Walsh Commercial Hedging 11/7/12
Nov 07, 2012
It was a good sign to see the complex not take a nose dive like the Dow did today and focus more on the fundamental aspects that lie ahead in the marketplace. I know many traders were disappointed with the results of yesterday’s election (me included) and that disappointment showed in the major indexes with the Dow Jones down more than 300 points. The wheat complex was a shining star on an overall depressing post Election Day trade. December wheat finished up 17 cents at $8.94, Kansas City Dec. wheat settled up 12 cents, and Minneapolis December wheat rose 11 ¾ at $9.59 ¾. Wheat was buoyed by concerns about unfavorable weather for crops growing here and abroad. Also, overnight Paris Matif and London wheat futures continued to make new contract highs for the third day in the row adding support across “the pond” to our wheat contracts. Weather patterns here in the states continue to look detrimental to wheat in the western plains. Also, the trade is expecting cuts to the world balance sheet for wheat. Ending stocks are currently estimated at 173 million tonnes and some in the trade are suggesting stocks could fall near 168-170 million tonnes. Argentina could see their wheat production trimmed 1.0 million tonnes to 10.5 and Australia could be cut 2.0 million tonnes to 21. The sharply higher trade in wheat also supported corn but the lower trade in beans put a cap on any significant rally in corn. Corn continues its range bound trade and finished the day up 3 cents at $7.44. December corn just couldn’t push past and stay above its resistance level at $7.51 ½. The trade is expecting a neutral/slightly bullish report on Friday which is supporting any breaks in corn this week. The soy market didn’t fare as well as the grains today with January beans finishing the day down 8 ½ at 1507. Technical selling and continued thoughts that the USDA will raise the US bean yield and production estimates on Friday’s report is keeping a lid on bean prices. However, like I’ve mentioned twice before any production increases should be offset by demand due to the staggering pace of exports, much like the report in October. The trade should be more focused on ending stocks than any increases in yield and production on Friday. Any number below 130 should be bullish.
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