EHegder Closing Grain Commentary 11/2/10

Published on: 15:51PM Nov 02, 2010


Tuesday grains closed mixed with the calendar spreads making large moves. December corn finished 1 ½ cents lower, November beans finished 1 ½ cents lower, and December Wheat finished 8 ¼ cents lower.
Coming into the day the night session was stronger and the dollar was sharply lower. Yesterday FC stone released their estimates for the November 9th WASDE report. They are expecting corn yield to fall to 154.1 with production at 12.523. They are projecting bean yield to increase to 44.9, with production at 3.449. Informa’s estimates were released at 10:30 am Tuesday and were not a major market mover like their previous estimates were this year. Informa is projecting corn yield to be 155 and bean yield at 44.9. 
The market saw heavy bear spreading today in the grains. A lot of this was the funds rolling their longs out of the front months (December Corn/December Wheat) and rolling into the back months. Deutsche Bank’s roll started today and other funds will be rolling as well. Bean’s front month weakness could be attributed to following corn and wheat but it is also a seasonal move to see the spreads widen at this time of year.
Crop conditions for wheat fell another percentage point to 46% in the good-to-excellent category. This is well below the 10 year average of 60% and could help wheat hold support especially compared to corn and soybeans.
There is plenty of uncertainty in the outside markets right now. The Fed announcement tomorrow is expected to be a large market mover for all things dollar denominated. This could prompt some investment money to exit riskier investments such as long commodities in the short term. We have already witnessed the funds lowering their net long positions in grains in the last Commitment of Traders report.  We like remaining with the strategy of being well sold with spring call spreads for upside potential.
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