Walsh Commercial Hedging 4/25/12
Apr 25, 2012
Good afternoon. It was déjà vu in the grain and soy complex today. The grains were supported overnight and into the opening session today by soybeans surging to 4 year highs and continued sales of corn but couldn’t stay in the green. July wheat settled at 626 ½, down 6 cents on ideas that the eastern Corn Belt will not be cold enough far enough south to cause much damage to the soft red winter wheat crop. July corn opened the session 8 cents higher at 616 but finished the day down 7 cents at 601. New crop December corn finished down 3 ½ at 538. Before the opening, the USDA announced export sales of 420,000 metric tones of corn to unknown destinations for the 2012/13 marketing year and sales of 262,500 for delivery to China. 90,000 tons is for delivery this marketing year, and 172,500 is for delivery for 2012/13. Yesterday, the USDA reported export sales of 480,000mt of corn for delivery during the current marketing year to unknown destinations, which traders assume means China, helped support corn but chatter before a USDA announcement that it found mad-cow disease in a California dairy cow pressured corn to close lower. Today, corn received a boost from the beans and the continued sales but I believe traders were expecting bigger sales to China and funds were aggressive sellers of 12,000 contracts on the session. The outlook for a sharply higher production of corn this summer has continued to weigh on the market. The May USDA report will be the first look at the 2012/13 ending stocks and traders see stocks near 1.8 billion bushels for the May report as compared with 801 million bushels for the 2011/12 season.
The big winner again today was in the soy complex. July beans made a new contract high of 1496 ¾ on the opening bell but backed off and finished at 1476, up 11 cents for the day. New crop November finished impressively at 1370 ½, up 18 ½. The weakness in the other grains and ideas that the market is overbought helped spark some profit taking throughout the session. Rumors of China buying more US beans and continued talk of declining production estimates for South America, especially Argentina, helped drive the market to its highest level since 2008. All in all, this is a great opportunity to protect your investment at these price levels.
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