Walsh Trading: Afternoon Grain Comments

Walsh Commercial Hedging 11/29/12

Nov 29, 2012

The grains finished lower while the soybeans finished higher as optimism about the US averting the potential effects of going over the “fiscal cliff” was complemented by an agreement on a new debt reduction deal for Greece overnight. The wheat complex finished lower on profit taking and on export sales that didn’t support the idea that US wheat exports are picking up just yet; like last week’s impressive 657,400 MT number. Wheat exports were pegged at 279,300 MT, below expectations of 300-450,000 MT. The dry growing conditions in the Western Plaines took a back seat to the weak sales number today as traders took some profits off the table with the July Kansas City contract finishing the day only down 2 cents at $9.41. There are reports that some analysts are beginning to adjust HRW wheat production under 1 billion bushels. The short term forecast still looks bleak for the US Plaines, but longer term forecasts for next weekend are showing some hope. There’s a chance for some light precipitation forecasted from Nebraska into the Dakotas but again this is a long way off and I won’t believe until I see it. Like most of time, the lower trade in the wheat complex spilled over into corn with March corn finishing the day down 5 ¼ at $7.58 ¾ after another disappointing export number. March corn was on the verge of taking out its near term resistance level of $7.67 ¾ at 7:26 this morning but once the export numbers hit the wire at 7:30 March corn fell. Old crop sales of corn were pegged at 236,100 MT, well below market expectations of 400-650,000 MT. The corn bulls will turn their attention now to the wet weather conditions in Argentina which is causing planting delays. January beans finished up 2 ½ at $14.48 ¾. Export sales for soybeans were also below expectations coming in at 319,100 MT while the trade was expecting them to come in the range of 500-700,000 MT. However, the report revealed higher than expected sales for soy meal which came in at an impressive 365,100 MT, up 85% from the previous week. The trade was looking for meal sales to come in at just 100-250,000 MT. The USDA also confirmed the recent bean oil sales in the last week. They reported bean oil sales at 121,500 MT for delivery in the 2012/13 marketing year that ends next September. The impressive sales of bean products verifies the world demand for these products are still incredibly strong and should stay that way until South America can get their soybeans to port and shipped without any delays and in my opinion won’t happen without some hiccups along the way which means the US is the main player in town which should support soy products well into 2013.

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Walsh Trading is a division of HighGround Trading Group, Inc. ("HTG"). HTG is registered as an Introducing Broker with the Commodity Futures Trading Commission and an NFA Member. Futures and options trading involves substantial risk and is not suitable for all investors. Therefore, individuals should carefully consider their financial condition in deciding whether to trade. Option traders should be aware that the exercise of a long option will result in a futures position. The valuation of futures and options may fluctuate, and as a result, clients may lose more than their original investment. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS All information, communications, publications, and reports, including this specific material, used and distributed by HighGround Trading Group Inc. (“HTG”) shall be construed as a solicitation for entering into a derivatives transaction. HTG does not distribute research reports, employ research analysts, or maintain a research department as defined in CFTC Regulation 1.71.

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Walsh Commercial Hedging 11/28/12

