EHedger Closing Grain Commentary 6/15/10
Jun 15, 2010
Grains started off well today with soybeans leading the way higher, but towards the close the market quickly corrected and ended up finishing mixed to lower on the day. No major changes in weather or other market news. Yesterday I talked about the news that the Canadian Wheat Board said they could see total acreage planted down by as much as 8 – 12 ½ million acres. This has been especially bullish for Spring Wheat, Canola, and Oats. The oats had expanded limits today and ended up touching the limit but settling 27 cents higher meaning we will go back to regular limits tomorrow (20 cents.) The outside markets were stronger with equities and crude oil sharply higher and the US Dollar lower. Crop ratings for corn are currently 77% good/excellent which is up 1 point in the excellent category from last week. Weather still looks good for most of the corn-belt with a drier forecast in the works for the later part of the week and adequate soil moisture levels. We will continue to monitor daily forecast changes over the next couple of weeks.
Soybeans were the market leader for most of the day but found much resistance on the close. There is really not much new news out there. Yesterday’s Nopa crush estimates were disappointing at 127.8 Mil Bu when the estimate was at 130.2 Mil Bu. Crop progress shows soybeans 91% planted which was right around what the market was expecting. Crop conditions are rated 73% good/excellent. We could see some continued buying from the outside markets but we still would use these rallies for those who need to catch up on sales. We still feel that with a large South American crop coming online our export business will likely continue to decrease. Having your soybean orders in above the market will be a good idea to capture bounces like the 10 cent intra-day rally we saw today. Today we did get filled on our orders that were recommended on 5/13/2010 to buy 30% of your 2010 soybean production in 8.00 Nov soybean puts and sell 10% of production in 10.00 Nov soybean calls all for a 1 cent credit.
Like corn and soybeans, wheat was stronger for most of the day but finished only up a ¼ cent in July Chicago contract. This market has been oversold compared to corn/beans. The Canadian report could be what traders need to see to start covering some of the massive spec shorts in the wheat market. We could see further short-covering from here which could give us the strength to make more sales if you are still under-hedged. For producers that are able to store wheat there are still strategies to sell deferred futures and capture the carry that remains in the market. If you are not caught up to our recommended levels of protection for corn/beans/wheat, please call you broker to discuss your hedging opportunities going forward.
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