EHedger Closing Grain Commentary 9/27/10

Published on: 16:02PM Sep 27, 2010


Corn fell sharply today after making new highs for the move in the overnight session. Beans were able to hold support. We are seeing a big unwinding of long corn/short bean spreads.

Today we came out with two new hedge recommendations for 2010 corn so be sure to check the updated hedge recommendations. 

Weekly grain inspections came in above expectations for beans, and in-line with estimates for corn/wheat.  This also helped beans hold support today.

Corn stats:  85% mature vs 65% for the 5-year average.  27% harvested vs 5-year average of 15%.   Corn condition is at 66% good to excellent compared to 68% last week and 68% this time last year.  The 10-year average good to excellent rating is 59%.

Soybean stats: 77% dropping leaves vs 72% for the 5-year average.  17% harvested vs 5-year average of 13%.  Soybean condition is unchanged from last week at 63% good to excellent and compares to 66% this time last year.  The 10-year average good to excellent rating is 55%.

Winter wheat is at 33% planted compared to the 5 year average of 38% this time of year.

I have included a crush chart below.  The price falling illustrates that demand for the products isn’t keeping pace with the soybean futures. This is probably a reflection of the huge inflows of investment money flowing into our markets.  The old/new option strategies recently recommended will help catch upside potential for these types of rallies.

Quantitative easing, selling of the dollar, and buying of treasuries and commodities have really been the main driving factor behind this rally.  It is just money chasing money at this point.  It makes grains more volatile and at the same time less likely to be sustainable at these prices.

Open interest continues to climb, we still haven’t hit record levels yet but we are close.  This 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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