Walsh Commercial Hedging 12/12/12
Dec 12, 2012
The wheat complex continued its slide from yesterday’s bearish report on technical selling with the spot March Chicago contract making a fresh five-month low at $8.12, down 9 ½ cents. Yesterday and today’s nose dive in wheat translates to a price reduction of nearly $10/ton in the US cash market which should spark buying interest, especially across Asia. East Asian countries are expected to be in the market for than 1MMT of wheat by the end of the year for early 2013 shipment. However, importers might wait to see if US wheat continues to slide before they enter the marketplace. In my opinion, I feel that the wheat market has gotten a little overcooked in the past few days and should find some support, especially the HRW wheat, with concerns about the continued dry conditions in the US Plaines. Forecasts show the potential for some light precipitation in portions of the northern Plaines over the weekend, but nothing significant. The lower trade in wheat again spilled over into corn but I have to say the corn complex has been hanging tough the past few days. March corn is down just 4 ½ cents prior to the report. In just two trading days the spread between March Wheat vs. March Corn has tightened from 118 ¾ to 86 ½ a difference of 32 ¼ cents. Feed lots in the Southeast might switch over to wheat and use less corn. Tomorrow’s export sales will be significant for the trade. If corn has another dismal report, the bulls might throw the towel in the ring and push March corn below that key support area of $7.15. The trade is looking for wheat sales of 300-600,000, corn sales of 150-400,000, and soybean sales of 550-900,000. I urge producers that still have corn in the bin to have some sort of “put” protection in place. The bean complex was lower for most of the day but received a boost by the strong meal trade we’ve been seeing lately. January beans finished the day up 1 ½ at $14.73 ½. The trade is expecting another strong export sales report for beans tomorrow because of all the talk of China buying up to 6-8 cargoes off the PNW last week. And there’s been continued talk of China buying another 2-3 cargoes of US beans this week. However, lately it feels like the trade is more focused on the decent weather in South America and not the strong demand for US soybeans.
Give me a call at 800.993.5449 or sign up for weekly hedge letter
Sign up for the Walsh Friday Hedge letter
Walsh Trading is a division of HighGround Trading Group, Inc. ("HTG"). HTG is registered as an Introducing Broker with the Commodity Futures Trading Commission and an NFA Member. Futures and options trading involves substantial risk and is not suitable for all investors. Therefore, individuals should carefully consider their financial condition in deciding whether to trade. Option traders should be aware that the exercise of a long option will result in a futures position. The valuation of futures and options may fluctuate, and as a result, clients may lose more than their original investment. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS All information, communications, publications, and reports, including this specific material, used and distributed by HighGround Trading Group Inc. (“HTG”) shall be construed as a solicitation for entering into a derivatives transaction. HTG does not distribute research reports, employ research analysts, or maintain a research department as defined in CFTC Regulation 1.71.