Nov 28, 2012

The complex settled mixed after taking a breather after yesterday’s sharp rally even though the outside markets were highly volatile. The wheat complex continues to be leader of the pack with the Kansas City wheat July contract finishing higher for the 7th straight session and posting a new contract high of 944 ¼ before settling up 4 ¼ cents at 942 ½. The trade is more focused on the terrible weather conditions in the western Plains than the sluggish demand for wheat exports. The weather forecast shows no significant precipitation is expected in the next 2 weeks and temperatures are expected to be above normal in the western Plaines which will keep some wheat from entering dormancy. The SRW wheat conditions in the east remain mostly favorable and this shows in the spread between KC and Chicago wheat in the last month. Back on October 29th the spread between the July Kansas City HRW wheat contract vs. the July Chicago SRW wheat contract was 39 ¼ cents. After today’s close the spread has widened to 55 cents. For tomorrow’s export sales report the trade is looking for wheat sales to come in between 300-400,000 MT. The corn complex settled mixed with the deferred contracts finishing in the green while the March contract finished only down a penny at $7.63. Traders continue to roll their December contracts with “First Notice” day for Dec. contracts this Friday. This morning’s ethanol stocks report was considered mixed against trade expectations. Ethanol production averaged 803,000 barrels/day for the week ending November 23rd, down from 811,000 last week and down almost 14% vs. last year. Total ethanol production for the week was 5.62 million barrels. Corn used in last week’s production was estimated at 84.3 million bushels vs. 85.16 last week. This crop year’s cumulative corn used for ethanol production for this crop year is 1.02 billion bushels. Corn use needs to average 86.64 million bushels per week to meet this crop year’s USDA estimate of 4.5 billion bushels. For tomorrow’s export sales report the trade is looking for corn sales to come in between 400-600,000 MT. The soy complex didn’t see any follow thru buying after yesterday’s sharp rally even though the USDA reported that US exporters sold 290,000 tonnes of soybeans to China for the current marketing year. Even though Chinese crush margins are reportedly improving thus putting China back in the market for US soybeans, the overall weather outlook in South America remains mostly favorable even though southern Brazil is dry which is keeping a lid on any significant rallies in soybeans. Even if export demand stays stellar, it’s my opinion the trade is more focused on the weather situation in South America in order to replenish the world’s pipeline of soybeans. However, if Brazil does have a bumper crop putting it ahead of the US in soy production for the 1st time ever it will have to deal with the logistical nightmare of getting those beans out. Don’t forget just a couple of weeks ago port delays and bottlenecks caused Japan to cancel an order of Brazilian corn and instead bought from the US. And this happened when Brazil doesn’t even have any soy to ship!

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Walsh Trading is a division of HighGround Trading Group, Inc. ("HTG"). HTG is registered as an Introducing Broker with the Commodity Futures Trading Commission and an NFA Member. Futures and options trading involves substantial risk and is not suitable for all investors. Therefore, individuals should carefully consider their financial condition in deciding whether to trade. Option traders should be aware that the exercise of a long option will result in a futures position. The valuation of futures and options may fluctuate, and as a result, clients may lose more than their original investment. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS All information, communications, publications, and reports, including this specific material, used and distributed by HighGround Trading Group Inc. (“HTG”) shall be construed as a solicitation for entering into a derivatives transaction. HTG does not distribute research reports, employ research analysts, or maintain a research department as defined in CFTC Regulation 1.71.

Walsh Commercial Hedging 11/27/12

Nov 27, 2012

It was definitely not a “Turnaround Tuesday” session in the complex today as all 3 sectors finished sharply higher on the day. Wheat and soybeans shot up when the pits opened at 9:30 while corn didn’t take off until 1:27. Technically March corn has held its resistance levels at $7.56 ½, which is its 100 day moving average, for the past couple sessions and for most of today. However, with the sharply higher wheat trade and once buy stops were triggered at that $7.57 level it didn’t take long for March corn to take off and finish the day impressively up 12 ¾ at $7.64. The recent pattern of heavy rains in Argentina has some in the trade thinking the USDA might cut corn production in their next report. The wheat complex was obviously buoyed by the winter wheat conditions yesterday and the continued unfavorable weather conditions for the Plaines. Typically the fate of the winter wheat crop is determined in the spring after it breaks dormancy. However, given the extent of the current drought and the poor crop ratings we saw yesterday the trade is concerned that a lot of the crop that has been planted hasn’t emerged and the wheat that has emerged is in bad shape and won’t survive the winter thus adding a weather premium into the market. July Kansas City wheat finished up the day 31 cents at 938 ½ and is close to taking out its contract high of $9.44 made on November 9th. Wheat is also seeing support by hopes that the US is closer to securing export business, as cheaper supplies from the competing Black Sea region dwindle and quality issues arise for crops from Australia and Europe. The soybean complex settled higher for the third straight session, rallying on concerns about dry conditions for some of Brazil’s newly planted crops with the spot January contract finishing the day up 24 ½ at $14.49 ¼. January beans did fill the gap after the November WASDE report between $14.48 ¾-$14.50 but we really didn’t see that big “buy stop” bounce like we saw in corn. Continued strong soybean product demand along with concerns that 1/3 of southern Brazil is trending too dry is supporting the soy complex. Even though export inspections yesterday fell shy of expectations only 19.7 million bushels are needed to ship each week to reach this crop years USDA export estimate.

