Walsh Commercial Hedging 5/9/12
May 09, 2012
Good afternoon. It was another “risk off” day in the complex today as a surge in the U.S dollar and selling across a wide spectrum of commodity markets helped to pressure the grain/soy complex throughout the day. Traders were also positioning themselves ahead of tomorrow’s USDA’s supply/demand reports. July wheat finished down 15 cents at 600 and managed to push into new contract lows late in the day. For the reports tomorrow morning, traders see winter wheat production near 1.64 billion bushels as compared with 1.494 billion last year. All wheat production is expected to be near 2.195 billion bushels as compared with 1.999 billion last year. For ending stocks for the 2011/12 season, the trade is seeing stocks near 780 million bushels as compared with 793 million in the April report. For the 2012/13 season, traders see ending stocks near 785 million bushels but with a range of 600-925 million bushels. You can see the estimates (high and low) for corn and soybean ending stocks on yesterday’s blog. July corn finished down 15 ¾ at 607 ¼ and new crop December corn was down 11 ¼ at 516 ¾. December corn matched the lows from last Friday and Monday at 515 as traders expect the first outlook for the new crop season to show a surge in U.S ending stocks for the new crop year.
July soybeans closed moderately lower at 1430 ¼, down 8, but the market saw a strong recovery from the early lows as funds were noted as big sellers on the opening. New crop November beans settled 7 cents lower at 1333 ½. For the report tomorrow, traders see Argentina production down to 42 million tonnes from 45 million last month and Brazil production near 64.5 million tonnes from 66 million last month. As a result, world ending stocks for the 2011/12 season are expected to drop near 53.3 million tonnes from 55.52 million last month. Hamburg-based oilseeds analyst Oil World for the second time in two weeks cut its forecast for Argentina’s 2012 soybean crop by 1.5 million tonnes. Oil World now forecasts Argentina’s 2012 soybean crop at 41.0 million tonnes, down from 49.2 million harvested in 2011. All in all, with so many uncertainties unwinding in the world today and a big report tomorrow, you can be certain it’s going to be a volatile spring/summer in the complex.
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