Ehedger Grain Commentary 4/12/12
Apr 12, 2012
Grains finished stronger with old crop soybeans leading the way. May soybeans settled 19 cents higher at $14.41, May corn 1 ½ cents higher at $6.37 ½, and May wheat 11 ¼ cents higher at $6.39 ¼.
Weekly export sales data was actually weak for soybeans and strong for corn. The majority of the corn sales were to Mexico and "unknown destinations". The USDA did announce some bean sales to China and unknown destinations before the day session began which were separate from the weekly sales report. The market continues to bid up old crop soybeans and July beans settled at a new high close going back to September 2011. The July – November soybean spread has really picked up speed and is now trading at +71 ¾ cents which is also a new high for the move (see chart).
Chart: July – November Soybeans
The other strong factor today was the US dollar trading lower. The June Dollar futures dropped 0.510 to 79.480 as of 4 pm today which helped commodities and equities across the board.
Weekly Export Sales Results:
Estimated Range 2011/2012 2012/2013
Corn 400,000 – 850,000 MTs 959,100 MTs 16,700 MTs
Soybeans 700,000 – 1,150,000 MTs 460,100 MTs 176,300 MTs
Wheat 350,000 – 650,000 MTs 452,100 MTs 90,400 MTs
Between now and June the market won’t have a definitive answer of just how many acres switch back to soybeans from corn. There is plenty of hedging waiting to get done above these levels for corn which is keeping December resisted. The most resistance may be found above the insurance level of $5.68. With strong sales and stronger ethanol numbers with week, we may find old crop corn gains back some of its ground it has lost to soybeans in the short run. Soybean direction should be extra sensitive to crush and export numbers from here until the next stocks report as the market seems wired to buy it. The "managed money" is holding a massive net long position which was increased by a full 25,000+ net contracts on the last COT report. If we see exports stay strong until September they could keep taking beans higher. If we see cancellations or sales rolled to new crop, it would be very bearish with such a large spec position in these months. We will have to continue to monitor these numbers for direction.
Now is still a great time to double check your 2012 hedge strategy using AMMO to see if there are any changes to be made. To receive a trial of the AMMO software, please sign up using the link below. If you would like to open a hedge account at EHedger, please contact Dustin or Dan at 866-433-4371. www.ammoag.com/signup
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