Closing Grain Commentary 6/17/10
Jun 17, 2010
This morning at 7:30 am the USDA released its weekly export sales numbers for corn, wheat, and beans. The export sales for corn were 1.09 mt for old crop and 136,500 mt for new crop. The corn market was fairly quiet for most of the session and ended up settling 1 ¼ cents higher at 3.57 ½ for the July contract. Yesterday we issued a recommendation for producers to sell another 10% of 2010-2011 corn at $3.84 basis the December futures. The high for the December contract since we issued the recommendation has been $3.81 ½. We feel that having this order in above the market is a good idea should we see buying come into the markets over night. Tomorrow morning Informa will be issuing an updated acreage estimate. The Informa numbers are usually released around 10:30am. Tomorrow will also bring us a Cattle on Feed report at 2:00 pm. The estimates for the Cattle on Feed report are 100.8% on feed, 122.3% placed in May, and 96.8% marketed in May. The mid-day weather run still appears to favor positive planting/growing conditions for the majority of the corn belt. If you feel that you need to catch up on the current recommendations that we have issued or are looking for additional protection as we continue through planting and into the summer please get in touch with your broker to discuss the available strategies.
The USDA export sales numbers were disappointing for old crop beans at 136,300 mt and good for new crop at 452,100. This may have contributed the bear spreading that the July Nov spread experienced. The July Nov spread finished the day lower by 6 ½ cents settling at 27 cents. Over the past few weeks we have been discussing the chance that old crop bean sales could continue to disappoint as the South American crop comes online. Today’s action further validates this point and is something that a producer needs to closely monitor. There is always the potential to see continued buying in the bean complex and in our opinion these rallies need to be taken advantage. Having your soybean orders in above the market will be a good idea to capture any quick rallies that we may see. If you feel that you need to catch up on your bean hedging strategies please give us a call and we can discuss the available strategies for your farm operation.
July Chicago wheat finished the day 1 1/4 cents higher at $4.62 3/4. This morning’s export sales were very strong for new crop wheat at 959,500 mt. The wheat market has experienced the most bearish of fundamentals. In our opinion unless corn experiences another strong selloff the wheat market may have put in the low. As we approach the end of the month and also the end of the second quarter the wheat market may be susceptible to continued short covering. For producers that are looking for strategies to hedge wheat we feel that the best option would be to sell deferred futures and store the physical. This strategy allows the producer to capture the carry that still remains in the market. If this isn’t a viable option for your farm operation please get in touch with your broker to look at other strategies that may be available.
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