Walsh Commercial Hedging 6/19/12
Jun 19, 2012
Good afternoon. The complex saw strong follow through buying after crop ratings declined significantly again and forecasts showing hot and dry weather in store for the next 7-10 days. The US soil moisture profile is now ranking as the 2nd driest in mid June on record since 1895! This stunning shortage of soil moisture is causing US summer row crops to go back fast in conditions when extreme heat prevails. NASS reported yesterday a 3% drop in US corn GD/EX ratings to 63% compared to 70% last year at this point. The 10 year average for this time of year is 68% for corn. The lowest was 40% in 1988. Nebraska slipped 8% to 62% while Indiana came in at just 37% from 49% last week. US soybean ratings fell 4% to 56% GD/EX compared to 68% last year. The 10 year average for beans for this time of the year is 66%. The lowest rating on record was 26% in 1988. Illinois was rated 47% GD/EX, down 3% from last week. Most of Illinois, Indiana, and Ohio may only see a trace scattered shower for the next five days and the 6-10 day forecast turns very dry. This caused the complex to close sharply higher for the 2nd straight day. July wheat finished up 19 ¾ to settle at 649 ½. Russian analyst SovEcon lowered their estimate for 2012 wheat production to 50 million tonnes from 56 in 2011/12. The weekly Spring Wheat Conditions report showed 76% was rated good/excellent compared to 75% last week but with the hot/dry forecast in store for the next 7-10 days this could add stress and yield loss to a significant portion of the growing area. September corn finished up 26 at 563 and December settled up 26 at 560. Also, dry conditions in the North China Plains are offering support as well. July beans finished up 48 ¼ at 1432 ½ and new crop November beans up 42 at 1381 ¼. The USDA reported a sale of 140,000mt of beans sold to unknown for the old crop marketing year. All in all, all eyes will be on the weather until next Friday’s Quarterly Stocks and updated Planted Acreage reports.
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