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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 1/31/11

Jan 31, 2011

Markets were strong in almost every sector with especially sharp gains for grains.  March corn was up 15 ½ cents, March soybeans and March wheat both finished 15 cents higher. 
 
The situation in Egypt has everyone's attention and has pushed the market into a fear style trade.  Crude oil which is feeling the largest impact from the civil unrest has gained another $2.50.  This strength is certainly helping corn as well.
 
We also have protesting down in Argentina which is blocking much of their export activity.  The Argentina Grain Exchange released a statement saying they are "profoundly worried" about the protest and its effects on export pace.  This is seen as favorable for grain prices and could continue to provide support.
 
Another factor to consider is this is end of month buying from funds. Technically if we can break through the March high of $6.67 for corn and $14.325 for soybeans, we could see short covering and a bullish technical signal. Large speculators have been pouring money into multiple commodity markets and this has been highly correlated with the support.  Lastly I want to note that tomorrow the Egyptians are expected to stage a 1 million man march.  If this escalates or extends into other nations which are oil producing countries, it could have a profound effect on commodities so be wary of large swings.
 
Again I want to stress, these are profitable levels for many producers.  We don't want to NOT make the necessary sales while we are at these levels, we want to make sure to be adequately sold and that can vary by operation.  We recommend keeping your upside potential in the calls spreads; please call your broker for a specific recommendation for your operation.

 

 

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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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