Walsh Commercial Hedging 12/6/12
Dec 06, 2012
The soy complex continues to dominate the market finishing higher for the 4th straight day and pushed beans to 4 weeks highs with the spot January contract finishing up 12 cents at $14.91 ¼. The USDA reported net export sales of 1,427,700 MT for delivery in the current marketing year that began on September 1st. This was not even close to trade estimates of 400-700,000 MT. It looked like it was going to be; buy the rumor; sell the fact type of day after all the talk of China inquiring about cargoes this week. However, after some profit taking from the recent surge in soybeans and a report from Conab, buyers came out near the close of the day. Managed money were estimated buyers of 5K contracts of soybeans today. Conab, the Brazilian equivalent of the USDA, estimated the 2013 Brazilian soybean crop at a record large 82.6 MMT. The USDA in November estimated Brazil production at 81 MMT. Both these numbers are of course assumed under normal weather conditions. Anyways, resistance should be strong at $14.99 ½ and I expect some more profit taking before the weekend but the market isn’t showing any signs of demand rationing and why should they at these price levels. Back on September 27th, the day before the Quarterly Stocks report, export sales were reported at an impressive 799,500 MT and that’s when January beans were trading at $15.71 ¼. The USDA also reported better than expected export sales for soymeal at 463,300 MT. January meal finished up $4.40 at $450.70. The Goldman Sachs roll begins tomorrow and lasts for 5 days. They will be rolling their long January bean/oil contracts into March. Wheat was down most of the day even though wheat exports were in line with expectations coming in at 353,100 MT but rallied on the close with the March Chicago contract finishing up 2 cents at $8.62. There was a report on Reuters that over 25% of the US winter wheat crop may be abandoned. Corn didn’t get the help we saw yesterday with the higher soy trade. Corn export sales were just dismal again coming in at only 51,600 MT for the current marketing year and well below the 677,400 MT pace needed to reach the USDA’s goal. There was a large 250,000 MT decrease to unknown that weighed on this week’s sale. March corn finished 6 ¼ cents lower at $7.51 ½ and continues its range bound trade.
Here are the carryout estimates for next Tuesday’s report:
Average Range USDA USDA
Corn 0.666 0.493-0.752 0.647 0.988
Soybeans 0.135 0.123-0.145 0.140 0.169
Wheat 0.718 0.690-0.754 0.704 0.743
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