EHedger Closing Grain Commentary 11/23/10

Published on: 15:35PM Nov 23, 2010

Tuesday grains continued trading at high volatility with corn trading down to new lows for the move and then back up to 13 ¼ cents higher on the day.  Soybeans were also sharply lower but finished 17 ½ cents higher in the January contract.  December wheat finished 3 ½ cents lower.


Grains were surprisingly strong today given the weakness in the outside markets.  The Dow Jones was down over 130 today, while the US dollar was up sharply after more concerns in the Euro zone.  GDP was out this morning and slightly better than analysts were expecting, but still below what is projected to start lowering the unemployment rate. 


The strength is mostly just rebound activity from last week’s break.  There was not a whole lot of fresh news that prompted such a sharp turnaround today. Once corn got towards $5 opportunistic buyers came in to support the market.  Gold and some other markets were sharply higher so it may be a jump to tangible assets over currency concerns.



This week volume may be light due to Thanksgiving.  Friday is option expiration day for December Grain Options.  Open interest for December $5 corn calls was at 41,042 coming into today.  Many times the market moves towards high open interest strike prices on expiration, so short term we may see some more pressure.  As we come to the end of the year we could see more liquidation from the market.  January we will get an influx of data and should provide plenty of direction for the 2011 marketing year.  We like staying with current hedge recommendations.



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