Closing Grain Commentary 6-3-10

Published on: 16:57PM Jun 03, 2010
After a rough start to the session July corn bounced off the early morning lows to settle a penny higher at $3.49 ½  .  As we have been discussing the last few weeks, it appears that we are still in a trading range within the corn complex.  The corn market has been on a fairly large break for the past few weeks and as we have seen before as we break down to the $3.45-$3.50 area in July corn buying interest picks back up.   The weather still looks favorable for most areas throughout the corn belt for the next 6-10 days. As is the case with any weather market day to day forecasts need to be monitored. We should continue to see strong progress with already planted crops and also areas that need to catch up. If the weather stays good through pollination, we will likely see December futures trade under $3.50 and head even lower towards harvest.  If we were to see a weather problem her in the  U.S. and/or in China this growing season we should see corn prices find a bottom in the coming months. We are hearing reports out of the West of farmers that are selling corn to make room for the upcoming wheat harvest. This could continue to put pressure on the corn market as we go forward. Tomorrow morning we will have export sales numbers at 7:30 am. Trading estimates are 700,000-1,250,000 mt. We will discuss the actual sales numbers in our morning letter and also on the EHedger Morning hotline.  I still think we are positioned well at this time. For those producers that still need to get caught up on the hedge recommendations that we have issued please call your broker and discuss the available plan for your operation.
Bull spreading was the theme of the day in the soybean complex as July beans settled 22 ½ cents higher at $9.55 while the November contract finished 16 ¾ cents higher at $9.19 ¾ . Based on the fundamentals that we have right now we feel that rallies such as the one we saw today need to be taken advantage of if there are cash sales that need to be caught up on. The record South American crop continues to come online and global stocks this fall will be 45% larger than last year. We will still have to grow a crop here in the U.S. obviously, but if we do have trend line yields we could see much lower prices this fall.  A lot can change (and usually does!) but if you are not caught up on sales I would look for a rally back towards $9.30-9.50 in November soybeans to do so. The estimates for tomorrow morning bean export sales are 200,000-400,000 mt. For those producers that have their hedges in place we would continue to stay hedged.
The wheat market tried to rally early in the day before facing another set-back on the close. The July Chicago wheat contract settled ¾ of a cent lower at $4.41 ¾. Wheat continues to struggle based on the fundamentals that are in place as well as outside markets. As previously mentioned we have been hearing that farmers out West are beginning to ramp up corn sales to make room for the upcoming wheat harvest. In our opinion if you are a wheat producer that has the ability to store your wheat, we have been discussing strategies to sell deferred futures and store the wheat in order to take advantage of the carry that is in the market. Please call your broker to see if this is a strategy that can benefit your operation. 

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