EHedger Afternoon Grain Letter

Published on: 18:07PM Jun 22, 2011

Grains were sharply lower today with corn finishing limit down. December corn finished 30 cents lower at $6.50 ¼, November soybeans down 17 ¼ cents lower at $13.32 ½, and December wheat down 34 ¾ cents lower at $7.19 ½.

Synthetically, July corn was down another 5+ cents and is likely going to open that much lower on the overnight session, especially with equities sharply lower again. Grains continue their downtrend on technical selling, weaker world wheat prices, and just a lack of fresh news to feed the bulls. Also today the ethanol numbers came in weak again. The USDA’s forecasted 5.00 billion corn bu used for ethanol production is looking a little heavy right now. We are still calling for that usage number to drop to potentially 4.9 billion at the current rate. This would essentially raise 2010 corn carryout and would be viewed as negative as the market is pricing this in.   
Also, I don’t want to sound like a broken record but with wheat prices getting heavy technical selling and worldwide prices falling, this will have a large affect on front month corn as they both compete for who can be the cheaper feed ingredient in a cattle market that has been liquidating numbers.
With the June 30th report coming out next Thursday, we could likely see more choppy days ahead of us like today. The funds are still loaded up with long positions in corn and soybeans. Managed money has reduced their long Chicago wheat positions substantially over the last couple of months, and with this recent action, I wouldn’t be surprised if they turn out to be net short on the next COT report, but we will have to wait for Friday to see that.
Best Regards,
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