EHedger Afternoon Grain Commentary 10/10/12
Oct 10, 2012
Overall the CBOT markets closed lower with wheat as the exception. December corn finished the day 5 ¼ cents lower at $7.36 ¾, December wheat up 5 ½ cents at $8.69 ¾, and November soybeans down 26 ¾ cents at $15.23 ¼.
This marks a new low settlement for soybeans (for the move) as the market gears up for higher production estimates on tomorrow’s WASDE report. The report will be released at 7:30 am CST. As a reminder both the pit and electronic markets are open during this time.
On average market analysts are calling for corn production to decrease to 10.601 billion bushels (September WASDE was 10.727 billion). They are guessing that yield will stay steady at 122.884 but the overall harvested acres will decline by over a million acres. What I believe is especially concerning about the estimates is how wide the range is. The lowest yield estimate is 120 and the highest is 127. The lowest production estimate for corn is 9.960 while the highest is 11.194. That’s a difference of 1.234 billion bushels of corn! The especially large range may translate into high volatility… obviously someone’s guess has to be rather far from reality.
The October report will be especially important this year due to the record harvest pace. Harvest pace surpassed 50% before October 1st which will hopefully lead to a greater degree of accuracy from the USDA (at least perceived accuracy). I have included the report estimates based on the Reuter’s survey in the chart below. We want to stay in sustainable hedges through harvest. To sign up for a free EHedger trial please click on the link below.
The average price for Fall Crop Insurance Re-adjustment has now set 8 of the 23 closes and is currently at $7.49 ¾ for corn and $15.43 ¾ for soybeans.
October WASDE Pre-Report Estimates:
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