December Chicago Wheat Tests $5.00

  • Posted on: September 12, 2014

Corn: December corn ended down 2-1/2 cents at a new contract and 4-year low settlement of $3.38 ½. For the week, CZ lost 17 ½ cents. The USDA effectively squelched any remaining bullish hopes with an estimated production of 14.395 billion bushels and a national average yield of 171.7 bushel/acre. Eyes will be on the weather and the actual impact of a projected frost. Sunday night’s first minutes of electronic trade might have some fireworks if there is any real damage. On the 30th we will have another USDA report giving updated ending stocks. 116K MT of corn was reported sold to unknown, presumably china. However most in the cash trade estimate that the Chinese are over 60 percent bought for their near term needs and most likely will be light buyers over the next several months. Technically, CZ has support at $3.35 ¾ which is the low of the move. Resistance above comes at $3.55, $3.68 and then $3.81 which is the 2-month high posted on August 18th. Hedgers: Roll down put options when it fits our risk/reward parameters. Wheat: December wheat ended down 7 cents at $5.02 ½ which is a new contract and 4-year low settlement. For the week, WZ lost 32 ¾ cents. The USDA delivered more bearish fundamental news, with ending stocks for 2014/15 at 698 million bushels, 30 million bushels more than the average analyst’s prediction. Global ending stocks at 196.38 million metric tons were 3 million more that the average analyst’s prediction as well. With the funds already short more than 50K bushels of wheat, one has to wonder if they will keep pounding on this winning trade by adding to their position. Monday’s COT report should be enlightening. Technically, the “round number effect” stemmed some selling today as WZ stopped the bleeding at the $5.00 level. A hard push below opens up the door to $4.84 and then $4.55. Hedgers: Roll down put options when it fits our risk/reward parameters. Soybeans: November soybeans ended up $3 ¾ cents to settle at $9.85 ¼. For the week, SX lost 36 ¼ cents. SX completed an inside-day-up on the charts, taking a breather in the wake of Thursday’s fresh contract and 4-year low down at $9.69 ½. The market continued to chew through the USDA information dump from Thursday. An average yield of 46.6 bushel/acre nationally, combined with a projected production of 3.913 billion bushels was a lot for the bulls to swallow. Ending stocks at 475 million bushels was 25 million higher than the average analyst estimate. Worldwide ending stocks at 90.17 million metric tons were 3 million higher than the average analyst estimate. Weather bulls floated the frost threat over the weekend. Sunday night might see a move if this actually plays out. Monday’s COT report should shed light on how long or short the funds exited this report. Hedgers: Roll down puts if they meet our risk reward parameters. Consider rolling them out to March if you know you are storing the beans. Our put options are deep in the money now, and are giving us a lot of marketing opportunities. In the wake of the USDA report, there’s not really a lot more to say without verging on “beating a dead horse” so to speak. If you have followed the program, you should be in pretty good shape. If you are new to the program or sitting on the fence about becoming a client, I invite you to call us and allow us to earn your trust. We can help you manage the risk no matter what the markets throw at us. Have a great and safe weekend. CER