Walsh Commercial Hedging 5/25/12
May 25, 2012
Good afternoon. The complex closed higher across the board as continued uncertainties in the 6-10 day model provided a weather premium before a 3 day weekend. July wheat finished up 17 at 680 and July Kansas City wheat was up 13 at 700. Hard Red Winter wheat harvest is getting more active with one of the earliest Kansas starts on record but early yields are not as high as producers thought just a few weeks ago due to dry and hot conditions the western plains have seen the past few weeks. While there are some rains in the forecast for Russia to ease stress, the region is still too dry and further adverse weather ahead could take a toll. The International Grains Council believes global wheat stocks will fall to a four-year low for the 2012/13 season after cutting world production by 5mmt to 671 million tonnes and this has pulled world ending stocks down to 191 million tonnes, down 15 million. July corn had a two-sided trade today and finished unchanged at 578 ½ but has taken a hit this week with it being down 54 ½ cents from Monday’s settlement. New crop corn fared better with weather uncertainties and finished up 6 ½ at 521 ½. The trade is looking for a 2-4% drop in corn rated good/excellent for Tuesday afternoon. Parts of eastern and southern Iowa, western Illinois, eastern Indiana and Ohio have seen warm weather and no rain for the past week or more and top soil rating are dry. It’s supposed to be near 100 degrees in Chicago on Sunday and the warmest Indy 500 on record. Old crop continues to lag behind December corn on cheaper corn in Brazil which has eased the tightness in the US cash market. July beans finished up 6 at 1382 and new crop November up 13 at 1289 ¼. Just like new crop corn, the trade is a bit uncomfortable believing that rains next week will completely ease dryness concerns thus propelling new crop beans higher. All in all, the trade doesn’t like uncertain weather forecasts and coupled with a 3 day weekend, the buyers came out today. Trading will resume Monday night at 7:00 P:M, not 5:00. Also, the CME Group announced that it will expand open outcry floor trading hours, but only during key USDA report days. The move would begin on June 12 and would only occur for major reports including WASDE, crop production, prospective plantings and acreage data. The USDA is currently, at the industry’s request, mulling a change in report release times for the current 7:30 A:M timeframe to later in the day. However, seeing that the pits will now be open during report days, I don’t think we’ll be seeing any changes soon. Have a safe holiday weekend and say a prayer for the men and women of the armed forces who have lost their lives for our independence.
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