 

Best Regards,

EHedger

 

For a free trial of EHedger services including the morning automated phone call, daily afternoon market commentary, and/or a free consultation, please contact EHedger at 866-433-4371. You can also visit us at www.EHedger.com.

 

Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. The market information contained in this message has been obtained from sources believed to be reliable, but is not guaranteed as to its accuracy or completeness. Market information may not be consistent with current or future market positions of EHedger LLC, its affiliates, officers, directors, employees, or agents.

 

Ehedger Afternoon Grain Commentary 8-22-2011

Aug 22, 2011

Grains were sharply higher today after the Midwest didn’t receive as much rain as expected over the weekend.  December corn finished 9 ¼ cents higher, December wheat 4 ¾ cents higher, and November soybeans 16 ¾ cents higher.

There are some big things going on this week that the market will be focusing on.  For one the Pro Farmer crop tour will be reporting yields all week.  Twitter was blowing up with condition reports all day, but the official Pro Farmer results will not be out until later in the day.  From the press releases the tone seems mixed with a lot of variability.  We also have the Jackson Hole summit where we can expect Fed Chairman Bernanke to speak about Fed policy.  Last year at this time he announced QE2 at the end of the week.  This year the market is speculating that he could announce a third round of quantitative easing during his speech.  We will have to wait to find out.

Weekly crop progress came in today at 3pm and is as follows:

Corn                                                August 22nd                         5 year average

Dough:                                                 73%                                        73%

Dented:                                                33%                                        37%

Good-excellent crop condition: 57% which is down 3% from last week and 13% from last year.

Soybeans                                         August 22nd                         5 year average

Blooming:                                            97%                                        97%

Setting Pods:                                       83%                                        88%

Good-excellent crop condition: 59% which is down 2% from last week and 5% from last year.

Overall the drop in the good-excellent categories can be seen as supportive for price action tonight.  We already made new contract highs today in Dec 11 and Dec 12 corn.  We also are seeing all time highs being made in other markets like gold.  With so much supply uncertainty this market seems to want to remain supported and we may see soybeans make the next move higher if we don’t see some adequate rains soon in the problem areas of the Midwest.

Buying soybean calls for upside potential is still a decent way to play the long side of the market.  Please call in if you have any questions.  Have a great week!

Chart 8.22.11

Best Regards,

EHedger

 

For a free trial of EHedger services including the morning automated phone call, daily afternoon market commentary, and/or a free consultation, please contact EHedger at 866-433-4371. You can also visit us at www.EHedger.com.

 

Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. The market information contained in this message has been obtained from sources believed to be reliable, but is not guaranteed as to its accuracy or completeness. Market information may not be consistent with current or future market positions of EHedger LLC, its affiliates, officers, directors, employees, or agents.

 

EHedger Afternoon Grain Commentary 8-19-2011

Aug 19, 2011

Corn and wheat staged a large rally today to finish the week.  December corn finished 12 ¼ cents higher at $7.25 ¼, December wheat up 22 cents at $7.61 ¼, and November beans up 7 ½ cents at $13.68 ½.

The market is still heavily supporting corn on supply concerns.  Next week we have the highly anticipated Pro Farmer crop tour.  This can provide a lot of volatility in the markets as reports start coming in out of the field.  Either way it will be one of the main focus points of the market.

Supply concerns have obviously been high enough lately to keep the price well supported since we are just off the contract highs.   Rains are expected to be favorable in the short term.  It all depends on where the national average yield goes from here.  Currently for corn it is set at 153 by the USDA which is well below the trend.  If you look at the last 7 of the 8 times the USDA has dropped the August yield estimate significantly, the final yield ended up being MORE than the August projection.  The point is many analysts are still expecting further final yield reductions which may end up being the case, but we have to remember that the USDA has a history of overestimating these reductions when it comes to the August reports.  I have the December 2011 corn chart showing the contract lows at 3.70 all the way to this week’s contract highs at $7.33 ½.  We came into the year expecting a tight carryout and the latest S & D report estimates that we are going out of the year with a surplus of 940 Million bushels.  For the 2011-2012 corn crop they are projecting a tight carryout but supply and demand are obviously still widely open.  The point is, the market has priced a lot of these concerns in right now and that is why we have doubled the price from the contract lows.  Technical retracements and moving averages are all sharply below current levels and the funds are still loaded up with long positions.  If production turns out to be worse than what they are projecting then we can obviously see the market continue to take out the highs, but we will have to figure in some demand destruction as well to ration supply.  Ethanol numbers and exports are nothing to write home about right now for corn, but until we get more definitive information about the size of the crop they could keep this market supported on production concerns.

