Walsh Hedging 11/16/12
Nov 16, 2012
It was quite the interesting day in the complex as corn did a 360 to close up a 5 ¾ at 727 after being down 10 ¼ cents this morning due to the sharply lower soybean trade. Traders awoke to double digit losses in the soybean complex due to news from China that crushers had cancelled 600,000 tonnes of soybean purchases for December and January. January beans did manage to rally a bit but finished the day down 18 ¾ at 1383 ¼. After last Friday’s bearish report for soybeans, beans futures have fallen about 5% this week and are down 22% from their all-time closing high two months ago. Even though export sales for soybeans came in higher than expected the trade was more focused on the China cancellation and the continued better weather outlook for South America. “Managed Money” were estimated sellers of 7,000 bean contracts today. However, in my opinion declines in soybean futures are likely to be limited by overall tight US supplies and cash-basis levels that are historically high. Demand from foreign importers and domestic soybean-crushing companies remain strong. Back to the bean export sales, the cancellations of 600,000 tonnes were not included in this morning’s report but some are speculating they may have been included in prior week’s sales that showed decreases for “unknown destinations” of 545,600 MT, although last week’s data also included a 382,000 MT switch from an “unknown.” This morning’s export sales for beans came in at 559,700 MT for the 2012/13 marketing year were up noticeably from the previous week and above the 248,000 MT pace needed. Net sales of 25,500 MT for delivery in the 2013/14 marketing year were for Japan. Corn weekly exports were in range of estimates but pretty much uninspiring coming in at 103,900 MT for 2012/13 and 208,200 for 2013/14 marketing year for Japan. Corn was trading sharply lower for most of the morning but caught a bid around 10:48 this morning. Why? Well, because Nancy Pelosi said she’s “confident” that a solution to the “fiscal cliff” may be in sight. I’m just kidding!! Just writing that name gives me the shimmers. Corn first jumped a bit when the EPA announced they had decided to move forward with a mandate for corn ethanol in gasoline, denying requests to suspend the requirement following a drought that drove up corn prices. The announcement was as expected but caused some short covering in corn. Also, there have been reports of congestion at Brazilian ports causing bottlenecks. Taiwan is turning to the US to partly meet its corn demand after congestion at Brazilian ports delayed shipment of at least 420,000 MT. Also, last week Japanese importers said more than 900,000 MT of corn from Brazil had been delayed due to the congestion. All in all, export prices in Brazil have soared about 17% over the past month coupled with the congestion could mean the US should be more competitive soon. Argentine exporters have stopped offering corn for sale until at least March or April too. If corn can stay in the 7’s before exports start to heat up and before the January Final Report, which in my opinion is going to be extremely friendly, we might be seeing an 8 in front of corn to start 2013.
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