EHedger Closing Grain Commentary 8/13/10

Published on: 15:56PM Aug 13, 2010


More follow through buying today for corn and beans but a quick sell-off in the old crop wheat.  On the week December corn was up 7 ¼, November beans up 10 ½, and December wheat was down 21 cents. 


Today’s COT tells the story as we see Large Speculative traders are now net long an additional 48,600 contracts of corn, 16,186 contracts of soybeans, and 3,695 contracts of combined wheat. With futures and options this makes their total net long positions over 1.52 billion bushels of corn which is 11.6% of expected 2010 US production. For Soybeans the numbers are even more staggering. With combined soybeans, soymeal, and soyoil, the large spec traders are long approx 935 million bushels of beans which is about 27% of expected US production. For combined wheat they are net long over 445 million bushels or 19.6% of US production. The question is how long can they keep this buying up heading into harvest? They are going against a seasonal trend of breaking prices this time of year. We do think the new crop corn still has to buy acres but the problem is the timing, it might not be a buy until after harvest.     


The key going forward is weather and fund activity.  We will have to continue to monitor the situation to see how much rain we get in the much needed areas of the delta and southern mid-west.


I know we have been talking about it in previous letters but I still want to stress the importance of staying hedged in this market. You can see from the numbers that the funds are still taking large bets and the question is what happens when they exit the market? If you need margin room we can talk about moving any marginal positions over to the cash market. Capital preservation and staying power for hedges are very important.


For those producers that need to get caught up on sales having resting orders in above the market is never a bad idea. Please give us a call if you have any questions about strategies to take advantage of these price levels.


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