EHedger Closing Comments 11-17-11
Nov 17, 2011
Grains finished sharply lower with corn leading the way. December corn settled 28 ¼ cents lower at $6.14 ½, but at one point was 32 ½ cents lower. January soybeans finished 19 ½ cents lower at $11.68 ¼, and December wheat down 24 ¼ cents at $5.92 ½.
Why did we collapse today? For one corn sales were extremely weak for the second week in a row. Net corn sales were 208,900 MTs which basically says it all. Bean sales were net 746,100 MTs and wheat sales 317,100 MTs.
On top of the obvious demand destruction we also had outside markets sharply lower. Crude oil was over $4 lower at one point while the Dow Jones futures were 160 lower. There were reports of basis levels dropping this morning as well. All of these combined factors were causes for the sell-off in prices.
The feed wheat story is still a very important key to this weakness. With the price of wheat still undercutting the price of corn around the world we have to imagine that the price of corn is going to have a hard time being supported by much export demand. I have talked about all of the examples of feed wheat being purchased in these past few weeks especially in the Asian countries. As long as this is the case I find it hard for corn to stay at these price levels.
Export sales estimates vs actual:
Estimated Range: Actual:
Corn: 250,000 – 600,000 MTs 208,900 MTs
Soybeans: 450,000 – 700,000 MTs 746,100 MTs
Wheat: 300,000 – 500,000 MTs 317,100 MTs
Cattle on Feed will be released Friday and expectations are as follows:
On Feed November 1st 104%
Placements During Oct 99%
Marketings in Oct 101%
Fundamentally we still stand bearish wheat/corn especially. Technically many of these markets are starting to point lower as well. The 50 day moving average for corn has crossed below the 200 suggesting the longer term trend is heading lower. Please call EHedger if you would like to discuss developing a marketing strategy for 2012. Our grain marketing software can help you discover your risk based on your current strategy and help you make marketing decisions going forward.
Chart: January Soybeans
Chart: December Corn
To receive a two week trial of our services please contact an EHedger broker today or sign up using the link below.
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.