Walsh Commercial Hedging 11/27/12
Nov 27, 2012
It was definitely not a “Turnaround Tuesday” session in the complex today as all 3 sectors finished sharply higher on the day. Wheat and soybeans shot up when the pits opened at 9:30 while corn didn’t take off until 1:27. Technically March corn has held its resistance levels at $7.56 ½, which is its 100 day moving average, for the past couple sessions and for most of today. However, with the sharply higher wheat trade and once buy stops were triggered at that $7.57 level it didn’t take long for March corn to take off and finish the day impressively up 12 ¾ at $7.64. The recent pattern of heavy rains in Argentina has some in the trade thinking the USDA might cut corn production in their next report. The wheat complex was obviously buoyed by the winter wheat conditions yesterday and the continued unfavorable weather conditions for the Plaines. Typically the fate of the winter wheat crop is determined in the spring after it breaks dormancy. However, given the extent of the current drought and the poor crop ratings we saw yesterday the trade is concerned that a lot of the crop that has been planted hasn’t emerged and the wheat that has emerged is in bad shape and won’t survive the winter thus adding a weather premium into the market. July Kansas City wheat finished up the day 31 cents at 938 ½ and is close to taking out its contract high of $9.44 made on November 9th. Wheat is also seeing support by hopes that the US is closer to securing export business, as cheaper supplies from the competing Black Sea region dwindle and quality issues arise for crops from Australia and Europe. The soybean complex settled higher for the third straight session, rallying on concerns about dry conditions for some of Brazil’s newly planted crops with the spot January contract finishing the day up 24 ½ at $14.49 ¼. January beans did fill the gap after the November WASDE report between $14.48 ¾-$14.50 but we really didn’t see that big “buy stop” bounce like we saw in corn. Continued strong soybean product demand along with concerns that 1/3 of southern Brazil is trending too dry is supporting the soy complex. Even though export inspections yesterday fell shy of expectations only 19.7 million bushels are needed to ship each week to reach this crop years USDA export estimate.
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