Walsh Commercial Hedging 5/11/12
May 11, 2012
Good afternoon. Yesterday, after the markets closed, J.P Morgan came out with an embarrassing bombshell of a news conference saying they had incurred at least a $2 billion dollar trading loss on hedges tied to synthetic credit products in Europe. This had a ripple effect throughout world markets overnight and into the grain and soy markets overnight. There’s a general sense that world money managers are stepping away from commodity markets with so much uncertainty in the marketplace. This was most evident in the soy complex today with fund trader long liquidation selling driving the soybean market to its lowest levels since the Prospective Planting report on March 30th. July beans finished down a whopping 49 ¼ cents at 1406 and new crop November beans settling down 37 ¾ at 1321 ¼. Also, news that China is going to soon release up to 3 million tonnes of beans from their reserves to crushers added to the bearish tone.
The corn market was sharply lower during the day session but late day buying emerged to keep the losses in the single digits. July corn finished down 6 ½ at 581 and new crop December corn settled at 505 ¼, down 2. July corn was down 39 ¼ cents for the week. December corn pushed to $4.99 and its lowest level since December 17th of 2010! Follow-through technical selling from the weak action yesterday plus continued good weather for advancing the planting progress and weak outside markets were all negative forces for corn. July wheat was the least volatile trade today but still finished down 4 ¼ at 597. The July contract was down 12 ½ cents on the week and pushed to a new contract low close. Unless Mother Nature gives us a surprise this summer, there isn’t anything supportive in the marketplace right now. I mentioned a couple of weeks ago that the market was in a fragile state and any negative news would have a ripple effect through the market. I’ve been saying this for weeks and I’ll say it again, I would strongly urge producers to have some sort of “put” protection in place through options to protect your investment.
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. Have a great weekend!
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