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04-11-2012 06:40 AM - edited 04-11-2012 03:25 PM
At the close:
The July corn futures closed 1 1/4 cents higher at $6.27. The July soybean contract settled 3 cents lower at $14.24 3/4. The July wheat futures ended 1 1/2 cents higher at $6.33 1/2. The July soymeal futures ended $2.60 per short ton lower at $388.90. The July soyoil futures closed $0.51 lower at $56.84.
In the outside markets, the NYMEX crude oil is $1.68 per barrel higher, the dollar is lower and the Dow Jones Industrials are up 90 points.
One floor trader weighs in this morning on the markets, SA production, and knee-high U.S. corn. In his own words:
"This week's Brazil's Conab agency's soybean estimate (65.6 mmt) was in line with your estimates. We may still lower Argentine soybean production down a little further, either 45.0 mmt to perhaps a 43.0 mmt, before it's all done. Sugar will take a couple of years to promote and come back, so ethanol will be on-and-off again. The Brazil state of Sao Paulo, where 95% of the ethanol exports land, slapped a 25% duty on imported ethanol a couple months ago. So, it will take time for ethanol bid there to overcome duty. For now, it shut ethanol exports from the U.S. down. At this point, new-crop balance sheet looks too tight to accomodate any weather problems and that can make for new highs. But, most of the loss in SA production has been traded...just can't break much until more is known about US crop potential. It will most likely take a good crop next winter in SA to recover from very tight soy stocks in the world. Meanwhile, early wheat harvest expected here in the US and early corn harvest may keep lid on tight US old crop corn stocks. I have farmers in Louisiana with corn knee-high and wheat that will be harvested by May 15th."
What do you think about the trader's perspective? Early corn harvest a factor? Does the market stay concerned about soybeans until next year's SA crop?
--Japan seeks 320,000 mt of feed wheat and barley Wednesday from various origins for July 31 delivery.
--Japan bought 98,335 mt of feed wheat and barley Wednesday. The origins include: Canada, Australia, U.S. or France.
Early calls: Corn 2-4 cents higher, soybeans 1-2 cents higher, and wheat 7-8 cents higher.
Overnight grain, soybean markets=Trading higher.
Crude Oil=$0.53 per barrel higher.
Wall Street=Seen trading higher, after five days of losses. Earnings season continues today.
World Markets=Asia/Pacific stocks are lower, while the European stocks are higher.
More in a minute,
04-11-2012 09:33 AM
Last year we had some corn that was 'early harvested', and went straight to feedlots and ethanol plants, that had the augers rattling in their bins. The guys at the co-op said that it helped them out, as they didn't have to pile any corn on the ground last year, as the first 100-200K bushels or so that came in, left as fast as it showed up. The offshoot, is that they almost NEED an early harvest this year, or they will run out of corn. So, I have three lines of thought here.
1) Early harvest, with 'normal' production - will still leave things tight, at the end of next year, as new crop had been harvested early to replace shortages of old crop, which should support prices into 2013.
2) Early harvest, with 'big' production, which could tank prices for a few years.
3) Early harvest, with 'short' production, which would require yet one more year of early harvests, which could cause price volitility even greater than we have been having.
Your guess is as good as mine.
04-11-2012 11:31 AM
Locally, our corn basis has widened. Since January, the basis has widened roughly 15-17 cents. I found this interesting until I talked to a couple of ethanol plant managers. They told me that last year when the margins were good that the plants were running full steam ahead not caring much about the conversion. Now, they say that the margins are razor thin. They're running their plants at maximum efficiency rather than maximum capacity. The oldest plant in these parts is said to convert the most gallons per bushel at around 82-85 percent capacity. So, here's my thought: USDA is using a conversion factor around 2.73 gallons per bushel. I'd venture to guess a lot of plants around the country are doing the same as those around here going after maximum efficiency. The old rule of thumb for years has been 2.8 gallon per bushel. This leads me to believe USDA needs to adjust their conversion factor which will add bushels to the carryout potentially.
Up to now, fat cattle prices have been high enough that feeders have been feeding to much heavier weights. I believe we're feeding them 29 pounds heavier this year than last year. Now that feeder cattle prices have declined, I'd venture to guess cattle will be pushed through faster and fed to lighter weights which could then cause feed usage to dip a bit as well.
I do believe locally we'll see 7 buck cash corn again before harvest. What I don't know is where futures will be. Last year, local basis got to 45 over. It might take a buck over to get to 7 this year.
04-11-2012 12:43 PM
Just thinking the maybe 7ish corn be more like 8.50ish cash before year end.
Beans to kpax so to speak carry corn w.
Northern cattle are plenty heavy now ( 100 lbs live per heavier vs 011 ) thus not real current there.
S deal is 20 to 30% less harvest cattle and same wts as 011, so very current there.
Beef tonnage runs same as a year ago, less head, but heavier cattle.
lftb issue took say 15% out of the grind mix, so real tight grind beef supply now.