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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.

Soybeans finish strong

Oct 13, 2011

Beans finished strong today while wheat and corn remained lower on the day.  December corn finished 2 ½ lower on the day at $6.38 ¼, December wheat 8 ¾ cents lower at $6.18, and November beans 17 ½ cents higher at $12.39 ½.

The big news this morning was a confirmation of a large corn sale to China.  The sale of 900,000 MTs of 11’-12’ corn to China came before the opening.  They also announced another 292,100 to "unknown" destinations as well as 110,000 MTs of Soybeans to "unknown".  Despite these sales, corn opened up lower and traded down to new lows for the day before finding support towards the latter half of the trading session.

Weakness could still be stemming from the disappointing report for Wheat and Corn yesterday with increased ending stocks for both.  The analysts that continue to call for lower corn yields found no reductions with an unchanged yield estimate by the USDA.  Funds and large traders who may have been trading a lower corn yield may be rethinking their strategy at the moment which is a downside market risk if more liquidation comes from this.

World wheat ending stocks are estimated at 202.37 Million MTs which is up sharply from the last report in September (up about 4%).  They were estimated to be up 76 Million Bushels here in the US alone which is a 10% increase.  This was the most significant information on the report as the world has options.  Why contract US corn out of the gulf when you have cheaper feed grade wheat you can buy from Russia or Australia?

Corn yield was left unchanged from the September report at 148.1 bpa as a national average.  Most were guessing a little higher, but we did show another reduction in exports of 50 million bushels to help offset this.  This combined with the Ending stocks rising to 1.128 billion bu from last year raised the carryout to 866 million when I believe the average guess was 800 million.

Beans were the only thing that were reported positive on the October S & D report with yield reductions to 41.5 and another decrease in ending carryout to 160.  Now with S. American beans currently getting planted we may see any foul weather related stories keep beans supported and it is a La Nina year.  Overall between corn and soybeans I am more favorable of NEXT year’s prices as they both have to hold support to continue to compete for acres.

If I were to take anything away from the report it would be that we are going to have a hard time sustaining significant rallies in corn and wheat UNLESS we see a major shift in demand.  Today’s corn sale to China didn’t seem to capture the bull’s attention but IF we see heavy demand coming in it can always change.  As producers we are still at record corn prices for the month of October and selling additional bushels at these levels makes sense.

For upside potential we can continue to look at buying bean calls and call spreads.  If you would like to get our specific recommendations, please sign up for a 2 week free trial with the link below. 

Chart:  December corn

Red-50 Day Moving Average; Blue-100 Day Moving Average; Grey-200 Day Moving Average

 

Chart: November soybeans

Red-50 Day Moving Average; Blue-100 Day Moving Average; Grey-200 Day Moving Average

To receive a two-week free trial of our research, including a tryout of the revolutionary AMMO software, please click on the link below:

www.ehedger.com/signup/

Best Regards,

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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