Walsh Commercial Hedging 4/20/12
Apr 20, 2012
Good afternoon. It’s been a roller coaster ride in the soy complex this week. July beans finished at 1449 ½ up 28 ½ for the day and new crop November beans finished at 1356 up 13 ½ for the day. Late in the session yesterday funds and speculators exited their spread positions long in soybeans and short in corn. Well, today they did the complete opposite by buying beans and selling corn throughout the session. The function of the soybean market is to keep prices high enough to discourage demand, something that doesn’t appear to be happening after today’s strong rally in beans. Traders are viewing solid, daily export demand as reasons to keep buying beans. Also, the other function of the bean market is to attract both larger US and South American acres this spring and fall. A surge in bean prices and an early harvest for winter wheat should prompt farmers to tack on extra soybean acreage this year. The fast growth of winter wheat should mean farmers have time to double-crop soy after they’ve harvested the wheat. I would strongly urge bean producers to get into some options to protect at these price levels.
Corn didn’t see any spillover from the beans because of spread traders getting out of their corn and buying back into beans. July corn finished at 603, down 9 cents, and new crop corn was down a nickel at 536 ¾. The corn market also saw “buy the rumor, sell the fact” reaction today. China did in fact take advantage of the recent sharp decline and reportedly bought 500-1000 tmt of US corn for old crop shipment. There was also an inquiry for new crop shipment, but there were no indications if there was anything done. Weather doesn’t look to be a factor in the eastern Corn Belt this weekend and the 7-10 outlook has warmer temperatures in the forecast. There’s still good revenue on the table in the corn market to protect at these price levels but the window is starting to close.
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. Have a great weekend!
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