Commodity Recap from Pratik Patel

Site Administrator | January 21, 2012

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The following is a special guest post on commodities from TradingPub Guest, Pratik Patel of the Futures Room:

As 2011 came to a close, many markets were in the negative including Soybeans and Wheat. One market that continued to shine was Corn. During the last two weeks of 2011, Corn posted a solid rally allowing the yellow crop to settle at 6.50 per bushel. Although Soybeans and Wheat also rallied alongside Corn, they were unable to close the year in the black. At the first opening bell for 2012, the entire grain complex gapped higher and held solid gains for a couple days until traders realized the first major USDA Grain Stock report was scheduled for the following week. As traders either were trying to positions themselves in or stay on the sidelines into the report, volume was below their daily average. On Wednesday morning January 11, the USDA released their numbers with a bearish tone. March Corn Futures opened heavily down at their exchange imposed daily limit of 40 cents per bushel. Soybeans and Wheat also took on heavy selling pressure as Corn was locked limit down.

Corn stored in all positions on December 1, 2011 totaled 9.64 billion bushels, down 4% from the same time last year. Off-farm stocks were 3.47 billion bushels, down 8% from last year. Soybeans stored in all positions on December 1, 2011 totaled 2.37 billion bushels, up 4% from a year ago. Off-farm stocks, at 1.23 billion bushels, are up 3% from December 2010. Wheat stored in all positions on December 1, 2011 totaled 1.66 billion bushels, down 14% from a year ago. On-farm stocks are estimated at 405 million bushels, down 26 percent from last December. Off-farm stocks, at 1.25 billion bushels, are down 10% from a year ago.

These numbers had a negative effect on grain prices into the rest of the week. Corn Futures settled the week below their major price support of 6.00 per bushel for the first time in three weeks at 5.9950. Soybeans futures witnessed heavy selling below their major price support of 12.00 as traders saw the break as a selling opportunity. Prices ended the week at 11.5825, the lowest close since Christmas week. Wheat Futures continued to trade lower but bounced off their price support of 6.00 per bushel to close the week at 6.0225.

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Risk Disclaimer: Past performance is not indicative of future results. Futures trading involves substantial financial risk. Views of guest commentators do not represent those of  Article intended for educational purposes only and not meant in anyway as a solicitation to buy or sell certain securities.  Please consult your personal financial advisor before using this information for your own trading purposes.