Walsh Commercial Hedging 5/1/12
May 01, 2012
Good afternoon. After yesterday’s impressive crop progress report, the grains opened lower and tried to fight their way into positive territory but late day selling emerged in the last few minutes to drive wheat and corn lower. July wheat finished down 11 ½ at 643. The weekly Winter Wheat Conditions report showed that 64% of the crop was rated good/excellent compared to 63% last week and 34% last year. The crop is also more advanced than recent years with 54% of the crop headed as compared with 29% last year. The weekly Spring Wheat Planting report showed that a record high 74% of the crop is planted compared to only 9% last year. With May upon us now and each day passes without a freeze, traders will be looking at a bumper crop for this year and expanding stocks so the upside looks limited in the near term. July corn finished down 5 ¼ at 629 and new crop December corn down 4 ½ at 538 ¾. New crop December corn continues to be weighed down on fears of a high yield and a sharp increase in stocks despite the recent surge in buying from China. The USDA will be in a position to lower old crop ending stocks in next week’s supply/demand update and will give traders the first look for the 2012/13 season. The 7-10 day forecast shows that it will be warmer with more rain but it doesn’t look like there will be any flooding issues and thus should support early growth. However, I would keep an eye on this as Mother Nature can throw us a curve without warning with too much rain in areas of the Midwest.
July beans finished 2 cents lower at 1503 ½ on news that there were 757 contracts delivered against the May contract. New crop November beans continue to be strong and finished up 11 ½ at 1392 ½. Liquidation of old/new crop bull spreads and continued buying from China helped support November beans. The USDA confirmed the sale of 110,000 tonnes of US soybeans to China for the 2012/13 season. This is on top of the sale yesterday of 220,000 tonnes of US beans for delivery to China for the 2012/13 season. Traders are concerned that 2013 stockpiles of soybeans won’t be large enough to keep up with strong demand. The trade is finally realizing that nearly all of the large sales reported in recent weeks are for the new crop delivery. I would strongly advice producers to have some “puts” on all unsold new crop bushels they anticipate growing.
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