Walsh Commercial Hedging 4/27/12
Apr 27, 2012
Good afternoon. The grain and soy complex ended the week on a strong note. Before the market opened up, the USDA confirmed the highest one-day sale of corn since 1991! The confirmed sales totaled 1.56 million tonnes with traders confident that they’re all for China. USDA said unknown destinations bought 1.44 million tonnes of US corn for the 2012/13 season and also a sale confirmed to China for 120,000 tonnes for 2011/12 season. July corn finished at 625 ½, up 18 for the day and new crop December corn was up 3 ¾ at 538 ¾. May corn was up a whopping 29 cents on the day finishing at 653. Coupled with the new sales, the corn complex is seeing tight US cash markets. Cash basis levels remain very strong for old crop corn with basis bids of 43 over July for central Illinois. Also, the International Grains Council says China’s 2012-13 corn imports will rise 50% to 6mmt. IGC’s forecast for 2011-12 stayed the same at 4mmt. Analysts still see old crop corn as undervalued citing tight old crop supplies and a firm cash market. July wheat finished at 650, up 14 ½ on the day, on support from corn and reports of cold weather moving into central Indiana overnight with temps dropping into the 20’s.
July beans finished the day higher for the 4th straight day finishing up 13 ¼ at 1493 ½. New crop November beans were up 3 ¼ at 1362. The July contract pushed to a new contract high as continued buying from China, strong cash basis levels, talk of no deliveries for May beans next week and continued concerns for the crop size in South America provided the fuel to run higher. July beans made a new contract of 1506 ¾ this morning but like yesterday backed off a bit on some profit taking. I would urge producers of beans to have some sort of protection in place through option strategies to protect your investment and a tremendous amount of revenue.
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. Have a great weekend!
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