EHedger Grain Commentary 4/18/12
Apr 18, 2012
Grains finished lower with soybeans having the largest move. May corn finished 15 cents lower at $6.01 ¾, May soybeans down 18 cents at $14.07 ¾, and May wheat down 4 ¾ cents at $6.10 ¾.
Ethanol production was down slightly while the ethanol stocks stabilized helping to add to the corn weakness. Crude oil also had a large selloff today. The old crop / new crop corn spreads were sharply lower for the second day in a row. Open interest in May and July corn dropped a combined 10,574 contracts and increased by 5,227 contracts for December. This suggests the large 2-day break in corn spreads has been a combination of liquidation and rolling positions from old to new crop. I have included a chart of the July – Dec corn spread with the USDA report dates to show some of the recent moves.
Chart: July – December Corn
Soybean spreads on the other hand continue to remain near the recent highs despite the selloff in the flat price. July – November soybeans finished down ¼ cent at +75 ¾ cents. The USDA announced another sale of 120,000 MTs of new crop soybeans to China this morning. Tomorrow morning we will have the Weekly Export Sales report at 7:30 CST. The estimates are as follows:
Corn 700,000 – 950,000 MTs
Soybeans 850,000 – 1,100,000 MTs
Wheat 450,000 – 650,000 MTs
May corn option expiration is still a concern as more and more of these puts get "into-the-money". As I discussed yesterday, there is a massive amount of open interest in the May $6.50 corn puts all the way down to the $6.00 puts. The last major strike level in sight for corn is $6.00 so this may be place where we find support.
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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