EHedger Closing Grain Commentary 9/2/10

Published on: 16:03PM Sep 02, 2010

Corn/beans/wheat all settled higher after a slow trade today. Corn/soybeans were lower for most of the day before turning higher near the close.  December corn finished up ¾ of a cent at 447 ½ which is still slightly below the 2010 high of 4.49 ¾. November beans found support at $10 again before finishing up 3 ½ at $10.09.  December wheat was the upside leader finishing 5 cents higher at $7.13 ¾.

Today was a fairly quiet trade for most of the session. Exports this morning were solid for corn/wheat and on the low end of expectations for soybeans. Wheat was supported after Vladimir Putin announced the Russian wheat ban would be extended until the end of next year’s Russian wheat harvest.

Tomorrow we will likely remain choppy as some traders even up before the long weekend.  There is an unemployment report coming out tomorrow morning at 7:30.  Monday the grain markets are closed for Labor Day.

If you are looking to get extra protection ahead of next Friday’s report, there are some cheap ways to get short-term put protection to carry us through the report (please call your broker to discuss your options.)  We mentioned this report might not reflect a drop in corn yield/production even though many in the marketplace are expecting it to.

We have been getting yield reports out of the fields and they have been relatively 2 sided.  Some are so-so and some are excellent. The fact is 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 overall bullish corn, we don’t think now is the time to be outright long (should have adequate downside protection.)  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.

In our opinion we have a very solid bean crop. The yields that we have been hearing have come back better than expected. Coupling a strong bean crop in the United States and poor crush margins in China the bean market may continue to see pressure. We still feel very strongly that bean sales up at these levels are a good idea going into harvest. If you need to catch up on our current recommendations or would like to add additional protection as we progress into harvest, please get in touch with your broker.


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