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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 Afternoon Grain Commentary 8/20/12

Aug 20, 2012

Bullish news coming out of the fields along the ProFarmer crop tour kept grains sharply higher today.  December corn closed 16 ½ cents higher at $8.23 ¾, November soybeans 37 ¾ cents higher at $16.83 ½, and December wheat 8 ¼ cents higher at $9.02 ¾.  We are about 25 cents below the contract high in December corn and only 8 cents below the contract/all-time high for November soybeans.  We broke through trendline resistance in soybeans and a move above the contract highs may trigger more buy-stops.  November soybeans are still holding an extraordinarily steep premium through the spring contracts.

 

Yield reports from South Dakota have been very poor so far.  Many of the fields in that region had already been chopped for silage and the fields still standing were well below last year and the averages.  Obviously the market has been expecting poor yields but today’s numbers may have been a little worse than they were expecting given the market reaction.  We also started the day with a corn sale announcement for 121,000 of new crop to Mexico (99,000 for 2012-13 and 22,000 for 13-14).

 

Crop progress shows no change to the corn condition but a 1 point improvement in the good-excellent category for soybeans.  Corn is now 17% mature and 4% harvested, both of these numbers are well above their 5 year averages.  Overall the report didn’t show any surprises.

 

Due to some technical difficulties, the export inspections were not released at their regularly scheduled time this morning.  Instead they released the numbers immediately following the day session close at 2pm CST.  Corn inspections were 21.515 million bushels which was about 2 million above expectations.  Soybeans were well above expectations at 21.42 million and wheat was at 23.42 million.  These numbers could lead to a slightly higher open on tonight’s trading session.

 

The CFTC’s Commitment of Traders report showed another increase to the already massive long positions the funds are holding in corn, wheat, and soybeans.  Using futures and options combined, the "managed money" alone is long 1.516 billion bushels of corn, 1.1577 billion bushels of soybeans, and 385.520 million bushels of Chicago wheat.  Obviously these huge positions have helped push grains to the current levels.  How much more will they add to these positions and how long will they stay in them are the questions to ask.

 

While corn is in a supply market we believe soybeans are in a demand market.  Crush continues to outpace estimates.  Exports have been strong.  At the same time the recent rains have the market wondering if bean yields have improved.  In our opinion once we get past the supply question soybeans will have a bigger story than corn.

 

Please contact EHedger at 866-433-4371 if you would like to try our proprietary farm management software called AMMO.  To learn more please visit www.ammoag.com.

 

Chart: November SoybeansNovember Soybeans

 

Chart: December CornDecember Corn

 

Chart: December WheatDecember Wheat

 

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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