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EHedger Afternoon Grain Commentary 7-21-2011

Published on: 14:37PM Jul 21, 2011

Weather changes have again created another volatile two sided trade today.  December corn ended up finishing 4 ¾ cents lower at $6.73, November soybeans finished 4 cents higher at $13.88, and December wheat down 18 ½ cents at $7.16 ¾. 

This morning’s forecast called for less heat with more chances of rain next week.  This combined with low export sales immediately put corn on the defensive.  At midday, we are again getting conflicting weather reports about how hot and how dry it actually will be next week.  This combined with a sharply lower US Dollar the market was able to come sharply off its lows today.

US Weekly export sales were lower than expected today for corn, wheat and soybeans.  Here are the following actual vs expected (in 1000’s of MTs):

                                                Expected Range                               Actual

Corn                                      900-1400                              901.5

Soybeans                               400-550                                445.9

Wheat                                   300-500                                403.5

Source: Reuters

One more thing to mention that many aren’t talking about is the feed wheat situation.  Right now Russian feed wheat is almost $80 per ton cheaper to feed than corn is, almost $2 per bushel.  If corn tries to stay where it is now, we could see much of this demand shift to cheaper feed grade wheat.  This is one more factor for corn that could end up bringing the overall price down.

If weather continues to come in with problems in the extended forecasts, or they take out rain we could easily see corn/beans go after their contract highs for new crop.  If they end up reducing the ridge or increasing precipitation, we could just as easily see this extra risk premium come right out of the market.  We like to remain with current hedges, and look to be long Sept calls if you want more upside coverage to take you through the rest of the summer.  Please call your broker for details on the Sept options.

Best Regards,

 

EHedger

 

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