Walsh Commercial Hedging 12/5/12
Dec 05, 2012
The soybean complex extended its gains for the third straight day with an impressive rally through its 200 day moving average at 1464 ½ and finished the day up 23 ¾ at $14.79 ¼. Managed money was an estimated buyer’s of 10K bean contracts on the day. January beans did move past that 1464 ½ mark around 5:15 this morning and traded just below that mark for most of the morning but when the pits opened up at 9:30 it didn’t take long for the January contract to push and stay above its 200 day moving average. Fundamentally, the whole soy complex is supportive. We saw that in the bean oil sales in the past couple weeks and the outstanding meal sales last week. Also, there is continued talk that China bought 6-8 cargoes of US soybeans this week for January shipment. For tomorrow’s export sales report the trade is expecting soybeans sales to come in between 400-700,000 MT. The continued rain in Argentina is causing flooding which is further delaying soybean plantings. The southern 1/3 of Brazil is trending drier with just spotty showers on Friday. More rains are scheduled in the 10-15 day forecast but long term weather forecasts and I don’t get along too well. Chinese crush margins are in the green on rising domestic meal prices and reduced domestic soybean supplies which could boost Chinese purchases of US soybeans. The higher trade in the soy complex spilled over into the grains with March wheat finishing up 3 ½ at $8.60. July Kansas City wheat finished up 5 ½ at $9.19 ¾. The forecast for the Plaines continues to be dry with a chance of a little rain next week. The trade is concerned that the dry soil could leave the crops vulnerable to freeze damage during their winter dormancy. March corn finished the day up 5 ¾ at $7.57 ¾. The EIA ethanol production report was slightly bullish for the corn market this morning. Ethanol production averaged 835,000 barrels per day which was up 4% vs. last week and the highest level of production since June 29th. Corn traders will be watching export sales tomorrow which are expected to come between 300-500,000 MT. For wheat, the trade is expecting 300-500,000 MT also. The trade is still waiting for corn and wheat exports to pick up. Even though Egypt bought some US wheat over the weekend and the trade thinks US wheat is competitive again, the trade really needs to see consistent demand in hopes of a rally. If it wasn’t for the sharp rise in soybeans from November 16th, corn and wheat could be trading much lower.
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