Walsh Commercial Hedging 11/5/12
Nov 05, 2012
The grain complex settled mixed on chopping trading and the soy complex continued to shed risk after finishing 23 ½ cents lower at 1503 ¼. Weekly export inspections for soybeans were outstanding again coming in at 59.4 million bushels. Only 17 million bushels are needed each week to reach this crop years USDA export estimate. However, the weaker tone in soybeans was attributed to a more favorable weather forecast for South America this week and the trade is expecting the USDA report to show an increase in the US average soybean yield and production. For South America, drier conditions are expected for Southern Brazil and Argentina while Northern Brazil is expected to see better rainfall. In my opinion, the soy complex is getting a bit over “cooked” the last couple sessions. Demand for soybeans looking forward remains as solid as the Chicago Bears victory yesterday. Positive crush margins and further Asian export interest especially with these declines should be a positive force. The Weekly Crop Conditions report showed that only 39% of the winter wheat is rated gd/ex compared to 40% last week. Traders are adding risk premium to wheat prices because of the dry conditions in the western plains and on hopes that demand may be picking up for high protein hard wheat classes. The dry conditions are raising concerns that some of the crop may not germinate ahead of winter dormancy. Additional support in wheat is coming on thoughts that Argentina and Australian wheat production may decline on Friday’s report. Also, most analysts feel global wheat production may be slashed again. However, any significant wheat rallies are being held in check by profit taking and the continued sluggish corn market. December Chicago wheat finished up 1 ½ at 866, 9 ¾ off the high. Corn was again a disappointment finishing the day down 4 cents at 735 ½. It was supported earlier by a strong wheat trade but the bearish soy trade weighed on the whole complex. Corn export inspections again came in below expectations at 14.7 million bushels. The Weekly Crop Progress reports showed that Ohio producers were able to pick up their corn harvest 10% points in the wake of Hurricane Sandy and are 74% complete. Pennsylvania is now 72% complete compared to 64% last week and in my book both those numbers are really impressive considering what they went through out east.
Here are the analysts’ estimates for ending stocks on Friday’s report
Average Range USDA(Oct) USDA(11/12)
Corn (19) 0.635 0.487-0.750 0.619 0.988
Soybeans (19) 0.133 0.115-0.175 0.130 0.169
Wheat (17) 0.666 0.625-0.728 0.654 0.743
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