Lower Start to the Week

Published on: 16:06PM Sep 09, 2013

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Grains and oilseeds closed lower to start the week.  Early corn yields continue to flow in very large.  The midday forecast added some chances for rain which also was part of the selloff.  The trade will continue to focus on harvested yields, crop ratings, and this Thursday’s monthly Supply and Demand report.

The crop ratings report was out at 3pm today and showed another decline in ratings as expected.  Corn is now rated at 54% good-excellent which is down 2 points from last week.  Soybeans also had a 2 point drop and are at 52% good-excellent.  Corn is only 9% mature which compares to the 5 year average of 28% at this time of year.  Although this was another decline in ratings this should have been built into the market already and should not cause any major swings on tonight’s reopen.

Seasonally markets head lower at this time as harvest gets underway and more physical product is sold.  Soybean yields have been deteriorating and have been supporting the corn market.  Corn yield is expected to be large enough and appears to be holding back the bean rally.  If soybeans make the same national average yield as last year it’s hard to say if we need to rally to ration more demand or not.  We are in a much better world supply situation after coming off of a record South American production year.  We need to keep this in mind and continue to stay well hedged going into harvest.  Like last year, November soybeans are holding a stark premium to the March and May contracts so it makes more sense to sell in the fall and if you really want upside potential re-own with some of the products in March through July.  For more information on these please give EHedger a call.

The upcoming Supply and Demand report will probably be the biggest market mover this week.  The average analyst guess is calling for bean yield to be 41.09 and corn yield to be 153.985.  There are large differences between the high and low estimates which can sometimes lead to a volatile market response. Bean yield is still the big question so for now we want to stay with hedges that offer a wide range of coverage which still allows for some upside and ride out the market volatility. Good luck this week.

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EHedger is a premier full service commodity brokerage offering risk management services for the agricultural sector as well as professional traders.
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