Walsh Commercial Hedging 12/18/12
Dec 18, 2012
After January beans failed to close about the $15 level yesterday, technical selling emerged overnight and the losses accelerated after the USDA reported significant cancellations of previously reported export sales. The USDA reported cancellations of 420,000 MT of soybeans for the current marketing year, including 300,000 canceled by China and 120,000 cancelled by an unknown destination. At the same time, the USDA than reported a sale of 110,000 MT of soybeans to an unknown. However, the sale of beans offered no support as the trade found greater importance in the cancelations. With favorable weather in Brazil in the forecast, the bulls didn’t have any positive news to report therefore sending January beans to close 30 ¼ cents lower at $14.66. Managed money were estimated sellers of 8K soybeans on the day. March beans will be the top step (spot month) contract tomorrow. March corn held its support level of $7.15 on the day and continues to trade in the bottom end of its recent trading range. The “bears” in corn point toward the tepid demand for corn from overseas buyers and ethanol producers while the “bulls” point to the fact that export demand for corn amounts to only 10% of its balance sheet and the weather in Argentina is slightly wetter. Corn doesn’t have much news to trade off right now and might continue its choppiness until January Final Report. March corn finished down 4 cents at $7.20. Wheat came storming back to finish in the green after Egypt released a tender for February shipment near the close of the day. Many in trade are saying that Chicago wheat is now competitively priced. March Chicago wheat held its support at $8.02 this morning and finished above its 200 day moving average of $8.09 at $8.11 ¼, up 3 cent which might indicate a short term low has been put in. All in all, with the “holiday” markets here and lower volumes each day, I expect the trade to stay choppy until the January Final Report.
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