EHedger Closing Grain Commentary 10/7/10

Published on: 15:08PM Oct 07, 2010

·         Corn Stats: 37% harvested vs. 21% 5-year average.  93% mature vs. 79% 5-year average. Corn condition is unchanged from last week at 66% good to excellent vs. the 10-year average of 59%.


·         Soybean Stats: 37% harvested vs.  28% 5-year average.  88% dropping leaves vs. 85% 5-year average.  Soybean condition is up 1% from last week at 64% good to excellent vs.  the 10-year average of 56%.


·         USDA Supply and Demand report tomorrow at 7:30am.


·         USDA announced the sale of 822,960 MT of US Corn to Mexico for 2010-2011 delivery.


·         USDA also announced the sale of 110,000 MT of US soymeal to South Korea.



The grain markets were higher across the board on Thursday. December corn settled the day 9 ¾ cents higher at $4.98 ¼ after trading above $5. November soybeans settled the day 3 cents higher at $10.65. December Chicago wheat finished the day 1 higher at $6.59 ¼.


USDA released weekly export sales numbers this morning.  Corn exports were at 604,100 MTs which is at the low end of trade guesses.  Bean exports were on the high end of the estimates at 947,400 MTs, and wheat was above expectations at 808,400 MTs. These were a little disappointing since more demand was expected after last week’s price breaks. This could mean the end user already has feed needs covered.  Mexico came in and bought 822,960 MTs this morning which helped make up for the lower corn number.


The USDA Supply/Demand and Production report will be released at 7:30 am tomorrow. The corn yield is estimated to be about 159.9 with production estimated to be 12.950 billion bushels. The 2010-2011 corn carryover estimate is said to be 1.148 billion bushel. The soybean yield is estimated to be 45.0 with production estimated to be 3.491 billion bushel. The soybean carryover is estimated to be 334 million bushel. The wheat market will be looking at the 2010-2011 ending stocks figure that is estimated to be 880 million bushel.


In our opinion the S/D report will set the stage for what the market will have to do between now and planting. With the record open interest, record long positions that are held by the funds in both corn and beans, and the anticipation of a bullish corn report we should continue to see a large amount of volatility after we see the results of the report Friday morning. It appears very obvious that everyone is anticipating a reduction in the yield estimate for corn. The failure to see enough of a reduction in the yield estimate for corn could be catastrophic for the corn market. Conversely, should the report come back with a number closer to 155 the market could become explosive as end users scramble to get coverage.  


In our opinion we feel well hedged and positioned as we approach the report. If you need to catch up on the current hedge recommendations or would like to get any additional coverage on please get in touch with your broker.


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