Walsh Commercial Hedging 11/2/12
Nov 02, 2012
Ugly. That’s how I view today’s trade. The entire commodity complex from the Dow, gold, silver, cattle and even RLL was down. What the heck is RLL you’re asking? It’s Random Length Lumber of course! The only safe haven was the US $. It was definitely a “risk off” attitude in the complex today. With the election only days away and the polls showing it’s coming down to Ohio, Pennsylvania, and Florida for the presidency traders ran for the hills because the trade doesn’t like uncertainty. Actually, July Kansas City wheat managed to stay in the green after being up 14 ¼ cents at one point in the day and finished up 2 ¾ at 921 ½. Chicago December wheat finished only 4 cents lower at 864 ½ but corn and especially soybeans were ugly. It felt like the trade didn’t even look at yet another impressive soybean export sales number today. Weekly export sales for soybean came in at 741,200 MT for 2012/13. Cumulative soybean sales stand at 74.8% of the USDA forecast for the current marketing year! Sales of just 195,000 MT are needed each week to reach the USDA forecast. January beans finished the day down 33 ¼ cents at 1526 ¾. The weather situation in South America for next week looked more promising, FC Stone and Informa had larger yields in their production reports, and the uncertainty over the election and next week’s WASDE report caused “managed money” and speculators to shed risk. In my opinion, the soybean market has already priced in a higher production number for beans. The question is how much? In October the USDA put the soybean output at 2.860 billion bushels using a yield of 37.8. Don’t forget the USDA said 64% of their soybean plots had been harvested for the October report so you would think that 37.8 number couldn’t go that much higher. Like I mentioned yesterday, any increase in production will be offset by export demand. It will be paramount that South America has a bumper crop but even if they do have a great crop they’ll have the logistical nightmare of getting those beans out. Every year you hear of port workers/truck drivers striking down there. The soybean market should stay volatile until the end of the year so hold on for a wild ride. Corn continues its range bound trade and settled down 11 ½ cents at 739 ½ after another sluggish export sales number. I’m hoping things will be brighter when my Chicago Bears beat the Tennessee Titans 24-14 on Sunday. Hopefully it won’t be another ugly day like today.
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