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Walsh Trading is a division of HighGround Trading Group, Inc. ("HTG"). HTG is registered as an Introducing Broker with the Commodity Futures Trading Commission and an NFA Member. Futures and options trading involves substantial risk and is not suitable for all investors. Therefore, individuals should carefully consider their financial condition in deciding whether to trade. Option traders should be aware that the exercise of a long option will result in a futures position. The valuation of futures and options may fluctuate, and as a result, clients may lose more than their original investment. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS All information, communications, publications, and reports, including this specific material, used and distributed by HighGround Trading Group Inc. (“HTG”) shall be construed as a solicitation for entering into a derivatives transaction. HTG does not distribute research reports, employ research analysts, or maintain a research department as defined in CFTC Regulation 1.71.

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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Walsh Trading is a division of HighGround Trading Group, Inc. ("HTG"). HTG is registered as an Introducing Broker with the Commodity Futures Trading Commission and an NFA Member. Futures and options trading involves substantial risk and is not suitable for all investors. Therefore, individuals should carefully consider their financial condition in deciding whether to trade. Option traders should be aware that the exercise of a long option will result in a futures position. The valuation of futures and options may fluctuate, and as a result, clients may lose more than their original investment. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS All information, communications, publications, and reports, including this specific material, used and distributed by HighGround Trading Group Inc. (“HTG”) shall be construed as a solicitation for entering into a derivatives transaction. HTG does not distribute research reports, employ research analysts, or maintain a research department as defined in CFTC Regulation 1.71.

Walsh Hedging 11/14/12

Nov 14, 2012

It feels like the complex is starting to re-focus on the fundamental aspects of the marketplace after Friday’s bearish report sent “managed money” to the exits sending prices lower. Strong demand and strong cash markets surfaced after the recent plunge in futures. First, we saw the sale of 158,496 MT of US corn to an unknown destination yesterday (most likely Mexico) and then today the USDA announced a sale of 120,000 MT of soybeans to China. The pick-up in demand wasn’t limited to exports, as domestic usage by soybean processors has increased amid the lower prices as well. The National Oilseed Processors Association said 153.5 million bushels of soybeans were crushed in October, above the average estimate of 144.4 million from analysts surveyed. The boost came from favorable margins for processors as domestic crushers took advantage of increased availability of soybean supplies from autumn harvests in the Farm Belt. Soybean futures also saw support from technically based buying amid the views from some in the trade the market’s recent declines was overdone. The spot January bean contract finished the day up 11 ¾ at 1419 ¾. For the time being, demand looks like it will be the driving force of the marketplace because the weather in South America looks good for the next couple weeks. For the corn complex, it was a good sign that December contract was unable to test the September 28th low of 705 yesterday and bounced higher. However, in my opinion, the December contract will need to get to and stay above that $7.50 mark before I can get excited about corn. Like I mentioned on Friday, my opinion is that the USDA is giving end users an early Christmas gift by not adjusting harvested corn acreage. Yesterday, the European firm Astrium projected the US corn yield at 116 bpa, lower than the USDA’s most-recent estimate of 122.3. The firm uses a combination of satellite imagery, people on the ground and weather data to make its predictions. We live in a technological advanced society now and one has to wonder why the USDA doesn’t change its policy of not adjusting harvested acreage from the October to November report for the past 16 years. December corn finished the day up 2 ¼ at 725 ¾. Producer selling has dried up on the price decline and commercials are anxious to get corn in position to move into export channels in advance of possible barge restrictions or even the closure of the Mississippi River south of St. Louis because of the drought this summer. Export sales won’t be out until Friday due to the holiday on Monday. December Chicago wheat finished the day down 2 cents at $8.49 despite yesterdays poor winter wheat crop conditions report but the breakdown by region is even more important. July Kansas Wheat finished the day in the green while the Chicago contract finished in the red because the SRW wheat crop in the east remains in favorable condition compared to the HRW wheat crop in the west. All in all, demand should dictate price direction for the coming weeks unless “managed money” starts to liquidate their positions with the end of the year around the corner.

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Walsh Trading is a division of HighGround Trading Group, Inc. ("HTG"). HTG is registered as an Introducing Broker with the Commodity Futures Trading Commission and an NFA Member. Futures and options trading involves substantial risk and is not suitable for all investors. Therefore, individuals should carefully consider their financial condition in deciding whether to trade. Option traders should be aware that the exercise of a long option will result in a futures position. The valuation of futures and options may fluctuate, and as a result, clients may lose more than their original investment. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS All information, communications, publications, and reports, including this specific material, used and distributed by HighGround Trading Group Inc. (“HTG”) shall be construed as a solicitation for entering into a derivatives transaction. HTG does not distribute research reports, employ research analysts, or maintain a research department as defined in CFTC Regulation 1.71.

