Aug 20, 2014
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September 2013 Archive for 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.

Strong Week for Wheat

Sep 27, 2013

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Grains finished mixed with small net changes on the day.  For the week corn settled 3 cents higher at $4.54, soybeans 4 ½ cents higher at $13.19 ¾, and wheat 36 ¾ cents higher at $6.83.  Wheat clearly had the best gains which can be mostly attributed to the global supply situation and short covering ahead of Monday’s wheat production and stocks report.

From the chart you can clearly see where wheat has broken out of its downtrend.  If the short covering continues the next major target would be in the low $7.40’s right at the 38.2% retracement level.

December Wheat Weekly Chart

December Wheat Weekly Chart

We are still bearish corn but if for some reason this wheat rally continues we can see that as providing at least some support for corn.  As you can see from the chart below, corn and wheat have been highly correlated.  If wheat hadn’t caught a bid over the past few days we probably would have taken the lows out again for corn.

December corn (black bars) December wheat (blue bars)

December Corn and December Wheat

The next thing to watch is the report results at 11:00 am Monday, September 30th.  For option strategies to protect your operation through harvest please give us a call for a free consultation (866) 433-4371. Have a great weekend!

EHedger  |  866.433.4371
 
Premier full service commodity brokerage offering risk management services for the agricultural sector as well as professional traders.
EHedger is a premier full service commodity brokerage offering risk management services for the agricultural sector as well as professional traders.
Premier full service commodity brokerage offering risk management services for the agricultural sector as well as professional traders. EHedger is a premier full service commodity brokerage offering risk management services for the agricultural sector as well as professional traders. 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.


FSA Acres Cause Volatility

Sep 17, 2013

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Grain markets closed mixed after trading wide ranges throughout the session.  December corn settled 2 ½ cents lower at $4.54, November soybeans 5 ¾ cents lower at $13.42 ½, and December wheat 1 ¾ cents higher at $6.43.   This morning’s FSA acreage estimates were considered "friendly" for corn, beans, and wheat but the market wasn’t able to hold those gains as the day trade began.

The acreage data was released just after 5 am this morning.  This is a rather odd time to release a government report due to the lack of liquidity so we hope they change this next time around.  FSA data has corn acres pegged at 91.4 million compared to 88.8 million in August.  They had soybean acres at 74.7 million compared to 72.1 last month.  Both of these are obviously well below the current WASDE acreage estimates and the market is left to "project" a final acreage number based on this data.  The problem is there is not enough of a correlation between the WASDE acres and the FSA reported acres to make a confident assumption.  Although the market initially viewed these acres as "friendly" for price action, they sold heavily into the rally causing a sharp selloff.

At about 10:30am Informa released their production estimates.  They have total corn production estimated at 13.80 billion which is just below the current WASDE estimate of 13.843.  They have soybean production pegged 71 million bushels ABOVE the September WASDE report at 3.22 billion bushels.  November soybeans seem to be stuck in a rangebound pattern while the market waits for more yield reports.  If Soybeans break through the bottom end of the range we could easily see soybeans break to the next support near $12.82.  For now the range is still intact.

NOVEMBER SOYBEANSNovember Soybeans

Our market opinion remains unchanged.  We continue to see corn yields flow in better than expected and are looking for a decent corn carryout to take prices lower into the year.  Soybean yields are still a big question and we are waiting for more yield data before making additional cash sale recommendations. Please feel free to sign up for a trial of our commentary to see our current hedge recommendations.  Have a great week!

 

EHedger  |  866.433.4371
 
Premier full service commodity brokerage offering risk management services for the agricultural sector as well as professional traders.
EHedger is a premier full service commodity brokerage offering risk management services for the agricultural sector as well as professional traders.

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.


Lower Start to the Week

Sep 09, 2013

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Grains and oilseeds closed lower to start the week.  Early corn yields continue to flow in very large.  The midday forecast added some chances for rain which also was part of the selloff.  The trade will continue to focus on harvested yields, crop ratings, and this Thursday’s monthly Supply and Demand report.

The crop ratings report was out at 3pm today and showed another decline in ratings as expected.  Corn is now rated at 54% good-excellent which is down 2 points from last week.  Soybeans also had a 2 point drop and are at 52% good-excellent.  Corn is only 9% mature which compares to the 5 year average of 28% at this time of year.  Although this was another decline in ratings this should have been built into the market already and should not cause any major swings on tonight’s reopen.

Seasonally markets head lower at this time as harvest gets underway and more physical product is sold.  Soybean yields have been deteriorating and have been supporting the corn market.  Corn yield is expected to be large enough and appears to be holding back the bean rally.  If soybeans make the same national average yield as last year it’s hard to say if we need to rally to ration more demand or not.  We are in a much better world supply situation after coming off of a record South American production year.  We need to keep this in mind and continue to stay well hedged going into harvest.  Like last year, November soybeans are holding a stark premium to the March and May contracts so it makes more sense to sell in the fall and if you really want upside potential re-own with some of the products in March through July.  For more information on these please give EHedger a call.

The upcoming Supply and Demand report will probably be the biggest market mover this week.  The average analyst guess is calling for bean yield to be 41.09 and corn yield to be 153.985.  There are large differences between the high and low estimates which can sometimes lead to a volatile market response. Bean yield is still the big question so for now we want to stay with hedges that offer a wide range of coverage which still allows for some upside and ride out the market volatility. Good luck this week.

EHedger  |  866.433.4371
 
Premier full service commodity brokerage offering risk management services for the agricultural sector as well as professional traders.
EHedger is a premier full service commodity brokerage offering risk management services for the agricultural sector as well as professional traders.
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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