EHedger Closing Grain Commentary 12/8/10
Dec 08, 2010
Wednesday grains started the day sharply lower only to reverse during the first part of the session and trade higher. March corn finished 12 ¾ higher, March Wheat ¾ lower, and January Soybeans 10 ½ higher.
The market remains choppy as traders continue to look at tight supplies and weather concerns as the support. Outside market forces and profit taking are seen as resistance. The ethanol subsidy extension is still unknown which may also play a major role in keeping the markets resisted in the short-run. The funds are still the major market movers as it was estimated they bought 7,000 contracts of corn, 1,000 contracts of Wheat, and 1,500 contracts of soybeans by mid-day. Ten cent moves have become the norm and it looks like volatility has only been increasing.
Traders are gearing up for Friday's report and we have the estimates as follows:
For corn they are expected to drop the ending stocks from November's estimate of 827 million bu to the average analyst estimate of 806. The range is between 672-877.
Soybean ending stocks are expected to drop from November's 185 million bu estimate to the average estimate of 160. The range is between 98-198.
Wheat ending stocks are expected to drop from 848 million bu in November to 839. The range is between 764-938.
They are not expected to change South America's numbers in this report.
I hate to sound like a broken record but the quality issue remains at the front of the minds of the trading community and may continue to provide strength for the wheat market. We could see more volatility in December as traders wrap up for year-end. In January we will find out how many wheat acres were planted, and that will help us figure out how many acres corn and soybeans will have to "buy". We like to have our sales in the cash market with basis locked in and have spring call spreads for upside potential (see hedge recommendations.) If you are looking to add additional protection, please don't hesitate to give your broker a call.
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