With the Dow Jones having another 200+ point swing today it looks clear that the market isn’t ready to drop the volatility just yet.  We want to stay in sustainable positions and stay well hedged at these levels.  Please call your broker if you have any questions.

Chart 8.19.11

 

Best Regards,

EHedger

 

For a free trial of EHedger services including the morning automated phone call, daily afternoon market commentary, and/or a free consultation, please contact EHedger at 866-433-4371. You can also visit us at www.EHedger.com.

 

Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. The market information contained in this message has been obtained from sources believed to be reliable, but is not guaranteed as to its accuracy or completeness. Market information may not be consistent with current or future market positions of EHedger LLC, its affiliates, officers, directors, employees, or agents.

 

EHedger Afternoon Grain Commentary 8-18-2011

Aug 18, 2011

Today grains traded lower along with the sharply lower outside markets. December corn finished 12 ½ cents lower at $7.13, December wheat down 18 ¾ cents at $7.39 ¼, and November soybeans down 5 ¾ at $13.61. 

Right now the story is still Demand destruction versus supply concerns.  Weekly sales today were poor for corn and we continue to see this week after week.  Ethanol has obviously plateaued, if it weren’t for exports to Brazil we would probably see further reductions.

The weekly export sales were out this morning and are as follows (in 1000 MTs)

                                                         Estimated Range              Actual

Corn:                                                  600-1250                       523.8 (poor)

Soybeans:                                            400-900                        421.5 (fair)

Wheat                                                  400-700                      548 (as expected)

Supply concerns have obviously been high enough lately to keep the price well supported since we are just one day off the contract highs.   Rains are expected to be favorable in the short term.  It all depends on where the national average yield goes from here.  Currently for corn it is set at 153 by the USDA which is well below the trend.  If you look at the last 7 of the 8 times the USDA has dropped the August yield estimate significantly, the final yield ended up being MORE than the August projection.  The point is many analysts are still expecting further final yield reductions which may end up being the case, but we have to remember that the USDA has a history of overestimating these reductions when it comes to the August reports.

With the Dow Jones having another 500 point swing today it looks clear that the market isn’t ready to drop the volatility just yet.  We want to stay in sustainable positions and stay well hedged at these levels. 

Please call your broker if you have any questions.

Best Regards,

EHedger

 

For a free trial of EHedger services including the morning automated phone call, daily afternoon market commentary, and/or a free consultation, please contact EHedger at 866-433-4371. You can also visit us at www.EHedger.com.

 

Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. The market information contained in this message has been obtained from sources believed to be reliable, but is not guaranteed as to its accuracy or completeness. Market information may not be consistent with current or future market positions of EHedger LLC, its affiliates, officers, directors, employees, or agents.

EHedger Afternoon Grain Commentary 8-17-2011

Aug 17, 2011

Soybeans regained some of their ground to corn today after making new contract highs today.  December corn finished 2 cents lower, November soybeans 17 ¼ cents higher, and December wheat 6 cents higher. 

Today we found strong buying support in November soybeans especially after some technical levels were breached.  The corn to soybean ratio has been so heavily weighted to corn lately that a small reversal is to be expected. 

Tomorrow we will have export sales in the morning.  Here are the following market estimates:

Corn:                                                  600-1250

Soybeans:                                          400-900

Wheat                                                400-700

We will have the actual in tomorrow morning’s letter.

Weather looks like we should see some quality rains through the better part of the corn belt over the next couple of days going into the weekend.  Weather and the Monday morning crop conditions reports should still be the main driving factors until we get into harvest.  We just made new contract highs in corn and we could easily see this push continue with the bullish sentiment.  We want to stay well protected with sustainable hedges. 

