EHedger Closing Grain Commentary 8/30/10

Published on: 16:51PM Aug 30, 2010

Corn and wheat both closed higher while soybeans finished lower.  All three markets opened higher while corn/wheat were the upside leaders. Quality concerns in the wheat market due to excessive rains in Germany and other parts of Europe caused European markets to rally overnight. This spilled over into our markets causing wheat to be up as much as 33 cents higher at one point in the day.

Corn had an impressive day closing above several technical levels.  This attracted additional fund type buying, and kept corn supported throughout the day.  Soybeans followed corn/wheat early throughout the day but were unable to hold support closing lower.

Grain export inspections were solid for corn/wheat and on low side for soybeans.  Crop ratings were unchanged for both corn/soybeans, which was viewed as bearish since most were expecting a decline in both crops.

There are a lot of emails circulating around the marketplace about early yields being poor for corn.  We would just like to mention as of today very little corn has been harvested.  So it is probably too early to write off the corn crop just yet.  In the next 10-15 days we should see a lot of combines starting to roll and we should start to get a much better idea of how corn yields are holding up.

The US corn crop is maturing very rapidly, and we should see a record amount of corn harvested in the next 30-45 days.  We believe this could put some strong downside pressure on the market during this timeframe.  Even though we are bullish corn, there are a few things we are concerned about. Firstly most participants in the marketplace are assuming we are going down in national corn yields from the last USDA estimate. So if national yields don’t go down or in fact go up, it would be a huge bearish surprise to the marketplace. The next production report is on September 10th, even if national corn yield ends up being lower it may not be reflected in this report.  With the marketplace holding near-record long positions and with a rapid harvest pace likely, we could easily trigger a larger sell-off than expected.  We like our current hedge positions at this time.

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