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11-01-2012 06:44 AM - edited 11-01-2012 03:05 PM
Here's a bit from the wire on why the overnight gains are starting to peter out: No big, fresh follow-through on the rumors of more export sales in Thursday's numbers, and some "light" profit-taking after a more bullish day Wednesday.
So, does that "light" profit-taking turn "heavy" later on today? Shaping up to be a bit of a testing day today for this floor some traders are saying are under current price levels. What do you think? Is it too early to tell whether that's going to ring true or not?
Well, we're still looking bullish as the opening bell's clanging: As of about 10 minutes ago, Dec. corn's 4 cents higher at $7.59 3/4, January soybeans are 17 higher at $15.65 3/4 and Dec. wheat's 5 1/4 higher at $8.69 3/4.
Good conversation here on the ethanol side of things. I wrote up this quickie on a recent report from Darrel Good over at the University of Illinois, basically showing that we're rationing, but not quite enough. Will these ethanol plant closings amount to more rationing, or will, like some say, other sectors of demand pick up the slack, namely export demand? How inelastic are those 2 sectors in relation to one another?
Got a new video here today from OptionEye Scott down on the floor in Chicago. Sounds like there's a good case for a floor under current price levels. What do you think?
Hope everybody survived the ghosts and goblins last night and are getting November started off on a positive note...the grains sure are! Those gains we saw yesterday -- driven mostly by talk of new fresh export demand as a couple previous exporters (Argentina and Ukraine) consider closing off exports sometime down the road soon because of supply worries -- are sharpening heading toward Thursday's session:
- January soybeans are 20 1/2 higher at $15.69 1/4
- December corn's 7 1/4 higher at $7.63
- December wheat's 8 1/4 higher at $8.72 3/4
So, anybody out buying padlocks to lock up the bins this morning, or are these prices just part of this week's seesaw? What else is on everybody's mind this morning?
11-01-2012 06:52 AM
As I have not sold one bu for months now and had NO part of this years crop presold, I am looking at swapping a few bushels for $$ at these very good exchange rates.
11-01-2012 06:55 AM
I am in Hong Kong this week and can say no shortage of money flowing around here!
When it comes to ghosts and goblins there is no shortage here either, it was amazing how many people were out and dressed up, I am talking in the thousands, all having fun. From young kids to the much older, we were all having fun. Plenty of $$ being moved around, mostly thru adult beverages, so doing what we can over here to support the farmers!
Thanks for the great "B" team reports.
11-01-2012 07:25 AM
11-01-2012 08:25 AM
One more ethanol plant was shuttered till better returns return.Thats was in Albion Ne a couple others were closed and another was sourcing from 90 miles a way because afotoxins in local corn.
11-01-2012 09:26 AM
For every ethanol plant that closes, another one that can source the corn will increase production....The demand for ethanol will continue and it will be filled by someone.
11-01-2012 11:17 AM
Just got the ethanol production numbers for the first two months of the crop year. Production is down 7% YOY. November is expect to be down over 10% YOY. We will make 370 million gallon less ethanol the first quarter of this crop vs. first quarter of last crop year.
11-01-2012 11:29 AM
Scott is one of few that now accepts that food demand is not optional and the state of the economy is fairly irrelevant to that fact and the prices that ultimately be charged. Which means farmers are lucky enough to sit among the wreckage of the rest of the economy and offer unwanted advice about how THEY pulled themselves up by their bootstraps (and federal subsidies) and criticise others for not going through more pain to 'fix' things. And here is where I part company with Scott.
I DO believe that cleaning up the aftermath of Sandy WILL be a stimulus. Much more effective than the Fed, $ for $. A lot of jobs at all levels of expertise from cleaning up with a shovel to expert engineering advice needed to evaluuate and design repairs and replacements. People will be hired at all levels of training. Materials will be sent into the area, bought from all over the country and traansported in. Wealth was destroyed but jobs created, and insurance or public money to replace public infrastructure and facilities flow into the community. More families will have more to spend, and most will be spending it to buy products and services needed by family's that are middle class, making decisions as to who have the best products for their needs.
The Fed is basically confined to the financial sector even though part of it's mandate is job creation when the economy is down. Sandy will result in currency flow in communities. The financial sector is sequestering the money it gets from the Fed in return for assets because they are afraid to invest in the community. Wealth is concentrating in Treasuries, bonds and other paper w/ tax advantages because they aren't going to invest at the community level because they are afraid that the working class/middle class is tapped out - AND THEY ARE! They COULD loan for only a few percent - BUT THEY WON"T.
What it comes down to is the Fed is trying to do what they do because the CONGRESS isn't doing anything. AND THEY WON'T. Congress won't do anything because they think it's to their political advantage if things remain in a stalemate. In other words - screw the middle class. They are nothing but a stepping stone to power and useful poster boys for how helpless they are and enable some to blame someone else. Yeah, it's sick. And dysfunctional.
Sandy was an artifact of natural forces and laws of physics, but I'll guess we see better results from Sandy on the economy than from our 'leadership'. And that's damm sad. And it won't get any better, based on all the lies and manure and Kool Aid being spread.
11-01-2012 11:32 AM
What percentage of total ethanol production is that reduction?
My understanding so far is that the fringe plants where corn is very hard to source are the ones reducing or shutting down.
11-01-2012 11:33 AM - edited 11-01-2012 11:38 AM
last year it appears the grind was 5B according to the sheets...............
THIS YEAR ALREADY THE USDA WASDE numbers have 4.5B.............thats a reduction of 1.35B gallon using 500M bushel times 2.7 gal/bu..........
so lets use your 370M gallon for a quarter........thats a reduction of 1.48B.........
now remember a drop in ethanol production means a drop in available DDG's........and lets just use 30% of the lost 500M grind........is 150M bushel needed to fill that gap..........
also remember USDA WASDE took down feed use...........
fact of the matter is..........ethanol is still going to grind........and likely grind a lot closer to 5B than 4B............and lost DDG's have to come from somewhere..........
and the balance sheet is already stripped down too much...........with demand too low and the supply sheet is as good as it gets and likely goes lower.........
throw in SA issues.........
throw in world wheat issues and what appears to be an impending train wreck in the NA WW crop...........
feed grains have a story.........
EDIT: Ray J has made a few comments on the other site........and even he realizes corn is tight............these conversations from this summer come to mind...........
BTW Ray, how are things............