EHedger Afternoon Grain Commentary 7/6/12
Jul 06, 2012
Grains finished the day lower along with sharply lower outside markets. December corn closed 15 ½ cents lower at $6.93, November soybeans 20 ¾ cents lower at $15.05 ¾, and December wheat 25 ¼ cents lower at $8.21 ¾. Despite the lower daily closes we still finished with strong gains on the weekly charts. December corn finished the week 58 ¼ cents higher, November soybeans up 78 cents, and December wheat up 45 cents.
Weekly December Corn
Weekly November Soybeans
Weekly December Wheat
This morning’s weekly export sales were all in line with expectations and weren’t a market mover. Informa released their production estimates dropping their national corn yield estimate to 153.5 and soybean yield to 42.0. Informa’s estimates didn’t seem to spark a reaction out of the market either way. Grains had already started their double digit losses. The weakness in grains was attributed to pre-weekend profit taking as well as extremely weak outside markets. The stock market fell sharply today after the jobs data came in disappointing and crude oil fell by over $3 a barrel. In 2008, the agricultural bull market was ultimately over after the economy started to slow. We have to be mindful of similar responses to the fiscal problems the economy is facing right now.
Weather is still the most important fundamental to watch for direction. We have now had three weeks of sharp gains in grain futures all based on weather and declining crop conditions. We are expected to have a few more days of hot and dry conditions before we see relief in parts of the Midwest Sunday – Monday. The latest midday forecast has added more rains to the driest parts of the Southern Midwest. As of right now our forecasters are still not expecting the rain to be enough to replenish soil moisture levels and crop stress is expected to continue in many areas of the Midwest.
Sunday night forecast changes have been major market movers resulting in large rallies for corn and soybeans. The market will surely be watching any changes to the forecast over the weekend. Monday we will have crop conditions in the afternoon as well as the CFTC’s Commitment of Traders report which was delayed due to the holiday week.
There is no doubt that this rally has negatively affected the demand outlook especially for corn. We want to remain in sustainable hedges until we know more about the crop size. If you would like to receive a free trial of our research including hedge recommendations, please sign up using the link below. To discuss opening an EHedger account with one of our experienced agricultural brokers, please call 866-433-4371. Have a great weekend!
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