Grains and oilseeds closed higher Tuesday on heavy volume in the last minute of the session. Both the flat price as well as the spreads had very large ranges during the last 60 sections of the day. This may be associated with the Goldman Roll, but could also be some major orders pressing the market during the most important time of the day which is the closing settlement. I have included 1-minute charts of November soybeans and the July-November spread below.
July –November Spread
Tomorrow’s report will be the major focus of the market. How much will acres and yield change tomorrow? The latest Reuters poll has bean acres up 700,000 from the March 31st report and corn acres down 1.5 million. We don’t forecast a major yield change based on the current crop ratings but we will say any drops in production for corn could also be met with a drop in the feed estimate. The USDA was using a feed number in May that we believe was a "compensating" number for having such excess supply. There is no reason to believe we will see such a jump in feeding next year unless we see a sharp decline in price to bring in profitability. So for these reasons we want to remain well hedged with a combination of insurance, sales, and options. The idea is to leave enough upside open to benefit from any market rallies as we have seen in the last five years, but hold enough protection to recieve a decent return on investment should the market break. There are too many unknowns to "know" where we end up this year. If you would like a second opinion at your marketing plan please contact us for a complementary risk review.
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