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08-09-2012 06:48 AM - edited 08-09-2012 02:49 PM
INVITE: Grab a cup of coffee and join us this afternoon at 2:30 for a Pre-USDA Report Briefing 'live' from the CME Group floor. Just watch for the thread in Marketing Talk. Dan Basse, AgResource Company and Terry Roggensack, The Hightower Report at 2:30 p.m. CT will discuss the impact of the drought on the latest crop yield projections, how the markets may be impacted by these projections and the key numbers to pay attention to once the reports are released on Friday.
At the close:
The Dec. futures corn contract settled 7 1/4 cents higher at $8.23 3/4. The Nov. soybean contract settled 50 cents higher at $16.31 1/4. Dec. wheat futures close 13 1/2 cents higher at $9.27 per bushel. The Dec. soymeal futures contract closed $16.90 per short ton higher at $494.60. The Dec. soyoil contract settled $0.81 higher at $53.20.
In the outside markets, the NYMEX crude oil is $0.11 per barrel lower, the dollar is higher and the Dow Jones Industrials are 4 points lower.
The Dec. futures corn contract is trading 9 1/2 cents higher at $8.26. The Nov. soybean contract is trading 42 3/4 cents higher at $16.24. Sep. wheat futures opened 9 3/4 cents higher at $9.13 1/2 per bushel. The Dec. soymeal futures contract is trading $17.00 per short ton higher at $494.70. The Dec. soyoil contract is trading $0.49 higher at $52.88.
In the outside markets, the NYMEX crude oil is $0.47 per barrel higher, the dollar is higher and the Dow Jones Industrials are 33 points lower.
One analyst says the soybean rally is based upon the 'shorts' getting scared of an expected bullish USDA Report Friday.
"The 'shorts' have pushed themselves out of those positions. The weekly export sales were not bad, and that helped," he says. Lots of talk of terrible yields on first harvest which is pushing things higher too. But, in the end, people are worried that USDA will show a very low number and they are getting out of the way."
Some farmer-selling is occurring, he says. "And, South American farmer-selling is taking place, on the rally. But, very little selling pressure of any kind, so far today. Some chart-based buying is taking place in the market too," he says.
Brazil's government agency, CONAB, pegs its country's corn production at 72.78 million metric tons. CONAB pegs the 2011-12n soybean crop at 66.40 mmt. NOTICE: This is the first time in many many years that Brazil will produce more corn than soybeans. This is awfully telling, in my opinion.
There was a question, earlier, regarding the breakeven level for ethanol plants. Here is what I found out, as I picked the brain of a well respected floor trader:
"For the blender, ethanol is cheaper than gasoline. But, it varies by month. But, ethanol needs to rally another 20-30 cents just to be par with gasoline, because every 10 cents up is 30 cents to break even in corn/ethanol crush. So, if ethanol rallies another 30 cents to ration blenders, than corn needs to rally another 90 cents. Break even, in spot futures this week, is 7.40 providing general support. So, raising ethanol 30 cents would justify breakeven support around 8.30 corn futures. To fully ration out fixed cost and shut down the most efficient ethanol plant would require another 80 cents above that, putting spot futures near 9.10. These are all rough numbers and subject to change with a lot of moving parts, but that is the scale of pricing. I am putting out to clients at this time that $7.50 looks “cheap”, $8.30 is fair with the idea we could move to $9.10 as we ration tight supplies," he says.
jriajdranch, I hope this helps.
At the open:
The Dec. futures corn contract is trading 11 cents higher at $8.27 3/4. The Nov. soybean contract is trading 23 cents higher at $16.04,. Sep. wheat futures opened 11 cents higher at $9.11 per bushel. The Dec. soymeal futures contract opened $8.30 per short ton higher at $486.00. The Dec. soyoil contract opened $0.47 higher at $52.86.
In the outside markets, the NYMEX crude oil is $0.02 per barrel higher, the dollar is higher and the Dow Jones Industrials are 7 points higher.
Let's talk about Friday's USDA Report. Here is what I have gathered:
Last month Trade Expectations Friday
Corn yield 146 bu./acre 126.2 bu./acre
Old Ending Stocks 903 mill. bu. 945 mill.
Next Yr. Ending St. 1.138 bill. bu. 651 mill. bu.
Soybean yield 40.5 bu./acre 37.2 bu./acre
Old Carryout 170 mill. 157 mill. bu.
New Carryout 130 mill. bu. 115 mill.
Fresh Sales: USDA says China bought 165,000 mt of U.S. soybeans for 2012-13 delivery Thursday.
USDA releases neutral-to-friendly Weekly Export Sales Thursday:
Corn=1.103 mmt vs. the trade's expectation of 1.0-2.0 mt
Soybeans=300,600 mt vs. the trade's expectaion of 200,000-450,000 mt.
Wheat=665,000 mt vs. the trade's expectation of between 400,000-650,000 mt.
Early calls: Corn 5-7 cents higher, soybeans 7-9 cents higher, and wheat 7-9 cents higher. Weekly Export Sales will be released at 7:30am. The trade expects:
Corn=1.0-2.0 million metric tons
Overnight grain, soybean markets=Trading higher.
Crude Oil=$0.48 per barrel higher.
Wall Street=Seen opening mixed. Questions arise as to when the European Central Bank would provide a bailout package for its countries. Hope is fading a bit.
More in a minute,
08-09-2012 07:17 AM
Mornin' Mike. Have you heard any new breakeven numbers on E with the rising crude price? Seems to me that crude has risen about 6 bucks a barrrel since corn hit $8. Just seems like E would still be profitable at these levels.
Thanks and Keep up the good work.
08-09-2012 07:42 AM
Nice rains, all across the eastern Corn Belt, this morning. Take a look at the latest Freese-Notis Weather Inc. radar:
A drought buster? I know, it's a silly question for a dead corn crop. Should boost pod-sizes on the beans and help them fill out, on the ones that haven't aborted.
08-09-2012 09:01 AM
Still searching for an answer for you on ethanol break-even. But, maybe this announcement, this morning out of Garnett, Kansas, answers your question?
Press Release: East Kansas Agri-Energy, LLC in Garnett, KS recently announced plans to temporarily suspend production operations beginning October 1st, 2012.
The company cited the prolonged drought conditions as having a negative impact on availability of corn and rising feedstock prices as the main reasons for the halt of production. Additionally, the demand for gasoline is down resulting in surplus ethanol stocks. These challenges led to the Company to reduce plant production capacity by 20 percent on April 1, 2012, according to the press release.
08-09-2012 10:28 AM
...Ok, the market is up hard today....covering the shorts, or buying the rumor? Do we sell the fact tomorrow...or follow the pattern of the last few weeks of a higher Fri. close and early gain Monday followed by a sell off? I think that plate of cookies in the kitchen doesn't stand a chance today and tomorrow.......