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Walsh Commercial Hedging 11/9/12

Nov 09, 2012

The trade was anxiously awaiting today’s NASS report and again it offered up a few surprises. Of course, the biggest surprise of all was raising its projection for soybean yield to 39.3 bpa, up a whopping +1.5 bpa from the October report. This helped push soybean production to 2.971 billion bushels, up 4% from its estimate last month saying that “late-season rainfall helped the crop bounce back somewhat from the drought.” Somewhat?! This is the largest increase for bean yields from an October to November report. The 39.3 bpa wasn’t even in the range of estimates and significantly higher than the 38.2 bpa the trade was expecting so I’d say the late season rains helped out a lot! Anyways, I found it hard to believe considering the USDA said they harvested 60% of their test plots before the October report but we have to live with this number and move on. The USDA managed to increase domestic crush demand by 20 million bushels and exports by 80 million bushels to offset the increase in overall supply. This left ending stocks at 140 million bushels vs. the 133 the trade was expecting. World ending stocks for the 2012/13 season came in at 60.02 million tonnes as compared to 57.56 in last month’s estimates. The US soybean carryover versus use is still exceedingly tight, while the World Supply/Demand balance sheet is tight but less so than in the US. This caused the spot January soybean contract to sharply drop and finish the day down 44 ½ cents at 1451 ½. In my opinion, this number will not likely get much larger in the January final report so the market should turn its attention to demand and South American crop prospects. I wouldn’t be surprised if we hear China inquiring about some cargoes of beans after this sell-off. For soybeans buying “puts” will keep you in the game for open cash sales and buying “calls” could be a strategy to re-own previously sold bushels. Call the office for a more detailed plan of an attack. The wheat and corn complex had an up and down day. For wheat, I found it a bit surprising that the USDA didn’t cut the world wheat carryover but actually increased it a tad. They pegged world ending wheat stocks at 174.2 MMT which wasn’t even in line with expectations of 169.0-174.0. Australian wheat production was reduced about 2 MMT- in line with recent expectations. However, they didn’t change Argentine wheat production even though there has been chatter about too much rain in Argentina leading to quality issues. December Chicago wheat did make a high of $9.16 ½, not seen since September 17th, on a higher corn trade during the day but both eventually succumbed to the sharply lower soy trade with December Chicago wheat finishing down 16 cents at 886 ½. The NASS numbers in my opinion for corn were largely a non-event, albeit production and yields came in slightly above expectations. The USDA tweaked corn yields +0.3 bpa from the October report to 122.3 bpa which added an extra 19 million bushels to production which is now pegged at 10.725 billion bushels. The 122.3 bpa would still mark the lowest yield in the US in 17 years, showing how the drought took a heavy toll on the nation’s largest crop. US ending stocks are pegged at just 647 million bushels which is up from 619 last month. I said the corn numbers were largely a non-event because the USDA doesn’t revise harvested corn acreage from the October to November report, preferring instead to make any necessary revisions in the January annual report. This has been going on for 16 years now. However, this year was definitely unlike previous years because of the historic drought. In my opinion, this could be an early Christmas gift to end users because a tiny reduction in harvested acreage would greatly affect ending stocks thus most likely bringing a sharply higher trade. Also, we have to question how much of the corn crop was damaged from Hurricane Sandy in Ohio and Pennsylvania. With such a tight balance sheet every bushel not harvested can greatly reduce the overall ending stocks but we won’t know until the January final report and because of this it’s my opinion corn will continue its range bound trade unless export demand gets really strong or the weather in South America takes a turn for the worse. One final thought, I have the Bears winning by 3 against the Texans on an extremely windy night on a soggy Soldier Field turf. Have a good weekend!

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Walsh Trading is a division of HighGround Trading Group, Inc. ("HTG"). HTG is registered as an Introducing Broker with the Commodity Futures Trading Commission and an NFA Member. Futures and options trading involves substantial risk and is not suitable for all investors. Therefore, individuals should carefully consider their financial condition in deciding whether to trade. Option traders should be aware that the exercise of a long option will result in a futures position. The valuation of futures and options may fluctuate, and as a result, clients may lose more than their original investment. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS All information, communications, publications, and reports, including this specific material, used and distributed by HighGround Trading Group Inc. (“HTG”) shall be construed as a solicitation for entering into a derivatives transaction. HTG does not distribute research reports, employ research analysts, or maintain a research department as defined in CFTC Regulation 1.71.

