Walsh Commercial Hedging 5/24/12
May 24, 2012
Good afternoon. The outside markets were quiet today with Greece out of the headlines, but the same couldn’t be said about the grain and soy complex. July corn continued its downward spiral from Monday’s high. It settled at 578 ½ and is down 66 ½ cents from its Monday high of 644 ½. Old crop export sales came in at a measly 156,100 tonnes. July corn dropped only 4 cents to 603 ½ when the export news hit the wires but when the pit opened at 9:30 the sell-off really started and continued throughout the day with funds liquidating their old crop positions. Also, talk of cheaper corn from Brazil and news that mills in China may hold off importing large volumes of U.S corn until September all weighed on July corn. New crop December corn finished down 8 at 515. Export sales for new crop corn came in at 325,900 tonnes for a total of 482,000 tonnes which was far below trade expectations of 1 million tonnes. Old crop sales of 337,000 tonnes are needed each week to reach the USDA forecast. Surprisingly, the wheat market didn’t have the spillover effect from the drop in corn. July wheat finished down 2 ½ at 663. July Kansas City wheat finished up a ½ cent at 687. Wheat export sales came in at 72,400 tonnes for the current marketing year and 754,600 for the next marketing year for a total of 827,000 tonnes which was above trade estimates of 500-700. The soy complex was the leader of the complex with July beans finishing up 13 ½ at 1376 and new crop November beans up 18 ½ to settle at 1276 ¼. After the bean market breaking almost a $1.00 this week many in trade felt the market was a bit oversold. Also, traders believe the recent break was already priced into the market with the better than forecasted 6-10 day model. Net weekly export sales came in at 800,100 tonnes for the current marketing year and 153,600 for the next marketing year for a total of 953,700 which was on the high end of the range of estimates of 700-1.1. As of May 17th, cumulative old crop bean sales stand at 100.3% of the USDA forecast. This tells us that the USDA may be in a position to raise their export forecast for the June update. However, traders see slower demand from China in the short-term due to China releasing 600,000 tonnes of their beans from their reserves. The 6-10 day forecast “have the GFS once again being more aggressive with rains for the Midwest by Wednesday and Thursday of next week, with totals in all of the Midwest indicated to be in the .50-1” range, with isolated heavier totals.” All in all, it will probably be a volatile two-sided trade tomorrow as traders square up their positions before the 3 day weekend.
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