Closing Grain Commentary 8/23/10
Aug 23, 2010
Corn and beans were mixed today while wheat rallied. December corn finished 3 ½, November soybeans finished up 1 ½, and December wheat finished up 13 ½.
Weekly export inspections this morning came back as expected for corn/wheat, and at the high end of trade guesses for soybeans. Today was a relatively quiet day compared to recent market activity. Outside markets were relatively stable as well with the dollar finishing up 165 and the S&P down 4.75.
Tonight we may see some weakness in corn after they increased the crop condition rating today from 69 good-to-excellent up to 70. Many were expecting this to decrease not increase. Soybeans good-to-excellent rating decreased from 66 percent to 64 percent. Spring wheat is 53% harvested while the 5 year average is 60%.
The Commitment of Traders report shows that the funds are still heavy buyers in this market. The large speculator's net long position with futures and options increased by another 300,355,000 bushels to 1.853 Billion Bushels! For soybeans another 45 million bushels were bought in the beans alone not to mention similar increases in soy meal/oil. Just a reminder when the funds get this long there is a risk the price drops on liquidation. Even though the fundamentals may be bullish for corn these guys are already massively long. With that said, we do think corn has the tightest fundamentals but we don't like going into harvest unprotected. We are still working to buy corn calls on a break.
We recommend staying with current levels of protection (see hedge recommendations.) For those producers that need to get caught up on sales please call your broker to discuss current strategies.
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