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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 Weekly Grain Wrap-Up 9/18/09

Sep 18, 2009
 
SETTLEMENTS 9/18
         
 
Dec 09 Corn
317 ¼
- 11 ¾  
Nov 09 Beans
937 ¼  
- 15 ¾   
Dec 09 Wheat
457
- 4 ¾
Dec 09 KC Wheat
472
- 2 ¼
Dec 09 Min Wheat
496 ¾    
- 3 ¾   
Dec 09 Meal
285.5
- 7.8
Dec 09 Oil
35.04
+ 0.08
 
 
 
 
 
 
 
 
 




 
        Corn, wheat, and beans all closed lower on the session. On the week corn closed 1 ¾ lower (despite going limit up on Tuesday), wheat closed 10 lower, beans closed 40 higher. The weather was the major focus this week. Early in the week the weather models had a chance for freezing temps in the Midwest for late next week. However, by the end the week all the models had taken out any threat for a freeze in the Midwest over the next two weeks. This week the outside markets were supportive to the grains. Crude oil, metals, and the stock market where all higher on the week while the dollar continued to move lower. Also, early in the week there was talk of a trade dispute with China over tire imports, which had many people nervous. If the trade disputes escalate this could be a big deal but at this point it does not look like a major issue.

            Looking forward, obviously at this point it is very difficult to estimate what the final yields or going to be. However, many of the producers we talk to are getting better yields than they expected and overall the crops are looking good in most areas. Sure a hard freeze could hurt the yields in some areas, but this window is quickly closing. If the crop finishes up well we could see a very large corn and bean crop. It looks like in many areas producers are realizing that they are probably going to have even more grain to sell than they originally thought. This large amount of grain that has to be moved should keep pressure on the corn market (Obviously a freeze or some unforeseen outside event could change this). I realize that many producers are below breakeven levels and refuse to sell their crop, even on rallies like we saw last Tuesday. It is a perfectly natural response not to want to sell at a loss and I realize that most farmers will be probably be helped out by crop insurance payments. However, there is a big difference to a farmers bottom line (even if it is a loss) if they sell Dec corn above 3.40 on the board (which you could do the a number of times this week) compared to having to sell it below 3.00 which is a potential risk if we see the crop finish up well. In addition, beans at these levels have even more potential downside risk if things finish up well. Strong sales, positive technical and the outside markets continue to support the beans. Sure beans could keep going higher because of any of these factors or maybe because once we get into the fields we find the yields are just not there. However, just remember that we are still over 1.50 off the lows back in March. If we do see a big crop and the outside markets really turned down, going back to these lows is not out of the question. As I have said I would love prices take off to the upside and see farmer make a lot of money on all their unsold grain. However, producers still have some real downside risk at these levels. If you are still holding a large amount of unsold grain use the rallies (like we saw this week) to make some sales (or at least put some protection in place). You don’t have to go sell your entire crop but at least make some sales on rallies and hope prices continues to go higher so you can sell more. You never know when your going to see a rally like we saw Tuesday so just go put some orders in above the market, you might just get filled. What I really don’t want to see is the situation set up where farmers are still holding a large amount of unsold grain with corn prices below 3 dollars and beans prices at eight dollars. In addition, those of you that are caught up on 2009 crop should... With the current input cost and a solid crop, these are levels that should make producers good money next year. Please give us a call if you have any questions.
  
 
 
 
 
 
 
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COMMENTS (22 Comments)

Anonymous
Big bean yields? Not here only averaging 32 bushels to much disease
9:33 PM Sep 20th
 
Anonymous
If you contracted high good for you. You will be able to buy John Deeres new planter that lists for $398,000. plus sales tax. New JD tractor $250,000. Aldo JD combine $300,000. I guess you might need new headers. My point is $4.oo corn is so far away from keeping up with new machinery purchases it isnt even funny. And we think health care insurance is out of control. Somehow we have fools out there that farm and keep saying everything is rosy, well wake up. I dont like having to have to buy a piece of machinery that is four to five times the price of my house. We will experience a machinery bubble that nobody can afford as soon as all good used machinery is depleted.
9:23 PM Sep 20th
 

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