Please call your broker if you have any questions.

Best Regards,

EHedger

 

For a free trial of EHedger services including the morning automated phone call, daily afternoon market commentary, and/or a free consultation, please contact EHedger at 866-433-4371. You can also visit us at www.EHedger.com.

 

Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. The market information contained in this message has been obtained from sources believed to be reliable, but is not guaranteed as to its accuracy or completeness. Market information may not be consistent with current or future market positions of EHedger LLC, its affiliates, officers, directors, employees, or agents.

 

EHedger Afternoon Grain Commentary 8-16-2011

Aug 16, 2011

Coming in from the overnight session grains were called weaker on the open.  Gradually they made their way higher to finish the day stronger and make new settlement highs for December corn.  December corn was up 7 ½ at $7.27 ½, November soybeans down 1 ¾ at $13.49 ½, and December wheat finished up 10 ½ at $7.52.

Yesterday’s crop progress report was left mostly unchanged for crop ratings and had a slightly bearish affect during the night session.  The surprising market news was Nass’s decision to release the FSA planted, failed, and prevented acres for all crops.  The report was considered "bullish" to corn and wheat specifically.  Soybeans lagged behind for the majority of the day and finished lower.

The FSA numbers are still not complete yet since all the Counties have not reported just yet.  From the numbers we have so far many analysts are thinking that we could see up to a 500,000 acre cut in corn, 100-200,000 acre cut in soybeans, 500-600,000 acre cut in wheat, and up to 800,000 acre increase in cotton. 

This is the first year they have done it like this and it will be updated each month.  Since all Counties haven’t reported yet there are still a lot of unknowns, but these are the preliminary numbers.  Either way the yield is still a much larger factor.  The acre question doesn’t seem to want to go away.  We can fine tune the acres all we want, but the changes will not likely be very significant for corn/beans and yield is still going to be at the forefront of the supply concerns. To put it in bushel perspective this equated to about 80 million bushels of corn.

If you have any questions please contact EHedger.  Have a great week!

Best Regards,

EHedger

 

For a free trial of EHedger services including the morning automated phone call, daily afternoon market commentary, and/or a free consultation, please contact EHedger at 866-433-4371. You can also visit us at www.EHedger.com.

 

Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. The market information contained in this message has been obtained from sources believed to be reliable, but is not guaranteed as to its accuracy or completeness. Market information may not be consistent with current or future market positions of EHedger LLC, its affiliates, officers, directors, employees, or agents.

EHedger Afternoon Grain Commentary 8-15-2011

Aug 15, 2011

It’s Monday and the markets are starting off the week stronger.  December corn finished 5 ½ cents higher at $7.20, November soybeans 16 ½ cents higher at $13.51 ¼, and December wheat 9 ¼ cents higher at $7.41 ½.

Soybeans led the way higher this morning after Nopa Crush came in better than estimates at 122,952.  Soybeans have been lagging behind corn over the last couple of months on corn supply fears.  We can see this in the latest COT report with one of the largest ever drops in net long soybean positions by managed money (see chart below)!

Weather is going to be a determining factor throughout the rest of August.  If we don’t see adequate rainfall coverage we could see the beans/corn ratio come back some.  If weather remains favorable for soybeans we could see another price break.  The latest crop progress report shows no major changes in crop ratings for corn and soybeans.  Here is how they break down:

Corn                               August 14th                         5 year average

Doughing:                           52%                                        58%

Dented:                               17%                                        21%

Corn’s crop rating was left unchanged in the good-excellent category at 60%.

Soybeans                          August 14th                         5 year average

Blooming:                            94%                                        94%

Setting Pods:                        70%                                        78%

Soybean’s crop rating was left unchanged in the good-excellent category at 61%.

The crop conditions report was neutral-to-bearish and may be slightly lower on tonight’s grain open.  The market is still in an unknown zone after pricing in last week’s USDA report.  We managed to take out the contract highs today in corn, but to continue making a significant rally we will likely need to see further yield reductions.  We like staying in sustainable hedges and periodically checking AMMO to make sure you are well protected. 

