EHedger Closing Grains Commentary 11/4/09

Published on: 17:03PM Nov 04, 2009
Dec 09 Corn
- 6 
Nov 09 Beans
995 ½   
- 11 ¼ 
Dec 09 Wheat
+ 5 ¼
Dec 09 KC Wheat
526 ¾
+ 6 ¾
Dec 09 Min Wheat
535 ¾ 
+ 6 ¾ 
Dec 09 Meal
- 4.8
Dec 09 Oil
+ 0.02

--Informa pegs corn production at 13.064 billion bushels and soybean production at 3.333 billion; FC Stone looks for 13.004 billion corn and 3.379 billion soybeans.
Corn and soybeans closed lower and wheat closed higher. Basically, today was the opposite of yesterday. Corn and soybeans struggled throughout the day despite the sharply lower dollar and strong stock market. The Fed left interest rates unchanged and this helped push the U.S. dollar index sharply lower. The trade continues to “borrow” cheap U.S. dollars and invest in foreign currency and commodities. The current administration favors a 0% interest rate and cheap dollar to stimulate prices and “fix” the economy. This is much easier than actually having to de-leverage the United States way of life. As long as this remains the policy, we will continue to see people borrow free money and buy leveraged assets including commodities. This should keep volatility high in all markets especially commodities.
The extended weather looks mostly warm and dry until the middle of next week. Informa and FC Stone came out with production estimates today. Informa estimates the national corn production at 13.064 billion bushels; FC Stone estimates production at 13.004 billion versus the USDA’s October forecast of 13.018 billion. Informa estimates soybean production at 3.333 billion; FC Stone 3.379 billion versus the USDA’s October estimate of 3.250 billion. The USDA will release updated estimates on November 10th. There is a lot of uncertainty with these estimates since a small amount (Estimated 30% of their test plots) have actually been harvested as of November 1. Their next estimate won’t be until January, so there will likely be a lot to argue about over the next 2 months! This has been a very unusual year to say the least, and many are just ready to finally finish up with this crop. Luckily it looks like weather will cooperate for the next 9 days at least. Hopefully this will mark a changing trend in the weather and help us finish a meaningful amount by Thanksgiving. The trade is currently looking for soybeans to be 75% complete by next Monday and corn to be 35-40% complete. There was not a large allocation of money into the grains today. We will have to see if the money returns tomorrow or not. If it does, I still like…

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