Jul 10, 2014
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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 Grain Commentary 4/17/12

Apr 17, 2012

Grains finished mixed with weakness in the old crop corn contracts.  May corn settled 6 ½ cents lower at $6.16 ¾ cents while December corn finished 3 ½ cents at $5.29 ¾.  May soybeans finished 5 ¾ cents higher at $14.25 ¾ and May wheat settled ¾ of a cent lower at $6.15 ½.

Old crop corn is under the most pressure as the early planting has the potential to replenish supply early.  Crop progress was expected to come out between 20 – 25 percent planted for corn but they came in below expectations at 17 percent on the 3pm crop progress report.  This is still a record pace for corn planting.  Everything is ahead of schedule with the weather we have had.  Winter wheat is 29% headed (average 8% at this time of year), oats 76% planted (48% on average), rice is 56% planted (29% on average), and spring wheat is 37% planted (9% is the average).

With corn’s planting pace below the market estimates this may be slightly bullish on the open tonight, especially after a large break in the spreads.  Since the April 10th WASDE report, May corn has dropped by 32 ¼ cents and May soybeans by 5 ¼ cents.  The Sept – Dec corn spread went from a high of 38 ½ cents on March 14th to today’s low settlement of 11 ¾ cents.  A large part of this has been market sentiment coinciding with what the USDA has expressed: early planting has the potential to replenish enough supply in this time frame.

Soybeans were the strong market today with more bull-spreading in the July – Nov contracts.  Today that spread settled at +76 cents. We will continue to watch the export sales reports as well as crush reports for direction of old crop soybeans.  The funds are loaded up with record long soybean positions and soybeans have a record open interest.  If demand falls off or we gain a significant amount of bean acres added we could see a sharp sell-off in this market.

As I said yesterday, May option expiration could be contributing to some extra weakness as option writers sell futures to cover short puts.  May grain options will go off the board on Friday and the corn put open interest is high at the $6.50, $6.40, $6.30, and $6.20 levels with a combined 51,386 puts just in those 4 put strikes alone.  Another 22,974 puts are at the $6.15 - $6.00 strikes and pressure below these levels could continue to add to the weakness.

 

For now we want to stay with the current EHedger recommendations. To receive a free trial of the EHedger research including hedge recommendations, please sign up using the link below. Thanks and have a great week!

 

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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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