Please call your broker if you have any questions.

Chart 8.15.2011

 

Best Regards,

EHedger

 

For a free trial of EHedger services including the morning automated phone call, daily afternoon market commentary, and/or a free consultation, please contact EHedger at 866-433-4371. You can also visit us at www.EHedger.com.

 

Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. The market information contained in this message has been obtained from sources believed to be reliable, but is not guaranteed as to its accuracy or completeness. Market information may not be consistent with current or future market positions of EHedger LLC, its affiliates, officers, directors, employees, or agents.

 

EHedger Afternoon Grain Commentary 8-11-2011

Aug 11, 2011

The August USDA Supply and Demand report was out this morning and caused a sharp market rally in the grains.  December corn traded up the limit on the open but finished 25 ½ cents higher at $7.14.  December wheat finished 13 ¾ cents higher at $7.33, and November soybeans up 30 ¼ at $13.31 ¾. 

The report was bullish for corn and soybeans with large yield reductions between both crops.  The wheat numbers were left in-line with estimates.  I would say the biggest surprise was the large reduction in soybean yield and production.  Also, we think that there is more wheat that will be fed than what the report is indicating.

Now that the August S & D report is out, and the market is expecting lower production, where do we go from here?   It is a good chance we will see new crop corn try to take out the highs again in the short term.  Bull markets need to be fed and this was enough of a bullish report to get a limit move in corn.   We still have to get the rest of the way through August and there is a chance that the market will continue to call for more yield reductions.   At the same time, we could also see demand levels cut even from what we are estimating.  Even though they reduced their Ethanol number slightly, we still think they are overstating corn used for ethanol by up to 100 million bushels for 10-11 and potentially even more for the 11-12 demand estimates.  Right now the market is completely focused on supply concerns and the support has remained strong.

With the uncertainty in the outside markets we still have plenty of downside risk in the market.  With 300-500 point swings in the Dow every other day, we could see a large flight to quality and risk-off.  Just like 2008, this is a risk that should be considered when marketing.  If you would like to go over your position again in AMMO, please give your broker a call.

Chart 8.11.11

Best Regards,

EHedger

 

For a free trial of EHedger services including the morning automated phone call, daily afternoon market commentary, and/or a free consultation, please contact EHedger at 866-433-4371. You can also visit us at www.EHedger.com.

 

Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. The market information contained in this message has been obtained from sources believed to be reliable, but is not guaranteed as to its accuracy or completeness. Market information may not be consistent with current or future market positions of EHedger LLC, its affiliates, officers, directors, employees, or agents.

EHedger Afternoon Grain Commentary 8-10-2011

Aug 10, 2011

Grains finished relatively unchanged ahead of tomorrow’s report.  With the weakness in the stock market, I would say grains held in there fairly well.  December corn finished unchanged at $6.88 ½, November beans up 1 ¾ cents at $13.01 ½, and December wheat up 15 ½ cents at $7.19 ¼.

Tomorrow’s Supply and Demand report could be a major market mover just like the previous USDA reports this year.  The market has obviously been heavily focused on supply shortages and much of the lower yield expectations should be discounted in the market.  I have included our own Supply and Demand estimates in the charts below.  As you can see we have corn used for ethanol below the USDA’s projections and this is highly based on the average pace that the weekly numbers are putting us at. We did lower our yield estimates slightly from the July S&D report, but still above the average of the analyst estimates.

If weather turns for the worse during the second half of August we could see those yields come down more, but time will tell.  At the same time, we could also see demand levels cut even from what we are estimating.  It’s a moving target, but here are the numbers we are seeing:

Supply and Demand 8.10.11

The report will be out at 7:30 am tomorrow morning.  I will have a report overview and reaction in the morning letters and EHedger hotline.  If you would like to discuss the report further please call your broker.

Best Regards,

EHedger

 

For a free trial of EHedger services including the morning automated phone call, daily afternoon market commentary, and/or a free consultation, please contact EHedger at 866-433-4371. You can also visit us at www.EHedger.com.

