March 2012 Archive for Walsh Trading: Afternoon Grain Comments

Good afternoon. Out of todays two pivotal planting and supply reports, the Prospective Planting’s Report was the big shocker of the day. All of the numbers that came out were not even inside the analyst’s range of estimates. The USDA pegged corn planted acreage at 95.864 million acres compared with trade expectations at 94.7 million. This is the highest planted acreage since 1937. Record amounts are expected to sown in Iowa, Minnesota, North & South Dakota, and Idaho. Soybean plantings were pegged at 73.9 million acres, increasing concerns about tightening global supplies of the oilseed due to poor harvests in South America. Analysts had expected soy plantings to increase to 75.393 million acres.  All wheat acreage for 2012 came in at 55.908 million acres compared with trade expectations for 57.4 million. For the Grain Stocks report, the only surprise came out of corn with March 1st stocks pegged at 6.009 billion bushels as compared with trade expectations at 6.15 billion which is about 140 million fewer bushels of corn than expected. With weather looking pretty favorable for planting in the following weeks coupled with a lower stocks report, the trade saw the CK/CZ spread surge up 24 cents for the day closing at 103 ¾. The report was considered very bullish for November soybeans. The market may need to push above $1400 into the planting season to attract more acres. All in all, the focus now will be on Mother Nature, as a continuation of the unusually warm conditions could favor an even larger corn crop.

It was déjà vu in the grain complex again today.  After the complex opened higher again today, long liquidation ahead of Friday’s pressured the grains into a lower close.  May wheat finished down 9 cents at 630 ¾.  May corn finished down 10 ½ at 620 ¼ and new crop December closed 13 lower at 536 ¼.  The wheat market was also pressured from mid-day weather models that were a little warmer for the 11-15 day outlook helping ease fears of cold weather damage.  May corn is already down more than 55 cents from last week’s highs.   Overnight, the corn market saw some support on rumors that private buyers from China bought 3-6 cargoes of US corn with some of the total for old crop delivery.  However, weak ethanol production, a higher $, and weakness in crude and the metal markets helped to spark some selling early which in turn sparked more fund selling.  May beans finished down 2 ¼ at 1367 ½ and new crop November beans finished down 7 ¼ at 1320 ½.  Beans were higher most of the day because near perfect weather in the Midwest has traders nervous that producers will push to plant as much corn as possible before shifting to soybean plantings but finished lower on the corn sell off but still held its ground nicely.  Producers only have 1 more day to shore up their marketing and hedge any production that is at risk.  One thing is for certain, come Friday, the grains will turn volatile and most likely continue once we get into the weather markets.

Give us a call at Walsh Hedging to see what we’re doing to protect our producers from the upcoming volatile markets at 800.933.5449 or email me at tmarcucci@walshtrading.com.

Futures and options trading involves substantial risk. The valuation of futures and options may fluctuate, and, as a result, clients may lose more than their original investment. In no event should the content of this letter be construed as an express or an implied promise, guarantee, or implication by or from Walsh Trading Inc. that you will profit or that losses can or will be limited in any manner whatsoever. Past results are no indication of future performance. Information provided in this correspondence is intended solely for informative purposes and is obtained from sources believed to be reliable. Information is in no way guaranteed. No guarantee of any kind is implied or possible where projections of future conditions are attempted. The risk of loss in trading commodities can be substantial. You should carefully consider whether such trading is suitable for you in light of your personal circumstances and financial resources. Only risk capital should be used.

Good afternoon.  The grain complex had a choppy two sided trade for most of the day but a late day selloff in wheat caused corn to drop too.  May soybeans opened 5 ¼ cents higher but the inability to take out yesterday’s highs plus talk of the overbought condition of the market helped spark some long liquidation.  May beans finished down 9 ¾ at 1369 ¾.  New crop November beans was down 1 ¾ at 1327 ¾.  The big loser of the day was May wheat which finished down 19 ¾ at 639 3/4 and gave back most of the gains from the last three trading sessions.  The light weather concerns with dryness in Europe and the cold weather concerns for the US crop has helped support wheat the past couple sessions but the sellers came back into the market with the improving crop conditions and ideas that global supply looks more sufficient for the coming season.  May corn opened higher but continued fund liquidation from yesterday coupled with the weakness in wheat helped May corn finish down 7 at 630 ¾.  New crop December corn was down 3 at 550 ¼.  May corn is down more than 25 cents from Monday’s highs.  December corn had its lowest close since January 18th.  All in all, I expect more of this choppy two sided trading as positioning continues until the key reports on Friday. 

Give us a call to hear what we’re doing to help protect our producers at 800.993.5449 or email me at tmarcucci@walshtrading.com.

