Walsh Commercial Hedging 5/29/12
May 29, 2012
Good afternoon. After a relatively quite night session because the weather forecast didn’t change much during the Memorial Day Weekend, the sellers came out in force during the day session. Wheat was the catalyst of the selloff with July wheat finishing down 23 ¼ at 656 ¾. The Commitments of Traders reports as of May 22nd showed Non-Commercial traders were net long 4,127 contracts, an increase of 53,185 contracts for the week which represents a change from a net short to net long position. The COT report pretty much confirms that nearly all of the short-covering from the funds has already run its course. News of better rain coverage for Russia and expectations for increased harvest pressures from the winter wheat crop just ahead added to the negative tone. Spring wheat ratings in the good/excellent category rose from 74% to 79% after the close which might weigh on the wheat market even more when the trade opens tonight. July corn took another big hit today with it finishing down 16 ¾ at 561 ¾. Fund traders were noted as active sellers of more than 15,000 contracts. Fund traders are moving their July longs to new crop. Also, exports have slowed dramatically with Brazil corn significantly cheaper than U.S corn. New crop December corn finished down 4 at 517 ½. Crop ratings for corn came in at 72% good/excellent, a drop of 5%. The trade was looking for a drop of 2-4% so we’ll see if this adds any support to the corn market tonight. The Midwest looks to receive ½ to 1 ½ inches of rain with 70-80% coverage into the weekend. The trade will be keeping a close eye on this since rain is now critical for most of Illinois, Indiana, and parts of Ohio. July beans were sharply higher overnight and into today’s session but the weakness in wheat and corn brought out the sellers in beans. July beans finished up 4 ¾ at 1386 ¾, 15 ¾ off the high and November beans settled at 1293 ½, up 4 ¼. Traders see the short-term weather as a negative factor but a shift back to a warmer and drier than normal pattern for the 11-15 day forecast has helped to provide some support in the bean complex. All in all, all eyes are on the weather and any changes to it can sharply turn this market around.
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