Walsh Commercial Hedging 4/23/12
Apr 23, 2012
Good afternoon. The grains rebounded from Friday’s down day while the soy complex came back to earth after Friday’s surge to the highest level since early September. July wheat finished at 632 ½ which was up 9 ½ cents for the day. Talk that the sell-off in wheat last week was a bit overdone plus increased concerns for cold weather damage in the eastern Corn Belt this week helped to support the wheat today. July corn finished up 9 ½ at 612 ½ and new crop December corn was up 8 ¾ at 545 ½. Continued talk that China is in the process of booking corn from the U.S, plus a lack of new selling interest even with the bearish influence from outside markets today supported corn. While the temperature outlook is cooler than desired for the week, there is only a limited amount of rain expected across the Midwest and planting is expected to be active. Traders see weekly crop progress for corn plantings this afternoon between 32%-36%. The weekly Commitment of Traders (COT) report showed an active long liquidation selling trend from speculators and traders viewed the market as oversold.
The bean complex may have been a little overcooked on Friday’s late day surge with July soybeans finishing down 8 ½ at 1441 and new crop November down 14 ½ at 1341 ½. The expiration of May soybean options on Friday may have contributed to the price jump in futures, as traders may have entered the futures market to cover their option positions. Also, rumors that Brazil would limit or restrict exports helped fuel Friday’s rally but the Brazilian government denied those rumors over the weekend. Non-Commercial and Non-reportable combined traders held a new record high net long position of 203,057 contracts, up 1,232 contracts for the week. With record high open interest in soybeans and a record net long position of speculators in meal, traders remain nervous over the possibility of a long liquidation correction. However, traders are seeing good crush margins in China plus a tightening supply of “unbooked” soybeans from Argentina and Brazil as a positive force. All in all, the soy complex is going to stay volatile in the near term.
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