Walsh Commercial Hedging 4/30/12
Apr 30, 2012
Good afternoon. It was a choppy two sided trade in the complex today until 1:00 hit. November beans surged higher near the close and the buying then spilled over into the grains. New crop November beans finished at 1381, up 19 cents for the day. July beans settled at 1505 ½ up 12 cents. Overnight, the bean complex was pressured by the fact there were 752 deliveries against May soybeans. Traders were expecting few or no deliveries. There was another sale of 220,000 tonnes of US beans to China for the 2011/12 season. The weekend Commitment of Traders (COT) report showed Non-Commercial traders were net long a record high 247,932 contracts, an increase of 3,774 for the week. Both soybeans and meal are showing a positive buying trend but have reached overbought status. Soybean plantings came in at 12% planted which was exactly what the trade was looking for. Once these funds decide to start selling beans, be prepared for a sharp break in beans. I would strongly urge producers of beans to have some sort of protection in place through option strategies to protect your investment and a tremendous amount of revenue.
Wheat and especially corn was supported by the surge in beans. July wheat finished up 4 ½ at 654 ½. July corn was up 8 ¾ at 634 ½ and new crop December corn closed up 4 ½ at 543 ¼. Corn plantings came in at 53% which was well above the 42%-46% the trade was looking for. Two big numbers that jump up at me are Iowa and Illinois. Iowa went from 9% to 50%. Iowa was 7% complete this time last year. The five year average for Iowa is 32%. Illinois farmers already have 79% of their corn in the ground! The 5 year average for Illinois at this time of the year is 29%. Looking forward, the weather outlook appears good with warmer and wet weather over the next week but not enough rain to cause major slowdowns in plantings. All in all, I would expect this impressive corn number to weigh on the new crop in the near term unless soybeans continue to move higher or outside market forces push corn higher.
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