Tuesday grains were mixed with soybeans sharply higher and a selloff in corn. December corn settled down 8 ¼ and January soybeans settled up 8. Chicago wheat finished unchanged. Today first notice day for December Grain Futures and there were more deliveries than expected. Deliveries were at 1351 for corn and 4056 for wheat. Soyoil was at 5245 and soymeal was at 538. Overall deliveries were higher than expected and could be looked at as slightly bearish.
The US Dollar was sharply higher again today. The funds were heavy sellers of corn and modest buyers of soybeans and wheat. This was evident in the spreads as well since the front months were the weakest in corn and strongest in the beans. Corn open interest was sharply lower mainly due to the option expiration but still a sign that there is some liquidation.
The latest CFTC Commitment of Traders report shows the large speculator reduced net long positions by 13,152 contracts of corn using futures and options. They increased their net long soybean positions by 2,478 contracts and decreased their ALL wheat long positions by 3,439 contracts. We are still coming off of record high open interest in corn and soybeans. If we see this type of fund activity going into the end of the year we could see another drop in prices between now and January. This could also affect the old crop/new crop spreads negatively since most of the open interest is in old crop contracts.
Winter wheat conditions were unchanged from last week at 47% good to excellent. More quality concerns today for Canadian and Australian wheat could be why wheat held supported even though corn sold off.
Something else to consider is the susceptibility of volatile market swings during the holiday season as traders wrap up for the year. December 10th will be the next USDA production report. This is the last major report before the end of the year. In January we will get an influx of data that should provide plenty of direction for the 2011 marketing year. Right now we are comfortable with the cash sales and hedges that we have in place. If you are looking to add additional protection, please don't hesitate to give your broker a call.
We are currently launching the newest addition of the AMMO Program. This program will allow producers to manage their complete farm operation including production costs, cash sales, hedge positions, and insurance coverage. All of the producer's information will then be used to compile a profitability matrix so that the farmer has a clear cut picture of where their farm stands. Please give us a call to learn more about the AMMO Program.
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