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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 6/14/12

Jun 14, 2012

Corn and wheat finished strong while old crop soybeans had a sharp selloff.  July corn closed 9 cents higher at $6.01 ½, July soybeans closed 22 ¼ cents lower at $13.86, and July wheat closed 7 ½ cents higher at $6.23 ½.

This morning we had NOPA Crush as well as export sales which were both above expectations for soybeans.  Crush was expected to be around 134.7 but instead came in at 138.266.  Total soybean export sales were estimated to be between 475,000 – 750,000 MTs but we had 425,100 MTs in old crop sales and 580,000 MTS in new crop.  Basically it was surprising to see the soybean market leading the way lower today despite strong fundamental news.

Corn export sales were the opposite coming in well below expectations.  The market was guessing 375,000 to 700,000 MTs in total sales.  Instead they came in at 92,100 MTs of old and 77,700 MTs of new.

The midday forecast was left mostly unchanged from that of this morning.  We will continue to watch for any forecast changes for market action.  The economy and outside markets have also been a large factor in grain prices lately.  The upcoming Greek elections on Sunday night will surely be watched closely.  A negative outcome on Sunday night could be one downside risk to watch out for in the short-term.

USDA REPORT SUMMARY

The USDA decided not to change the production or demand for new crop corn.  The key here is that up until Monday crop ratings were rather favorable for corn and there was not a major reason to lower production on this report.  Also to the market’s surprise, they did not change the demand number for old crop corn leaving carryout unchanged at 851 million bushels.  The world corn numbers echoed the US numbers with bearish surprises.

Export demand for old crop soybeans was raised by the USDA and in turn lowered the ending carryout by 35 million bushels to 175 million.  Carrying this number to new crop and lowering total use by 30 million bushels resulted in a net decrease in new crop carryout of 5 million bushels (the market was calling for a 2 million bushel decrease).

Wheat carryout in the US came in below estimates for old crop and new crop.  The only real bearish factors were higher than expected winter wheat production as well as higher new crop world carryout. 

So where do we go from here?  We have to keep an open mind for corn as weather is still the main factor to watch in the following weeks to come.  Pollination is coming soon for some of the early planted corn and the forecasted rains will be very important for price action. 

Soybean market direction will also rely heavily on weather but until we know more about how many acres beans have gained since the planting intentions report, or have been added as doublecrop, the margin-for-error is much smaller for the bean crop than it is corn.  The USDA is currently projecting only a 140 million bu carryout using a 43.9 bpa.  This will make for a long summer of volatility if they continue to add rain and take it out of the forecast.

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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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