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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Walsh Trading is a division of HighGround Trading Group, Inc. ("HTG"). HTG is registered as an Introducing Broker with the Commodity Futures Trading Commission and an NFA Member. Futures and options trading involves substantial risk and is not suitable for all investors. Therefore, individuals should carefully consider their financial condition in deciding whether to trade. Option traders should be aware that the exercise of a long option will result in a futures position. The valuation of futures and options may fluctuate, and as a result, clients may lose more than their original investment. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS All information, communications, publications, and reports, including this specific material, used and distributed by HighGround Trading Group Inc. (“HTG”) shall be construed as a solicitation for entering into a derivatives transaction. HTG does not distribute research reports, employ research analysts, or maintain a research department as defined in CFTC Regulation 1.71.

Walsh Commercial Hedging 11/5/12

Nov 05, 2012

The grain complex settled mixed on chopping trading and the soy complex continued to shed risk after finishing 23 ½ cents lower at 1503 ¼. Weekly export inspections for soybeans were outstanding again coming in at 59.4 million bushels. Only 17 million bushels are needed each week to reach this crop years USDA export estimate. However, the weaker tone in soybeans was attributed to a more favorable weather forecast for South America this week and the trade is expecting the USDA report to show an increase in the US average soybean yield and production. For South America, drier conditions are expected for Southern Brazil and Argentina while Northern Brazil is expected to see better rainfall. In my opinion, the soy complex is getting a bit over “cooked” the last couple sessions. Demand for soybeans looking forward remains as solid as the Chicago Bears victory yesterday. Positive crush margins and further Asian export interest especially with these declines should be a positive force. The Weekly Crop Conditions report showed that only 39% of the winter wheat is rated gd/ex compared to 40% last week. Traders are adding risk premium to wheat prices because of the dry conditions in the western plains and on hopes that demand may be picking up for high protein hard wheat classes. The dry conditions are raising concerns that some of the crop may not germinate ahead of winter dormancy. Additional support in wheat is coming on thoughts that Argentina and Australian wheat production may decline on Friday’s report. Also, most analysts feel global wheat production may be slashed again. However, any significant wheat rallies are being held in check by profit taking and the continued sluggish corn market. December Chicago wheat finished up 1 ½ at 866, 9 ¾ off the high. Corn was again a disappointment finishing the day down 4 cents at 735 ½. It was supported earlier by a strong wheat trade but the bearish soy trade weighed on the whole complex. Corn export inspections again came in below expectations at 14.7 million bushels. The Weekly Crop Progress reports showed that Ohio producers were able to pick up their corn harvest 10% points in the wake of Hurricane Sandy and are 74% complete. Pennsylvania is now 72% complete compared to 64% last week and in my book both those numbers are really impressive considering what they went through out east.

Here are the analysts’ estimates for ending stocks on Friday’s report

Average Range USDA(Oct) USDA(11/12)

Corn (19) 0.635 0.487-0.750 0.619 0.988

Soybeans (19) 0.133 0.115-0.175 0.130 0.169

Wheat (17) 0.666 0.625-0.728 0.654 0.743

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Walsh Trading is a division of HighGround Trading Group, Inc. ("HTG"). HTG is registered as an Introducing Broker with the Commodity Futures Trading Commission and an NFA Member. Futures and options trading involves substantial risk and is not suitable for all investors. Therefore, individuals should carefully consider their financial condition in deciding whether to trade. Option traders should be aware that the exercise of a long option will result in a futures position. The valuation of futures and options may fluctuate, and as a result, clients may lose more than their original investment. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS All information, communications, publications, and reports, including this specific material, used and distributed by HighGround Trading Group Inc. (“HTG”) shall be construed as a solicitation for entering into a derivatives transaction. HTG does not distribute research reports, employ research analysts, or maintain a research department as defined in CFTC Regulation 1.71.

