Walsh Commercial Hedging 5/31/12
May 31, 2012
Good afternoon. It was another “risk off” day in the complex as outside market forces shifted from positive to negative on weak U.S economic news and a lack of consensus that the European economic woes are close to a bottom. Investors are not expecting anything more than a temporary technical reprieve from the European debt saga. Bottom line, it looks more and more like political leaders in Europe are putting a band aid on the situation instead of fixing it. Sadly, it’s just a matter of time without any major budget cuts, that we’ll be seeing the same problems here in the states. I’m done venting; let’s get back to the grain and soy markets. July wheat finished down a dime at 643 ¾ and July Kansas City wheat settled at 665 down 14 cents. There’s talk of decent yields coming out of Kansas and with the surge in wheat the last couple of weeks feed demand for wheat is lowering. Weekly export sales will be out tomorrow morning because of the holiday Monday. The trade is looking for wheat weekly export sales near 425,000 tonnes. July corn finished down 4 ¼ at 555 ¼ and new crop December corn settled up 1 ½ at 522. The July/December corn spread is down more than 66 cents from last Monday’s highs and settled at 33 ¼. July corn was trading a few cents higher for most of the session but another round of long liquidation selling from fund traders pushed old crop lower again. New crop December pretty much had a lackluster day. However, traders are concerned that the rains this week and into next week will only ease dry topsoil conditions and will leave the market in need of timely rains in order to avoid any further stress into Mid-June. Traders see weekly corn export sales near 550,000 tonnes tomorrow morning. The bean complex took it on the chin today as July beans finished down 33 ¼ at 1340 and new crop November beans closed down 22 ¾ at 1270 ¼. End of month fund liquidation, as managed money still holds a large net long position in beans, was the primary reason for the plunge in soybeans. Even with talk that the recent overnight rains were below expectations and increased concerns for crop conditions as the Midwest turns warmer and drier was not enough to bring out the buyers. All in all, it will be interesting to see if “new” money comes into the complex tomorrow with the beginning of a new month and if the buyers will come out of the woods with continued concerns about dry forecasts into mid-June.
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