 

Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. The market information contained in this message has been obtained from sources believed to be reliable, but is not guaranteed as to its accuracy or completeness. Market information may not be consistent with current or future market positions of EHedger LLC, its affiliates, officers, directors, employees, or agents.

EHedger Afternoon Grain Commentary 8-9-2011

Aug 09, 2011

Grains were mixed today after trading sharply lower overnight.  December corn finished 2 ½ cents higher at $6.88 ½, November soybeans down 11 ¾ at $12.99 ¾, December wheat up 9 cents at $7.03 ¾.

With the stock market turbulence, grains have undoubtedly been highly affected in the short term swings. After the FOMC minutes were released we eventually found very strong support for the outside markets which could end up pushing grains higher on the overnight open.

Besides the stock market, we also had the crop ratings released last night which were "friendly" for corn and "bearish" for soybeans.  We could see this in the corn to bean ratio in today’s trade.  On top of this, the average trade guesses came in for the August 11th report and they are lowering their corn production estimates quite heavily while keeping soybean production estimates slightly lower from the last USDA numbers.

Here are the averages from the Reuters poll:

Source                                 Corn       Avg yld         Soybeans    Avg yld

Average trade estimate        13.082    155.589          3.187       42.775

Highest trade estimate         13.410    158.000          3.590       43.400

Lowest trade estimate          12.775    152.100          3.115       42.000

USDA July                             13.470    158.700          3.225       43.400

USDA 2010 final                    12.447     152.800         3.329       43.500

The market is expected to remain volatile right through the August report.  If you want any additional protection for the report, tomorrow is the last trading day to get something on for the report.  Please call your broker in the morning if you would like to go over your positions.

Best Regards,

EHedger

 

For a free trial of EHedger services including the morning automated phone call, daily afternoon market commentary, and/or a free consultation, please contact EHedger at 866-433-4371. You can also visit us at www.EHedger.com.

 

Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. The market information contained in this message has been obtained from sources believed to be reliable, but is not guaranteed as to its accuracy or completeness. Market information may not be consistent with current or future market positions of EHedger LLC, its affiliates, officers, directors, employees, or agents.

 

EHedger Afternoon Grain Commentary 8-8-2011

Aug 08, 2011

Grains sold off today with the rest of the outside markets.  The Dow Jones was as much as 675 points lower on the day towards the close.  This weakness is stemming from the US debt downgrade from last Friday.  Crude oil was down over $6 making new lows for the move today.  In fact, two of the only markets trading higher were precious metals and treasuries as the market sees capitulation to "safe haven" products.

We obviously are getting a lot of negative outside market influence in the grains.  At this point the market is trading a national average yield that is lower than what the USDA currently has marked down.  On Thursday’s Supply and Demand report we can see a change to this number, but it may not be a large enough change to get a large rally from the market, especially given that the market has already discounted a yield reduction.  For now we want to make sure to have enough downside market risk protection.  Soybean puts are still low in volatility and can be a good downside hedge.

Crop progress was released this afternoon and was largely in line with estimates for corn, and slightly better than expected for soybeans:

Corn                                 Current                                 5-year average 

Silking:                               93%                                        93%

Doughing:                           32%                                        38%

Dented:                               7%                                         10%

Corn lost 2% in the good to excellent category from last week and is currently 60% good-excellent. 

Soybeans                          Current                                 5-year average

Blooming:                           87%                                        89%

Setting Pods:                     51%                                        63%

Soybean ratings actually gained a percentage point in the good-excellent category. 

Right now we like to make sure we have adequate coverage before Thursday’s Supply and Demand report.  After the grains closed today we had another sharp break in energies/equities and we may see this setback carryover into the grains at the 6:00 pm open tonight.  Please call your broker if you have any questions. 

Have a great week!

 

Best Regards,

EHedger

 

For a free trial of EHedger services including the morning automated phone call, daily afternoon market commentary, and/or a free consultation, please contact EHedger at 866-433-4371. You can also visit us at www.EHedger.com.

 

Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. The market information contained in this message has been obtained from sources believed to be reliable, but is not guaranteed as to its accuracy or completeness. Market information may not be consistent with current or future market positions of EHedger LLC, its affiliates, officers, directors, employees, or agents.

