Closing Grain Commentary 6-9-10

Published on: 16:02PM Jun 09, 2010
Today’s session saw corn trade higher for the entire session before settling up 2 cents at $3.58 ½ in the December contract. Once again we saw a weaker dollar and stronger equities markets support corn for most of today’s session. Tomorrow morning at 7:30 am the USDA will release the June Supply and Demand numbers. Below you will find the trade estimates for this report. We will be hosting a webinar at 8:30 am tomorrow morning with our reaction to the report, you can sign up for a seat to the webinar by clicking on the link at the top of the page. In addition to the USDA report we will also have export sales at 7:30 am. The export sales estimates for corn are 300,000-800,000 mt. We are still looking at favorable weather for most areas throughout the corn-belt for the next 6-10 days. One thing to think about is the fact that the start of pollination is only about three weeks away. If the 2-week forecast continues to look great the market could keep dropping weather premium out of corn. Also, in the KC wheat contract we are seeing some places bidding wheat for under the price of corn. With a large wheat crop coming to the market, it could be possible to see up to a couple 100 million bushels of demand move away from corn to wheat. Asian buyers have already started buying some feed-wheat in place of corn. As the Euro Currency weakens, Euro denominated feed-grade wheat looks cheaper, and is one more thing corn has to compete with. We feel well positioned at this time. If you have any questions about where you are sitting as we progress through the growing season please get in touch with your broker.
The soybean complex saw commercial bull spreading contribute to the July bean contract settling 12 ½ cents higher at $9.43 1/2. The November contract also settled higher by 2 ¼ cents at $8.96. Farmers have been reluctant sellers in the bean complex and with interior basis levels strengthening commercials have been seen bidding for beans. As I mentioned earlier, in addition to the USDA report we will have export sales numbers. The average trade guess for beans is 100,000—500,000 mt. The last few weeks we have seen a drastic slow down in the export sales of beans. This morning we did sell 240,000 mt for 2010-2011 delivery to China. With the soybeans out of South America continuing to come online we will have to closely monitor our weekly sales. If the weather continues to cooperate, the bean market may be susceptible to a further break from these levels. As a producer, we would continue to keep all of our hedges in place. For those producers that need to catch up on sales, having resting orders in always is a wise idea given the volatility that we have seen. As always, if you have any questions about your individual operation or are looking for bean hedging strategies please get in touch with your broker.
The wheat market struggled for most of the session before finishing just off the lows down 4 ¼ cents at $4.28 for the July Chicago contract . Wheat continues to struggle based on the fundamentals in place as well as outside markets. I talked a little about this in the corn commentary but I will mention it again. As the Euro Currency continues to deteriorate, European wheat looks cheap. Much of our demand could be shifted to Europe leaving our fundamentals weaker. We have been hearing that farmers out West are beginning to ramp up corn sales to make room for the upcoming wheat harvest. 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. Another thing to think about going forward; we have settled below the support line on the weekly continuous chart of Corn, Wheat, and Beans all added together as a basket (this has been discussed in previous letters -see chart below.) From a technical standpoint this could mean further weakness from here. If you are not caught up to our recommended levels of protection, please call you broker to discuss your hedging opportunities going forward.

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