EHedger Afternoon Grain Report

Published on: 17:39PM Apr 29, 2010
Corn, soybeans and wheat all closed higher. Corn and wheat led the way higher today. Rumors of more corn sales to China helped rally corn prices overnight and this morning. Weekly exports were good for corn and this also helped fuel the rally. The sharp rally in cash corn prices prompted farmers to make old crop sales today and this helped prices set back. Interior basis levels are down 10-15 cents over the past 2 days. This is indication that plenty of old crop corn still remains to be sold. The strong demand should keep prices supported near recent lows and the large supplies should keep prices tempered on large rallies. Wheat saw another round of short-covering and this pushed prices sharply higher by mid-day. Soybeans tried to keep up with corn, but weak export sales and a weak meal market tempered the rally today. The “Head and Shoulders” formation is still intact for December corn. With China buying some U.S. corn and the entire growing season ahead of us, we may see corn prices bottom at these levels for now. Corn remains cheap to wheat and soybeans and without a large break in soybean prices it will be hard for corn to head much lower for now. On the other hand, the growing season if off to a great start and this should make it difficult for corn to sustain a large rally without a weather problem. The July calls that we purchased should give us some nice upside potential if the weather turns for the worst this summer. Options are even cheaper for soybeans and this is giving the producer a very unique opportunity to protect the downside with puts or have some upside exposure with calls. Usually option volatility is much higher when prices are this high (especially as we head into the growing season). Please call if you have any questions. 

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