 

 

EHedger Afternoon Grain Commentary 8-5-2011

Aug 05, 2011

Grains started out sharply lower along with the stock market but were able come off their lows after the stock market turned higher from news that the ECB would be bailing out Italian and Spanish debt. 

Grains have obviously been largely affected by outside markets in the last couple of trading sessions, but even with the weakness, corn has managed to hold support quite well.  The market is still obviously concerned about corn supply and was able to stage a corn rally to positive territory late in the day.  As long as lower yield forecasts continue to come in, it looks like we are going to keep this market supported and potentially even take out the highs again.  December corn’s resistance still stands at the contract high of $7.22 ¾.

Next week will be a big week for grains. We will have crop conditions reported on Monday afternoon, and the August Supply and Demand report released on Thursday the 11th.  The S & D report should give the market more direction as everyone is wondering what the USDA will do with acres if they make any changes.  We should have the average analyst estimates on Monday and I will have them in the afternoon grain letter.  

We want to remain in sustainable positions, and stay well hedged at these levels.  I wouldn't rule out further weakness from this latest economic setback, we had the same thing happen in 2008.  Please call your broker if you need additional coverage or want to go over your current position.  We have option strategies available that can cover a larger amount of bushels with a minimum bushel level of upside margin exposure.  

Have a great weekend!

Best Regards,

EHedger

 

For a free trial of EHedger services including the morning automated phone call, daily afternoon market commentary, and/or a free consultation, please contact EHedger at 866-433-4371. You can also visit us at www.EHedger.com.

 

Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. The market information contained in this message has been obtained from sources believed to be reliable, but is not guaranteed as to its accuracy or completeness. Market information may not be consistent with current or future market positions of EHedger LLC, its affiliates, officers, directors, employees, or agents.

 

EHedger Afternoon Grain Commentary 8-4-2011

Aug 05, 2011

It was a sharply lower finish for most asset classes today especially equities with the Dow Jones reaching a 500 point loss at one time.  Grains finished lower with December corn down 11 ½ cents at $7.01 ½, November soybeans down 27 ¾ at $13.45 ¼, and December wheat down 24 ½ at $7.25 ½.

When the US dollar is up 1000 points, crude oil trades at a $5+ intraday loss, and equities are that low, it is hard for grains not to make similar moves.  I will say that corn acted rather strong given the state of the outside markets.  Given a further break in the stock market after the grain close, I wouldn't be surprised to see a further corn setback at the 6pm open tonight.

Weekly export sales were out this morning with no major surprises.  Corn was below expectations while soybeans and wheat were above.

                                           Estimated Range                              Actual

Corn                                     850,000-1,100,000 MTs                  758.6

Soybeans                               450,000-650,000 MTs                      680.2

Wheat                                   350,000-500,000 MTs                      504.1

The August 11th report is one week from today.  We want to remain in sustainable positions, and stay well hedged at these levels.  I wouldn't rule out further weakness from this latest economic setback, we had the same thing happen in 2008.  Please call your broker if you need additional coverage or want to go over your current position.  We have option strategies available that can cover a larger amount of bushels with a minimum bushel level of upside margin exposure.

Best Regards,

EHedger

 

For a free trial of EHedger services including the morning automated phone call, daily afternoon market commentary, and/or a free consultation, please contact EHedger at 866-433-4371. You can also visit us at www.EHedger.com.

 

Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. The market information contained in this message has been obtained from sources believed to be reliable, but is not guaranteed as to its accuracy or completeness. Market information may not be consistent with current or future market positions of EHedger LLC, its affiliates, officers, directors, employees, or agents.

EHedger Afternoon Grain Commentary 8-3-2011

Aug 03, 2011

Grains finished lower this morning with December corn down 2 ¾ cents at $7.13, November soybeans down 6 ¾ at $13.73, and December wheat down 8 ¾ at $7.50.

