Walsh Commercial Hedging 6/4/12
Jun 04, 2012
Good afternoon. It was a relatively quiet grain session with the weather instead of the Euro Zone debt crisis dictating movement today. The U.S dollar was trading lower for the day adding support to the complex. July wheat finished up 15 ½ at 627 ¾. Talk that the recent break in wheat was a bit overdone after a break of $1.11 in just 8 trading sessions helped to support the market. However, spring wheat conditions are expected to remain good and the continued winter wheat harvest might keep the upside limited. Last week was the end of the marketing year for wheat and cumulative export inspections came in at 10.8 million bushels above the USDA estimate for the year. This would suggest that old crop exports and ending stocks may be adjusted in next week’s report on Tuesday. July corn finally stabilized and finished up 16 ½ at 568. Basis has firmed substantially in the ports indicating that business is getting done. U.S corn is still substantially cheaper than domestic Chinese origin for the moment, but South America corn is offered even cheaper. However, logistics will favor the U.S if the corn can be originated. It looks like the fund traders long liquidation spree in old crop may be close to complete. The Commitment of Traders reports as of May 29th showed Non-Commercial traders were net long 112,631 contracts, a decrease of 41,999 contracts for the week! New crop December corn finished up 13 ¾ at 523 ¾ on talk that the weekend rain event was disappointing and that a continued below normal rainfall outlook could leave some areas of the Midwest with some dryness stress. Traders see the weekly crop condition ratings to slip 1-2% in the good/excellent category to around 70% good/ex. July beans closed down 4 ¼ at 1340 while new crop November beans finished up 10 ¼ at 1268 ¼ on the below than normal rainfall seen ahead. Crop conditions for soybeans will be released this afternoon for the first time with expectations in the 67% to 70% good/excellent range. The USDA confirmed the sale of 165,000mt on new crop beans to China this morning. All in all, if the Euro zone situation stabilizes (highly unlikely), the trade will be monitoring the weather moving forward.
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