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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 Grain Commentary 3/28/2012

Mar 28, 2012

Grains finished lower again extending yesterday’s losses.  May corn finished 10 ½ cents lower at $6.20 ¼, May soybeans 2 ¼ cents lower at $13.67 ½, and May wheat down 9 cents at $6.30 ¾.

December corn traded down to $5.35 ¾, making a new low in 2012 and is only ¾ of a cent above the low in November.  The average trade guess suggests corn will gain 2-3 million acres from last year.  The market seems to be scrambling to get short corn ahead of the report which may be a lot of producer hedging to catch up on sales.  The corn-to-soybean ratio made new highs again today suggesting areas that haven’t decided to plant soybeans yet could still switch over.  Obviously we aren’t talking about a massive amount of acres but we still have a chance to see 1-2 million switch back over before we are all said and done.

Personally I think the market is setting itself up for disappointment on these reports.  They are under the impression that either soybeans or corn will get the extra acres that are expected this year.  We’re of the opinion that we could see 172 million acres between corn and soybeans combined.  This compares to the market where we are seeing a lot of 168-169 million acre guesses.  Ultimately this could be a very bearish scenario for the market.

The other potentially "bearish" surprise could come from quarterly stocks.  The last report in January ended up in a "limit down" move in corn as the stocks came in well above estimates.  How many quarterly stocks reports in a row have we seen negative reactions for corn?  Dates and correlated price movements for front month corn in the three most recent Quarterly Stocks Reports:

January 12th, 2012 - Down 40 cents (limit down)

September 30th, 2011 - Down 40 cents (limit down)

June 30th, 2011 - Down 69 cents (July contract in delivery at the time)

 

Lastly we have to keep in mind that these planting intentions are from March 1st.  We have had a lot of price movement since which could still end up affecting acres in the end.  But between the available acres we believe corn and beans will be the most likely crops to gain ground where possible.  Ultimately we want to make sure as producers you have enough downside coverage in both of these markets.  I have included the average trade guesses for the report below.  Tomorrow morning we will be watching the weekly export sales for direct, they will be in the EHedger Morning Grain Commentary. Please sign-up by clicking the link below to try EHedger’s grain marketing software AMMO.  Have a great rest of the week!

Chart – December Corn (Red – 50 day, Blue – 100 day, Grey – 200 day moving average)

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EHedger

866-433-4371

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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