Futures and options trading involves substantial risk. The valuation of futures and options may fluctuate, and, as a result, clients may lose more than their original investment. In no event should the content of this letter be construed as an express or an implied promise, guarantee, or implication by or from Walsh Trading Inc. that you will profit or that losses can or will be limited in any manner whatsoever. Past results are no indication of future performance. Information provided in this correspondence is intended solely for informative purposes and is obtained from sources believed to be reliable. Information is in no way guaranteed. No guarantee of any kind is implied or possible where projections of future conditions are attempted. The risk of loss in trading commodities can be substantial. You should carefully consider whether such trading is suitable for you in light of your personal circumstances and financial resources. Only risk capital should be used.

The grain complex closed mixed.  Talk of more early planting and long liquidation before the report helped drive May corn down 7 ¾ at 637 3/4.  New crop December corn finished at 553 ¼, down 4 ¼.  For the Prospective Plantings report this Friday, analysts see corn planted acreage at 94.7 million acres which is up nearly 2.8 million acres from last year and the highest since 1944.  A Farm Futures magazine survey pegged corn planted acreage at 95.1 million acres for this season.   The bean complex saw support overnight from a private forecaster that reduced bean production in Brazil to 66.7 million tonnes.  This is down from the 68.5 the USDA forecasted in March.  Just last Thursday Argentina’s government cut its soy forecast, raising concern about tighter world inventories this year.  For the report Friday, analysts have soybean acreage pegged at 75 million acres, little changed from 2011.  May beans finished up 13 ¾ at 1379 ½.  New crop November beans settled at 1329, up 7 cents.  This is the highest May beans have been since September 16th.  May wheat finished at 659 ½, up 5 ¼ for the day.  Short covering earlier in the session and growing concerns for dryness in Western Europe helped support May wheat to high of 670 ½ for the day but the selloff in corn late in the day dragged on the wheat.  Until Friday comes around, I can see continued spreading of beans/corn, fund liquidation, and choppy two sided trading in the grain complex.  I would urge producers to get into some option strategy before Friday to protect yourself from the upcoming volatility in the grains.

Give me a call to discuss how Walsh Hedging can help you better market your grain through our option strategies at 800.993.5449 or email me at tmarcucci@walshtrading.com

Futures and options trading involves substantial risk. The valuation of futures and options may fluctuate, and, as a result, clients may lose more than their original investment. In no event should the content of this letter be construed as an express or an implied promise, guarantee, or implication by or from Walsh Trading Inc. that you will profit or that losses can or will be limited in any manner whatsoever. Past results are no indication of future performance. Information provided in this correspondence is intended solely for informative purposes and is obtained from sources believed to be reliable. Information is in no way guaranteed. No guarantee of any kind is implied or possible where projections of future conditions are attempted. The risk of loss in trading commodities can be substantial. You should carefully consider whether such trading is suitable for you in light of your personal circumstances and financial resources. Only risk capital should be used.

The grain complex closed mixed with wheat leading the way for a change.  May Wheat finished up a dime at 646 1/4 as short-covering emerged after early weakness in the market.  Talk of the oversold condition of the market after a 44 ¼ cent break from Monday’s highs helped fuel the support.  May corn finished up 2 ½ and new crop Dec. was up ¾ at 556 ¾.  Corn had a choppy two-sided trade for most of the day.  Weekly export sales for corn added support to the market before the opening.  Sales for old and new crop came in at 917,100.  The trade was looking for 650-850.  May beans finished down 5 ½ at 1349 ½ and new crop Nov. was down 6 cents for the day. 

The SX12/CZ12 ratio has moved from a low of 2.0 in early November 2011, when the South America soy production was indicated to be substantial, to the current ratio of 2.35.  Historically, soybeans are considered cheap to corn whenever the ratio is below 2.0.  The recent climb in the ratio does not provide any guarantee there will be more soy acreage.  Enticing acreage into soybeans ultimately rests in the producer’s break-even price ratio (BEPR).  We won’t know whether soy acreage will be boosted until the release of the USDA’s Prospective Plantings report next Friday.  From what I’ve been hearing from producers, the BEPR remains tilted in corns favor.  As always, however, Mother Nature will prove to be the final arbiter.  I would greatly encourage producers to hedge their corn using Put options in the September and December contracts.  Give us a call for specific hedge strategies based upon your operation at 800.993.5449 or email me at tmarcucci@walshtrading.com. 

