EHedger Closing Grain Commentary 9-9-10

Published on: 17:09PM Sep 09, 2010

Corn and wheat finished strong while beans finished slightly lower.

Coming into the day beans were sharply lower from the overnight markets after rumors of an investigation regarding illegal loans for soybean and rubber speculation in China.  The rumors were denied by China.

The markets held strong support from sale announcements as well as from stronger outside markets after Jobless claims fell more than expected today. Today was also the last day to position before tomorrow’s Supply and Demand Report. The USDA announced the sale of 60,000 MT’s of US Soyoil to China this morning.  They also announced the sale of 220,000 MT’s of US Hard Red Wheat to unknown destinations. Wheat basically gained everything it lost yesterday and then some.

Tomorrow’s USDA Supply and Demand report will be out at 7:30 am. We will release the numbers in tomorrow morning’s letter.  We have been talking about the emails floating around the marketplace of lower than expected corn yields. The market is obviously expecting to see lower corn/soybean production estimates (see report estimates below.)  The average guess for corn yield is expected to drop from the August USDA estimate of 165 to 163.1.  Soybean yield is expected to drop from the August USDA estimate of 44 down to 43.8.  With the market generally one-sided bullish, this could be a "buy the rumor - sell the fact" type of situation.  Even though we are bullish corn, we have already had a large move ahead of a big report. With record fund long positions, there is considerable risk of the price dropping if the funds start to liquidate.  We will have to wait and see what tomorrow’s report brings and how the market reacts.

The bottom line is to get protected while we have levels which are profitable for most producers.  It makes good business sense to secure prices when you know you can make a good return on investment.  Please call your broker if you need to get caught up to the latest EHedger recommendations.


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