EHedger Afternoon Grain Commentary 12/18/12

Published on: 16:05PM Dec 18, 2012

This morning’s soybean cancellations sent soybean prices sharply lower.  January soybeans closed 30 ¼ cents lower at $14.66.  March corn was 4 cents lower at $7.20 while March wheat settled 3 ¼ cents higher at $8.11 ¼.

The market was expecting the USDA to announce more soybean sales this morning at the usual 8:00am time.  To the market’s surprise the USDA announced the cancellation of 300,000 Mts of US soybeans to China as well as 120,000 MTs to "unknown" destinations.  They did announce a sale to 110,000 Mts of soybeans to another "unknown" destination at the same time.  The recent soybean strength has been fueled mostly by strong export demand so this was an especially large shock to the market.

Corn futures were weak mainly following soybeans lower.  Wheat was lower for most of the day but found strength into the close.  It could be that wheat has had the largest selloff recently and this is just short covering.  Concerns over central US dryness are also providing underlying support for wheat.

March corn found technical support at last week’s lows (see chart):March Corn

January soybeans settled below the 200 day moving average (grey line).  Further setbacks may trigger sellstops to take us back toward the low.  With January options expiring Friday we could see some larger price moves on position squaring.  Larger put open interest is noted at the $14.00 strike while larger call option open interest is noted at the $15.00 strike.

Soybean Chart

Open Interest Chart

Wednesday we will see ethanol production as well as Informa’s 2013 acreage estimates.  Friday will be the last trading day for January grain and oilseed options.  We will be open on Christmas Eve until noon and closed Christmas Day.  Markets will reopen on the 26th at their usual morning open-outcry times.  We expect low volume and choppy trading over the next two weeks as many traders are out for vacation.  If you have been waiting for a chance to price grain having hopeful orders above the market may not be a bad idea during this timeframe.  For a free two week trial of our services please click on the sign-up link below.  Have a great week!

Best Regards, 



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