The grain markets are still holding their high ground despite a minor setback today.  The weak equity markets have not had a large weight on the grains as supply concerns are still the major focus for grain traders.  Maybe the heat took more of a toll than what was expected, we will just have to wait to find out what yield ends up being.  The latest yield forecasts were from the Lynn Group today and are putting corn down to 152.1 and keeping bean yield estimates at 43. We have seen analyst estimates ranging between 145-155 areas for corn. It is import to realize that we are trading $7 corn because the market is factoring in these yields.  For the market to continue to rally from yield reductions we have to keep reducing the yields even lower.  Another thing to consider is even if they do end up being that low at the end of the year, there is a real risk that the USDA August report comes out closer to 160, as they use count population and average test weight.  Basically there is a potential for the August 11th report to disappoint the longs.

Tomorrow morning we will have the weekly export sales report released at 7:30 am.  Here are the following estimates:

Corn                                      850,000-1,100,000 MTs

Soybeans                               450,000-650,000 MTs

Wheat                                  350,000-500,000 MTs

The economic numbers haven’t necessarily been supportive to demand.  Exports have been running 3-4% lower from year ago levels in Brazil over June/July. With a huge crop last year in Brazil, bad crush margins in China, and the Chinese government releasing stock piles, soybean demand is looking weaker. Chinese imports have been estimated to be all the way down to 51 MMTs, which was thought to be as high as 58 MMTs earlier this year.

For corn we are still seeing demand destruction at these levels.  Ethanol numbers were out this morning with 93.526 Million bushels used.  We need to average 117.997 Million bushels per week to meet the USDA estimate, we have seen these numbers steadily coming in between 92-96.  Basically the monthly S&D ethanol demand estimate shows strong demand, but the weekly numbers are running behind pace. We have seen a lot of wheat fed in place of corn, and situations of poor margins for feeding cattle.

Until the market is more comfortable with what yields are, it doesn’t seem to want to break. We want to remain in sustainable positions, and stay well hedged at these levels.  Please call your broker if you need additional coverage or want to go over your current position.  We have option strategies available that can cover a larger amount of bushels with a minimum bushel level of upside margin exposure.

Best Regards,

EHedger

 

For a free trial of EHedger services including the morning automated phone call, daily afternoon market commentary, and/or a free consultation, please contact EHedger at 866-433-4371. You can also visit us at www.EHedger.com.

 

Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. The market information contained in this message has been obtained from sources believed to be reliable, but is not guaranteed as to its accuracy or completeness. Market information may not be consistent with current or future market positions of EHedger LLC, its affiliates, officers, directors, employees, or agents.

EHedger Afternoon Grain Commentary 8-2-2011

Aug 02, 2011

Grains finished sharply higher with corn and wheat leading the way.  December corn finished 30 cents higher at $7.15 ¾, November soybeans up 17 ¾ at $13.79 ¾, and December wheat up 38 at $7.58 ¾.

A lot of new money seems to be flowing into grains.  Corn appears to be trading a yield that is lower than last year’s national average.  Currently crop ratings are running at their 10 year averages for both corn and soybeans. Maybe the heat took more of a toll than what is expected, we will just have to wait to find out what yield ends up being.  A private estimate from a "weather" service company lowered their expectations from 156.7 down to a 150 national average.  We think this number is probably a little too aggressive at this point, especially since we are looking at crop ratings at their 10 year averages.  We are very close to contract highs in December corn, and we made new settlement highs today. We wouldn’t be surprised if they try to test the contract highs on the overnight session.

We can make the argument that this rally is completely based on yield and not just money coming into the market, but that doesn’t explain why Sept wheat was up 47 cents today as well.  Despite the stock market being sharply lower today, and the dollar sharply higher, they still wanted to take grains higher.  Even crude oil couldn’t hold support today. 

The economic numbers haven’t necessarily been supportive to demand.  Exports have been running 3-4% lower from a year ago levels in Brazil over June/July. With a huge crop last year in Brazil, bad crush margins in China, and the Chinese government releasing stock piles, soybean demand is looking weaker. Chinese imports have been estimated to be all the way down to 51 MMTs, which was thought to be as high as 58 MMTs earlier this year. 

