EHedger Closing Grain Commentary 8/27/09

Published on: 16:59PM Aug 27, 2009
Sep 09 Corn
+ 2 ½
Dec 09 Corn
329 ¼
+ 3 
Nov 09 Beans
- ½
Sep 09 Wheat
- 3 ¾
Sep 09 KC Wheat
508 ½  
- 2 ½
Sep 09 Min Wheat
538 ¾  
- 4 ½  
Dec 09 Meal
- 2
Dec 09 Oil
- 0.26

Soybeans, Corn End Mixed In Low-Key Trade; Friendly Weather Weighs
  • Nov Soybeans Slump Despite Heavy US Dollar Fall, Strong Export Sales
  • End-Of-Month Fund Activity Expected To Keep Activity Choppy
The soybean market got off to a solid start Thursday and initially built on overnight firmness thanks to strong US export sales reported in the pre-market. However, as a decent sales total had been anticipated, the early support soon gave way to profit taking which served to keep Nov prices on the defensive for most of the rest of the session.
More profit taking and general selling pressure can’t be ruled out Friday, but we are also expecting a fresh round of month-end position allocations into the commodities arena that could well serve to boost all raw material markets, soybeans included. As a result, we need to allow for quite wide trading ranges in the sessions ahead as this market tries to transition from a tight old crop scenario into a likely ample new crop environment over the coming weeks.
We appreciate that worries about an early frost nipping national yields will likely prevent new crop prices from cascading lower any time soon, but also believe that friendly weather conditions so far have certainly endowed this crop with huge potential as long as the closing stages of the growing season avert widespread frost.
Overall, it is clear that prices here are going to stay lively for some time yet, but given that an early frost is at best only a ‘possibility’ rather than a ‘probability’ right now, we continue to advise producers to use periods of price strength as opportunities to top up sales ahead of harvest.
Corn managed to score a modest gain on the day but lacked clear direction overall as prices explored both sides of their recent trading range.
From a technical perspective, Dec futures nearly etched a ‘bullish outside day’ as prices extended beyond Wednesday’s trading range and closed just shy of Wednesday’s highs. Had today’s close bettered Wednesday’s high, that would likely have triggered follow-through buying, but given that the late rally petered out just shy of there, we expect the recent sideways bias to be maintained Friday.
Weather conditions remain key, but as we get closer to the end of the growing season we need to brace for very strong yield reports and projections. August has been nearly perfect for most of the crop, and if we get more of the same weather in September a record national yield cannot be ruled out. Such a big crop projection will force a closer look at the demand side of the story, which remains patchy outside the ethanol industry.
So, once again, if there are producers out there who have not yet made a meaningful amount of sales of the upcoming crop, we encourage you to give us a call to discuss your ag marketing opportunities and how you can get caught up ahead of a potentially steep price decline going into harvest.
Chicago Dec wheat had a choppy day, and spent most of the session down near recent lows around $4.92-4.94 before staging a late rally on the back of crude oil’s recovery and the weaker US dollar. More choppy trade is expected ahead, but the overall bias of this market is likely to stay lower as long as global inventories continue to climb and overall usage remains soft.
Get More From EHedger.
Our commentaries are just one part of our whole risk management service. Please go to for a free two-week trial of our full member website that gives you access to all our hedge and marketing recommendations, educational tools, market snapshots and much more.
Also learn about our acclaimed AMMO Program that helps producers optimize their marketing strategies using the premier tools and insights in the industry.
Get Organized. Get Ahead. Get EHedger
Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. The market information contained in this message has been obtained from sources believed to be reliable, but is not guaranteed as to its accuracy or completeness. Market information may not be consistent with current or future market positions of E Hedger, its affiliates, officers, directors, employees, or agents. Recipients assume the risk of reliance on and indemnify and hold E Hedger harmless for any and all losses, costs, or tax consequences incurred as a result of their use of market information.