EHedger Afternoon Commenatry 6-24-2011

Published on: 15:31PM Jun 24, 2011


Markets started off the day higher but finished sharply lower by the day session close. December corn was down 14 cents finishing at $6.32. November soybeans were down 8 cents at $13.09 ¼, and December wheat down 8 ¾ cents at $7.05 ½.
Grains have continued liquidating. Part of today’s weakness was stemming from sharply lower outside markets. The Dow Jones and S&P 500 were both sharply lower and this helped bring corn, beans, and wheat off their overnight highs.
Looking at the CFTC’s commitment of traders report we can see the liquidation quantified. Managed money reduced their net corn position by 60,000 contracts of corn and another 7,000 was liquidated by the index funds. Combined these two are still holding over 500,000 net long corn positions using futures and options, so you can imagine what the market would look like if more of these start to get liquidated. Managed money is now short Chicago wheat, but still holding long positions in Kansas City and Minneapolis wheat.
Here is a chart of what July corn did during this period of liquidation (red rectangle): 
ZCN11 ~ Daily 06242011 030413pm
With the June 30th report coming out next Thursday, we could likely see more choppy days ahead of us like today. Short term options may be of some use if you need to get some extra coverage for the report.


Best Regards,
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