For corn we are still seeing demand destruction at these levels.  Ethanol numbers have stayed strong on the monthly S&D numbers, but running behind pace on the weekly numbers. We have seen a lot of wheat fed in place of corn, and situations of poor margins for feeding cattle.  We can talk about the demand numbers all we want, but right now the market is 100% focused on supply, which is fine, at this time in the year that is to be expected.   FC stone’s private estimates came out today at a yield of 153.2 for corn and 42.4 for soybeans.  We have heard other estimates running much lower than this for corn, and with analysts with guesses between 145-155 yields, that is all the market is going to care about at the moment.  It is import to realize that we are trading $7 corn because the market is factoring in these yields.  For the market to continue to rally from yield reductions we have to keep reducing the yields even lower.  Another thing to consider is even if they do end up being that low at the end of the year, there is a real risk that the USDA August report comes out closer to 160, as they use count population and average test weight.  Basically there is a potential for the August 11th report to disappoint the longs. 

Until the market is more comfortable with what yield is, it doesn’t seem to want to break. We want to remain in sustainable positions, and stay well hedged at these levels.  Please call your broker if you need additional coverage or want to go over your current position.  We have option strategies available that can cover a larger amount of bushels with a minimum bushel level of upside margin exposure.

 

Best Regards,

EHedger

 

For a free trial of EHedger services including the morning automated phone call, daily afternoon market commentary, and/or a free consultation, please contact EHedger at 866-433-4371. You can also visit us at www.EHedger.com.

 

Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. The market information contained in this message has been obtained from sources believed to be reliable, but is not guaranteed as to its accuracy or completeness. Market information may not be consistent with current or future market positions of EHedger LLC, its affiliates, officers, directors, employees, or agents.

 

EHedger Afternoon Grain Commentary 8-1-2011

Aug 01, 2011

Corn staged a large rally today despite a break in the outside markets.  December corn ended 17 cents higher at $6.85 ¾, November soybeans up 4 ¾ cents at $13.62, and December wheat up 5 cents at $$7.20 ¾.  

Markets are still highly focused on the US debt deal.  Since yesterday it has been expected that congress has reached an agreement to raise the debt ceiling, and as a result the markets rallied sharply overnight.  Coming into the day however, the markets opened sharply lower after the ISM index came in sharply below expectations.  Despite a sharp break in the equities, a rally in the US dollar, and a sharp break in crude oil, grains still managed to hold support.  Part of this support could be beginning of the month reallocation, or possibly pre- crop ratings purchasing. 

Crop ratings were out at 3 pm and to the market’s surprise corn ratings were unchanged from last week.  Here is the following breakdown:

Corn                Current                        5-Year-Average

Silking:             83%                             84%

Doughing:        18%                             23%    

Dented:           4%                               5%

Crop condition at 62% good-excellent.  This is unchanged from last year, and right at the 10 year average of 62%

Soybeans        Current                        5-Year-Average

Blooming:        77%                             81%

Setting pods:   34%                             45%

Crop condition at 60% good-excellent.  This is down 2% from last week, and right at the 10 year average of 60%.

Winter wheat is 81% harvested compared to 86% on average.

Spring wheat crop condition dropped 4% from last week to 70% good-excellent.

This report was slightly "bearish" for corn and "bullish" for soybeans based on market expectations and we may see this on tonight’s opening trade at 6:00pm.  Since we are still at the 10 year average for corn and bean ratings, and weather looks favorable in the near future, we may see this start to weigh on prices.  We still have the August 11th Supply and Demand (next Thursday).  We feel that it is a good idea to get well protected between now and then.  We have some strategies in place to get extra hedged on the downside, please call your broker if you would like to go over these and how they may help your operational risk.

Best Regards,

EHedger

 

For a free trial of EHedger services including the morning automated phone call, daily afternoon market commentary, and/or a free consultation, please contact EHedger at 866-433-4371. You can also visit us at www.EHedger.com.

 

Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. The market information contained in this message has been obtained from sources believed to be reliable, but is not guaranteed as to its accuracy or completeness. Market information may not be consistent with current or future market positions of EHedger LLC, its affiliates, officers, directors, employees, or agents.

 

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