EHedger Closing Grain Commentary 12/20/10

Published on: 20:30PM Dec 20, 2010

Grains start the week strong with corn up 3 cents, beans up 16 ½, and wheat up 12 ¾.
Overnight grains were sharply higher for wheat and soybeans as fresh buying came into the market.  Corn remained quite strong for most of the day but came off its highs before the close.  Bean's strength can be attributed to concerns of dryness in heavy soybean producing areas of Argentina.  Rains in other parts of Argentina and Brazil are expected to be favorable starting next week.  Outside markets were also favorable with energies and metals posting modest gains.  The US Dollar was stronger throughout the day but didn't seem to affect the grains to its usual capacity.
Export inspections were on the high end of expectations for wheat and at the low end of expectations for corn and soybeans.
Thursday we have option expiration for January grains.  There are a decent amount of $6 January corn options, as well as $13 January soybean options.  The market tends to gravitate towards these higher volume strikes so potentially we could see Thursday's expiration stay close to these levels.
Even though we can see reasons for the market to be friendly in 2011, we still want to remain adequately hedged incase the unexpected happens.  For example, last year it took until the January report before grains broke, which lasted all the way into early summer.  Right now we are staying well hedged and keeping our upside in the spring call spreads.  Please contact your broker if you would like an overall analysis of your 2011 marketing year.
Markets will be closed for Christmas Eve and reopen that following Sunday.  Between now and then we could continue to see high volatility on low volume.  Last year on December 23rd, we saw total corn volume at only 82998, a fraction of what we typically do.  If you are looking to add additional protection, please don't hesitate to give your broker a call.



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