Walsh Commercial Hedging 11/2/12

Nov 02, 2012

Ugly. That’s how I view today’s trade. The entire commodity complex from the Dow, gold, silver, cattle and even RLL was down. What the heck is RLL you’re asking? It’s Random Length Lumber of course! The only safe haven was the US $. It was definitely a “risk off” attitude in the complex today. With the election only days away and the polls showing it’s coming down to Ohio, Pennsylvania, and Florida for the presidency traders ran for the hills because the trade doesn’t like uncertainty. Actually, July Kansas City wheat managed to stay in the green after being up 14 ¼ cents at one point in the day and finished up 2 ¾ at 921 ½. Chicago December wheat finished only 4 cents lower at 864 ½ but corn and especially soybeans were ugly. It felt like the trade didn’t even look at yet another impressive soybean export sales number today. Weekly export sales for soybean came in at 741,200 MT for 2012/13. Cumulative soybean sales stand at 74.8% of the USDA forecast for the current marketing year! Sales of just 195,000 MT are needed each week to reach the USDA forecast. January beans finished the day down 33 ¼ cents at 1526 ¾. The weather situation in South America for next week looked more promising, FC Stone and Informa had larger yields in their production reports, and the uncertainty over the election and next week’s WASDE report caused “managed money” and speculators to shed risk. In my opinion, the soybean market has already priced in a higher production number for beans. The question is how much? In October the USDA put the soybean output at 2.860 billion bushels using a yield of 37.8. Don’t forget the USDA said 64% of their soybean plots had been harvested for the October report so you would think that 37.8 number couldn’t go that much higher. Like I mentioned yesterday, any increase in production will be offset by export demand. It will be paramount that South America has a bumper crop but even if they do have a great crop they’ll have the logistical nightmare of getting those beans out. Every year you hear of port workers/truck drivers striking down there. The soybean market should stay volatile until the end of the year so hold on for a wild ride. Corn continues its range bound trade and settled down 11 ½ cents at 739 ½ after another sluggish export sales number. I’m hoping things will be brighter when my Chicago Bears beat the Tennessee Titans 24-14 on Sunday. Hopefully it won’t be another ugly day like today.

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Walsh Trading is a division of HighGround Trading Group, Inc. ("HTG"). HTG is registered as an Introducing Broker with the Commodity Futures Trading Commission and an NFA Member. Futures and options trading involves substantial risk and is not suitable for all investors. Therefore, individuals should carefully consider their financial condition in deciding whether to trade. Option traders should be aware that the exercise of a long option will result in a futures position. The valuation of futures and options may fluctuate, and as a result, clients may lose more than their original investment. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS All information, communications, publications, and reports, including this specific material, used and distributed by HighGround Trading Group Inc. (“HTG”) shall be construed as a solicitation for entering into a derivatives transaction. HTG does not distribute research reports, employ research analysts, or maintain a research department as defined in CFTC Regulation 1.71.

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Walsh Commercial Hedging 11/1/12

Nov 01, 2012

The grain complex settled on a mixed note after a disappointing close for corn. December was up 7 ½ cents at 763 ¼ in early morning trading and stayed in the green for most of the day but at 11:06 the tides turned and December corn finished the down 5 ¾ at 750. Corn has been supported by continued talk the US corn will be competitive on the world market in a matter of weeks and continued uncertainties with weather in Argentina. Even though the US remains overpriced relative to other world origins the spread between the US and South American corn continues to narrow. However, in my opinion the US is still weeks away from being a competitive player thus keeping corn range bound for the time being unless the weather in South America really takes a turn for the worse. The corn market might be a little bearish tonight after FC Stone came out with their production numbers. They pegged corn at 124 bpa with production at 10.881 billion bushels. The USDA currently has yield at 122 bpa and production at 10.705 billion bushels. For tomorrow’s delayed export sales report the trade is looking for corn sales of 200-400 MT. Wheat found support in early trading from a revision down in Russia wheat production and news of yesterday’s winter wheat crop rating which at 40% gd/ex is the poorest on record and managed to stay in the green during corns sell-off finishing the day up 4 cents at 868 ½. The soy complex was the winner of the day with January beans finishing the day up 11 ½ cents at 1560 ½. Continued firm cash markets and a lack of producer selling are helping support soybeans. FC Stone pegged bean yields at 39.1 bpa and production at 2.959 billion bushels. That is up from their previous estimates of 38.2 and 2.849. Many in the trade feel that the USDA will raise their current bean yield of 37.8 in next week’s report. However, given the Chinese appetite for beans, any revisions higher in production could be offset by export demand leaving our balance sheet thin. Also, if there are any delays in soybean production in South America our balance sheet might become razor thin. For tomorrow’s export sales the trade is looking for beans to come in between 500-700 MT.

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November 2012 Archive for Walsh Trading: Afternoon Grain Comments

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Walsh Commercial Hedging 11/5/12

Walsh Commercial Hedging 11/2/12

Walsh Commercial Hedging 11/1/12

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