E Hedger Grain Commentary 3/26/10

Published on: 16:08PM Mar 26, 2010
Market Settlement Change Low High 
May corn 356 1/4 1 1/4 355 358
May wheat 464 3/4 -1 3/4 464 468.75
May beans 952    9 1/2 941.75 955
May soymeal 270.90 5.00 265.7 271.5
May soyoil 38.95 0.25 38.65 39.08
Apr live cattle 94.025 -0.725 93.80 95.20
Apr lean hogs 69.675 -0.45 69.33 70.25
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Corn and soybeans closed higher, while wheat closed lower on the day. For the week May corn closed 18 cents lower (5-month lows), May wheat closed 19 cents lower (contract lows), May soybeans closed 10 cents lower, and Nov soybeans closed 24 cents lower. Most of today’s action had to do with light short covering after yesterday’s big break and ahead of the weekend. The negative fundamentals continue to outweigh the positive factors at this time. Weather outlooks for spring planting have improved this week. Farmers still face plenty of challenges, but the doom and gloom weather outlooks are disappearing. Plus increased acreage for corn and soybeans at a time when demand is slowing has led to liquidation and lower markets for the week.
Trade estimates for acreage on USDA report next Wednesday
                  Corn      Soybean    All Wheat     Winter Wheat
Average      89.2       78.46           53.38              37.31
Highest       91         80.22            55                   37.90
Lowest        87         76.5             81.90              36.44
USDA 2009  86.5      77.5             59.133           43.311
Average trade guesses for March 1 stocks of corn 7.496 vs 6.954 last Mar 1, soybeans 1.208 vs 1.302, wheat 1.366 vs 1.040. This friendly outlook for ending stocks in soybeans led to bull spreading. Meanwhile, the ending stocks figure for wheat is simply too large for any strength.
Given current price levels, producers that are adequately hedged should look at buying cheap May calls. The idea is to have upside protection in place against short futures or sold bushels. This is a cheap cost (this week’s price loss alone) ahead of a very important grain report. After the report we will consider the implications and look at potential re-positioning. As always, please call us with questions.

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