Walsh Commercial Hedging 5/7/12
May 07, 2012
Good afternoon. It looked like it was going to be a down day in the complex but late day buying in the grains helped support wheat and corn. The complex was in the red for most of the night and day pressured by macroeconomic concerns after the elections in France and Greece, and by weekend rains in the U.S which benefited crop development. The trade overnight was worried with the defeat of President Sarkozy by Mr. Hollande. France has now gone Socialist and this has the trade worried things are going to become worse in the already fragile Euro Zone. This caused the Euro drop to 3 month lows and push the U.S dollar higher, thus propelling the grain and soy markets lower overnight and into the day session. However, mid-day into the session, the U.S dollar started to go lower and the stock market higher thus helping corn and wheat.
July wheat finished up 2 ½ cents at 612. July corn settled at 620 down ¼ cent and new crop December corn finished up a ½ cent at 524 ¾. Strong cash markets continue to help support the May contract (up 2 ¾ @ 665) with historically high basis bids, record wide May/July inversion, and a lack of deliveries against the May contract. New crop corn hit its Friday low of 515 but bounced back on short covering ahead of Thursday’s report. On Friday, private analytical firm Informa Economics pegged U.S 2012 corn plantings at 96.124 million acres, up from its March figure of 95.5 million and above the USDA’s March 30th forecast of 95.864 million. Crop progress just came in at another impressive number of 71%. The trade was looking for it to come in between 65%-70%. I say this is impressive because of the hefty rain totals last week which should have slowed plantings. This might have new crop corn test that 515 mark tomorrow. The soy complex didn’t fare as well as the grains today. July beans finished down 12 ½ at 1465 ¾ and new crop November settled at 1353 ½ down 13 ¼. On Friday, Informa forecast U.S 2012 soybean plantings at 75.822 million acres, up from its previous forecast of 75.1 million and up from the USDA’s March 30th figure of 73.902 million. Crop progress for soybeans came in at 24% which was in the range of estimates of 22%-24%. The lower close last week after posting a contract high was seen as a negative technical development by some traders. The COT report as of May 1st showed Non-Commercial traders were net long a record high 259,763 contracts, an increase of 11,831 contracts for the week. The reversal last week in beans might attract some additional technical selling as well with the COT report showing a record high net long position in 5 of the past 6 weeks. All in all, producers should have some sort of protection in place before Thursday’s reports.
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