EHedger Afternoon Grain Commentary 4/25/12
Apr 25, 2012
Grains were wildly mixed today with large moves in the spreads. Corn started the day strong but managed to close at the lows of the day at $6.01 for July (down 7 cents). July wheat was down 6 cents at $6.26 ½. July soybeans were sharply higher on the open but only finished 11 cents higher at $14.76. This is a full 20 cents from the morning session high. In fact the November soybeans had the best close of the day finishing 18 ½ cents higher. Part of this strength in the November contract may have been from large "bearspreading" activity in the July – Nov bean spread late in the day after making a fresh high this morning.
To start the day we were hearing rumors of massive Chinese old crop soybean purchasing. The USDA did not announce any official sales for soybeans this morning but they did announce a number of corn sales. They announced 90,000 MTs of old crop corn to China, 172,000 new crop corn to China, and another 420,000 MTs of new crop corn to "unknown". Despite these sale announcements corn was unable to hold the strength it found on the opening and quickly made its way lower.
Ethanol production was down from last week but stocks were lower as well. Crude oil traded lower early and helped spur the weakness in corn. There was an article out earlier about Iran possibly halting their nuclear expansion to escape the oil sanctions. This helped ease some oil supply concerns.
Export sales will be released tomorrow and will be watched closely at this time of the year and at the current estimated export demand. The average analyst estimates for the report are as follows:
Corn: 550,000 – 1,000,000 MTs
Soybeans: 800,000 – 1,300,000 MTs
Wheat: 350,000 – 700,000 MTs
It appears yesterday’s "mad-cow" scare has not picked up much speed. One Korean grocer did announce that they would halt the sale of US beef until further notice of its safety from their government. Livestock futures were higher today after yesterday’s "limit-down" move.
We have had two days of strong corn sale announcements and corn can’t seem to catch any strength. It may have been that these sales were less than what was rumored, but this is still not a great sign for price action. We will have to see what effect the export sales report will have on price tomorrow morning.
The last point I want to make is that this is only April and we are seeing a lot of volatility in our markets. We could see this continue right into the summer. For now we want to remain with the current Ehedger recommendations. To receive a free trial of the EHedger research including hedge recommendations, please sign up using the link below. Thanks and have a great week!
Chart: November Soybeans
Chart: December Corn
Chart: December Wheat
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