EHedger Closing Grain Commentary 11/8 /10
Nov 08, 2010
Monday grains traded both sides of the market ahead of the November WASDE report. At settlement Dec corn was down 2 ½ cents, Nov beans were down 9 ¼ cents, and Dec wheat was 7 ½ cents higher.
Tuesday morning the USDA Supply and Demand report will be released at 7:30 am. The average analyst estimates corn yield at 154.4 bpa and production at 12.545 billion bu. They are estimating soybean yield at 44.6 bpa production at 3.426 billion bu. From customer reports we wouldn't be surprised to see the bean yield closer to 46, but nobody is guessing that right now.
The November WASDE report is especially important for soybeans since we will have yield estimates that were gathered after the belt was mostly harvested. At this time of year it is expected to be a more accurate estimate. In case the report is a bullish surprise, or the dollar continues to free fall, we have upside protection in the call spreads (please see recommendations) and remain sold in the cash market.
Monday's reports included crop conditions for winter wheat as well as export inspections. Inspections were not a market shocker but were below last week's levels as well as below year ago levels for corn, beans, and wheat. Crop conditions for Winter Wheat dropped another percentage point to 45% good to excellent. The anticipation for a drop in this category may have been the cause for today's wheat strength.
Below I have included a chart of December Corn. Even though technically this market has a lot of momentum to the upside, the support levels are well below the market. The thirty day moving average is just above the gap level at $5.43 and the 50 day is all the way down at $5.22. We like having upside potential but that is why we are going with the call spreads and keeping hedges in cash sales. Please check with your broker for a specific recommendation for your operation. If you need to get additional protection please call your broker.
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