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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 Closing Grain Commentary 8/25/10

Aug 25, 2010

 

Wednesday's trading session saw December corn settle ½ cent lower at $4.20 while the November bean contract finished the day unchanged at $9.99.  The Chicago wheat contract was weak for the majority of the day and ended up settling just off the lows in the December contract down 27 ¼ at $6.80.

 

There was nothing in the way of fresh news to influence the day's trading session. It appears that there is positioning ahead of Friday's September option expiration in both the corn and bean market. The $4.00 level in September corn and $10.00 level in September beans are key areas to watch as we head into Friday's expiration. The break in the wheat market in our opinion is linked to the fact that from a cash standpoint we are still non-competitive in the USA compared to other global suppliers.

 

Tomorrow morning at 7:00am CST we will have a Census Crush report. The Census Crush estimate is between 127.5-129.0. The June crush number was 129.17. We will release the crush number in our EHedger Morning commentary.

 

Also, the USDA will release its weekly export sales numbers tomorrow morning at 7:30am. The estimate for corn sales is between 650,000mt-1,450,000mt. The sales estimates for beans are between 750,000mt-1,100,000mt. The wheat sales are estimated to be between 550,000mt-900,000mt. We will release the actual sales numbers in all of EHedger Morning and afternoon commentaries. 

 

I have talked about how long the funds have been in previous letters. When the funds get this long, there is a risk the price drops on liquidation. On top of this we are starting to see flight-to-quality in the outside markets. If we get harvest pressure at the same time as pressure from outside markets, grains could see more weakness than expected. I'm not saying this will happen, but it is important to be hedged, especially at levels which are profitable for many producers.

 

We do think corn has the tightest fundamentals but we don't like going into harvest unprotected. We are still working to buy corn calls on a break to cover current hedges. For those producers that need to get caught up on sales please call your broker to discuss current strategies.

 

 

 

 

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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.

 

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