Futures and options trading involves substantial risk. The valuation of futures and options may fluctuate, and, as a result, clients may lose more than their original investment. In no event should the content of this letter be construed as an express or an implied promise, guarantee, or implication by or from Walsh Trading Inc. that you will profit or that losses can or will be limited in any manner whatsoever. Past results are no indication of future performance. Information provided in this correspondence is intended solely for informative purposes and is obtained from sources believed to be reliable. Information is in no way guaranteed. No guarantee of any kind is implied or possible where projections of future conditions are attempted. The risk of loss in trading commodities can be substantial. You should carefully consider whether such trading is suitable for you in light of your personal circumstances and financial resources. Only risk capital should be used.

May Corn 6.42’ 5’4

May Soybeans 1355’ 10’0

May Wheat 636’2 6’2

By: Tony Marcucci

We’ve been experiencing a choppy two sided trade early this morning after trading significantly lower over the course of the last couple days.  Wheat and corn were pressured lower mid-day and into the close while the beans found support on ideas that China demand will remain strong and fears that planted acreage will not increase much from the USDA Outlook Forum.  I have been hearing from my producers there is a lot of grain left in the bin which the market could be overlooking currently. As this unusual hot weather pattern continues, it could force a lot of this grain to start moving in the coming weeks creating a “harvest” selling pressure in the market, also affecting the USDA’s quarterly stocks report at the end of the month. I believe farmers are willing to take the excess risk of a frost this year and plant early. The risk/reward last year of not planting by April 15^th   had producers holding out till June proved unrewarding. The added risk of not being covered by crop insurance and planting early is marginally low at this point since we have not experienced a significant winter. The larger risk for producers would be to delay planting till June. I believe if we have a similar weather pattern as last year and are able to get the crop in early, we will be substantially lower in new crop corn this year. We are going to have a weather market as we do every summer but the question on everyone’s mind in here is “from where”. We see some great opportunities to use options to put revenue floors underneath to ensure we are at least operating in the black for next year. We also see some good opportunities for speculating using options to capturing a good risk/reward in the market. Give us a call if you want to hear more about our option strategies. (800)993-5449

Futures and options trading involves substantial risk. The valuation of futures and options may fluctuate, and, as a result, clients may lose more than their original investment. In no event should the content of this letter be construed as an express or an implied promise, guarantee, or implication by or from Walsh Trading Inc. that you will profit or that losses can or will be limited in any manner whatsoever. Past results are no indication of future performance. Information provided in this correspondence is intended solely for informative purposes and is obtained from sources believed to be reliable. Information is in no way guaranteed. No guarantee of any kind is implied or possible where projections of future conditions are attempted. The risk of loss in trading commodities can be substantial. You should carefully consider whether such trading is suitable for you in light of your personal circumstances and financial resources. Only risk capital should be used.

Afternoon Grain Comments from Walsh Trading.

Good afternoon. Well, there was no "Turn Around" Tuesday in the grains today.  A more bearish tone in outside markets forced the grains lower this morning and continued throughout the close.  A stronger US dollar and economic concerns coming out of China plus weakness in metal and energy markets all combined to spark the selling.  May wheat finished down 9 3/4 at 642 1/2.  May corn finished down 16 at 647 1/2 and new crop December was down a dime at 561 1/2.  Funds were lightening up their positions and taking profits in corn throughout the whole session.  Traders also saw the unusual warm weather and talk of early plantings as a negative force which could have helped spark some more profit taking and long liquidation.  Planting corn this early in the season in Illinois/Iowa is pretty much unheard of.  There are some producers out there rolling the dice and planting though.  Iowa producers who plant before April 11th would not be able to collect on their crop insurance policies if a frost were to require them to replant.  For Illinois producers, the cutoff date is April 6th.  The 2 week forecast calls for above normal temps and plenty of moisture though.  May beans finished down 21 1/2 at 1345 and new crop November was down 18 1/4 at 1307 1/4.  Follow thru technical selling from yesterday's reversal action added to the negative tone early in the beans and talk that the outside-day down reversal occured on the first day of spring added to the selling.  All in all, traders are keeping their eyes on the outside markets and unusual warm weather in the Midwest until the Prospective Plantings and Grains Stocks report come out March 30th.

Futures and options trading involves substantial risk. The valuation of futures and options may fluctuate, and, as a result, clients may lose more than their original investment. In no event should the content of this letter be construed as an express or an implied promise, guarantee, or implication by or from Walsh Trading Inc. that you will profit or that losses can or will be limited in any manner whatsoever. Past results are no indication of future performance. Information provided in this correspondence is intended solely for informative purposes and is obtained from sources believed to be reliable. Information is in no way guaranteed. No guarantee of any kind is implied or possible where projections of future conditions are attempted. The risk of loss in trading commodities can be substantial. You should carefully consider whether such trading is suitable for you in light of your personal circumstances and financial resources. Only risk capital should be used.