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Walsh Trading: Afternoon Grain Comments

RSS By: Andy Kopale,

Andy is a seasoned grain market analyst and the senior account executive at Walsh Hedging. His main focus is assisting producers and end users to better hedge their investments through his various market strategies over his years of experience working on the grain floor.

Walsh Commercial Hedging 5/17/12

May 17, 2012


Good afternoon. The complex has seen continued buying from “Turnaround Tuesday” on strong demand news, calmer outside markets and weather issues here in the states and across the “pond”. The threat of smaller crop yields from warm, dry weather drawing down soil moistures has enticed traders to continue adding risk premium to prices. July wheat continues to be the catalyst in the market finishing up 19 cents at 657 ¾ and is up as much as 66 ¼ cents from Monday’s lows. July Kansas City wheat closed up 16 at 672. The funds have a sizable short position in wheat and have been covering their positions the last couple of days. The trade is worried about the dry and hot conditions in southern Russia, Ukraine, and less than ideal conditions in parts of Eastern Europe.   Back here in the states, traders continue to be concerned about deteriorating crop conditions in western Kansas. Also, dry conditions “Down Under” is keeping the wheat planting pace slow. Net weekly export sales for wheat came in at 321,800mt for the current marketing year and 389,600 for 2012/13 for a total of 711,400 which was well above trade expectations near 550,000. The corn complex had a choppy two-sided trade earlier in the session but the strong support in wheat finally weighed too much on corn. July corn finished up a nickel at 625 and its highest close since May 1st. New crop December corn was up 2 for the day and settled at 528 ¼. In spite of historically high basis levels, producer selling is still light thus bringing a stronger premium of old crop corn to new crop. The CN/CZ spread settled at 96 ¾ and has come back from its low of 71 ¼ after the report last week. Net weekly export sales for both marketing years came in at 865,100mt which was lower than the 1,100,000mt the trade was expecting. The soy complex saw follow-through buying from the overnight session on thoughts that the recent sharp break was overdone. July beans settled 16 higher at 1438 and new crop up 4 ¼ at 1306 ¼. The SN/SX spread made a new high of 134 during the session and settled up 11 ¾ at 131 ½. More China buying of old crop soybeans and a little less pressure from outside market forces helped to support strong buying early in the session with the market already up as much as 74 cents from Monday’s lows. Weekly sales were a bit slow but a bulk of the sales was for old crop and this was seen as positive. On top of the weekly sales report, the USDA announced a sale of 480,000 tonnes of U.S soybeans to China for the 2011/12 season.

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Futures and options trading involves substantial risk. The valuation of futures and options may fluctuate, and, as a result, clients may lose more than their original investment. In no event should the content of this letter be construed as an express or an implied promise, guarantee, or implication by or from Walsh Trading Inc. that you will profit or that losses can or will be limited in any manner whatsoever. Past results are no indication of future performance. Information provided in this correspondence is intended solely for informative purposes and is obtained from sources believed to be reliable. Information is in no way guaranteed. No guarantee of any kind is implied or possible where projections of future conditions are attempted. The risk of loss in trading commodities can be substantial. You should carefully consider whether such trading is suitable for you in light of your personal circumstances and financial resources. Only risk capital should be used.
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