EHedger Closing Grains Commentary 12.23.2009

Published on: 15:25PM Dec 23, 2009
Market Settlement Change Low High 
March corn 404 3/4 6    397.25 405.25
March wheat 529    6    518.75 529.75
Jan soybeans 1001 1/4 10 1/4 990 1001.75
Jan soymeal 303.90 5.40 298.5 303.7
Jan soyoil 38.08 0.03 37.88 38.29
Feb live cattle 85.375 0.7 84.90 85.50
Feb lean hogs 65.675 0.92 65.05 65.75
Corn, soybeans and wheat all closed higher. Holiday markets. Low volume and choppy markets will be common in the remaining days of 2009. I recommend producers have resting orders in above the market if the need to catch up on sales exists. We often see sharp breaks and sharp rallies on low volume during the holidays. Census crush came in as expected at a record 168.6 million bushels for November. Unexpected however, was the sharp build in both soybean meal and soybean oil stocks. This implies weaker domestic demand for soybean meal and much weaker domestic demand for soybean oil. 
South America remains in good condition and Informa estimates that 2009 soybean production is 100 million bushels higher than the last USDA estimate. I would say that I agree with most of these statements. As I have been saying, I expect soybeans to be the weakest of the grains/oilseeds in 2010 if South America has a good crop. We are quickly approaching the end of the year, and after months of hoarding soybeans, we could see a sudden shut-off in Chinese demand (especially out of the U.S.) This would be a dramatic change from the last 12 months and could cause a very large sell-off this spring. However, we are on a large break and are due for a rally. New money allocations (if they occur) could give us another rally at the start of the year. This would be a great selling opportunity in my opinion, and I suggest being an aggressive marketer during this timeframe. We will be receiving a lot of useful information in January. We will know how much “new money” was placed into commodities, we will get updated production figures for corn and soybeans, we will get winter wheat plantings, we will have a good idea on the size of the South American crop, we will get a quarterly stocks report and know more about feed demand, and we will have a good idea what the crop insurance prices will be for corn and soybeans. All of these a large factors and will set the direction of the market for 2010. With so many unknowns, the market will likely build some premium back into the markets ahead of these events. Hopefully this will provide the opportunity to lock in even more attractive prices for the 2010 crops. Have a great Holiday season and give us a call if you have any questions.
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