EHedger Closing Grain Commentary 9/22/10

Published on: 15:27PM Sep 22, 2010

Grains had a mixed trade today but beans remain strong into the close.


Corn traded both sides of the market today before rallying along with soybeans in the last few minutes.  Soybean strength remained consistent for most of the day and had a strong push higher just before the close.


Another 226,000 MT’S of US soybeans were announced today for 2010-2011 delivery to China.  One thing to keep in mind is that Chinese demand has been pegged by the USDA at 55 Million MT’s this year.  This means on average they have to import 1.06 Million MT’s from either the U.S. or S. America every week to keep up with expected demand.

Open interest continues to climb.  Soybean’s open interest is about 550,000 contracts which is only 67,000 contracts away from its all-time high in February 2008.  Corn’s open interest is about 1.42 million contracts which compares to the all-time high of 1.546 million contracts in February 2007.  With such high open interest and a market largely supported by speculative investment we are likely to see volatility kept high.  The trend remains bullish for corn/soybeans.


Other commodities have been rallying right along with grains such as the metals and softs.  Gold posted a new all-time high today at 1298 per ounce (December).


Tomorrow morning we will have Weekly Exports and Census Crush. The crush is expected to be at 127 mill bushels with a range of 126.5-127.2.  Soyoil Stocks are expected to be 3.306 and meal stocks expected at 373.4.  Corn exports are expected between 550-800, beans between 450-650, and wheat between 400-700.  We will have results for both reports in tomorrow morning’s grain letter.


This Friday is the October option expiration for grains.  Much of the corn option open interest is at the $5 level which many times the market leans towards heading into expiration.  Next week we will be at the end of the month/end of the quarter.  Many technical support levels still remain well below current prices so we recommend staying adequately hedged.  If you would like to get more protected please call your broker to discuss current strategies.

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