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Community Manager
marketeye
Posts: 2,891
Registered: ‎05-03-2010
0

Floor Talk December 9

[ Edited ]

VIDEO Feature: Dave Hightower says the farm markets face the most bearish outlook in a very long time.

Marketeye visits with Hightower

 

Mike

-------

At the close:

The March corn futures settled 6 cents lower at $5.94 1/4. The Jan. soybean contract ended 25 1/4 cents lower at $11.07. The March wheat futures settled 1 cents lower at $5.96. The January soymeal futures contract settled $7.40 per short ton lower at $276.90. The January soyoil futures closed $0.85 lower at $49.60.

In the outside markets, the NYMEX crude oil is $1.13 per barrel higher, the dollar is lower and the Dow Jones Industrials are up 198 points.

 

Mike

--------

At 1pm:

The CME Group announced Friday, regarding more money being released back to MF Global's former customers.

"Today the Bankruptcy Court approved the MF Global Trustee's motion to make a third interim distribution of MF Global customer funds. This distribution, which is expected to begin next week, enables the Trustee to distribute 72 percent of customer funds previously frozen, including trapped account balances, dishonored checks, and distributions with respect to warehouse receipts and other customer property at MF Global."

Meanwhile, yesterday, one of the folks that testified in front of House Ag Committee said this new money may take two weeks to get into the hands of the customers.

 

Mike

------

At mid-session:

The March corn futures are trading 12 cents lower at $5.88 1/4. The Jan. soybean contract is trading 26 1/2 cents lower at $11.06. The March wheat futures are trading 7 1/2 cents lower at $5.89 1/2. The January soymeal futures contract is trading $6.80 per short ton lower at $277.50. The January soyoil futures are trading $1.17 lower at $49.28.

In the outside markets, the NYMEX crude oil is $0.06 per barrel higher, the dollar is lower and the Dow Jones Industrials are up 152 points.

One analyst says, "Lots of spec type selling, some liquidating longs and others getting short again.  There were stops hit on the way down but those seem to be taken care of now.  Charts are showing a negative appearance again for the short term anyway.  The reports themselves were generally in line with trade expectations, but offered no real reasons to buy so no one is buying.  Lots of bearish ideas about the EU debt situation not helping buy side attitudes at all.  Just seems like spec and fund selling and the funds are getting short in corn and getting shorter in the rest."


Mike

--------

At 10:25am:

Farm markets fall double-digits.

 

Mike

------

At the open:

At the open, the March corn futures opened 5 3/4 cents lower at $5.94 1/2. The Jan. soybean contract opened 14 cents lower at $11.18 1/2. The March wheat futures opened 9 1/2 cents lower at $5.87 1/4. The January soymeal futures contract opened $3.00 per short ton lower at $281.30. The January soyoil futures are trading $0.45 lower at $50.00.

In the outside markets, the NYMEX crude oil is $0.02 per barrel higher, the dollar is lower and the Dow Jones Industrials are up 120 points.

 

Mike

------------

At 7:40am:

As a result of a bearish USDA Report, the floor traders are saying that Early Calls for the commodities are seen lower. For corn and wheat, the opening calls are 20-30 cents lower and 15-20 cents lower for soybeans.

 

 

Mike

--------

REPORT REACTION:

--One analyst says, "The report for me is neutral to negative.  USDA showed less demand and an uptick in ending stocks across the board, but this should have been expected given the slow export pace so far, and so I am not sure how big a surprise it is.  Ending stocks hold tight for corn and beans anyway which should limit down side.  Trading interest might stay thin as we wait for the Europeans.  Calls -2 to -4 corn and wheat, -5 or a bit more beans ."

--Another grain analyst says:
"Bearish across the board both US and Global. Less demand in all categories domestically and larger crops globally.
Especially bearish to wheat which will drag on corn.
Only hope is funds take some profits on short wheat."

 

--Another floor trader says:

"The USDA lowered exports for beans and wheat… they lowered feed use by 5 million bushels. For corn…so carryouts increased across the board… acreage and yield adjustments will be left for the Jan report…
Calls are lower.. across the board but I have not seen any point values yet… the projected  world carryout for soybeans increased by 1 mmt…and we have 9 mmt more beans in the world than this time last year… so the report highlights why we have had such a tremendous break in beans this fall…the large crop last year in South America has meant they have been very competitive this fall..couple that with a slower import pace in general for the World and we have seen weekly sales out of the US falling by as much as 400 million bushels behind last year… the USDA has license to write bean exports down further..
There has been recovering rains this fall in U.S. southwest and in eastern Europe to raise some optimism on wheat production next year in the Northern hemisphere…and there is a rain event for this weekend in Southern Brazil and Argentina that will be closely watched as we have been trending drier there recently..
We come into this report with a large short in beans.. so I would expect a lower start to be fairly well supported… this reports surprises no one who has followed the numbers on a weekly basis ..still think the up or down next week is a function of South American weather and the US dollar…
In general, corn can continue to struggle if we don’t write the crop down on the Jan report… current ethanol production margins are negative for the new calendar year… Chinese corn prices have slumped lower lately and a commercial import margin into coastal Chinese bids.. suggests corn needs to move to 5.50 price additional business. Assuming they are being economic…the ethanol margins to encourage extended coverage would also need to see numbers in the 5.40-5.50 range to find a 4 to 5% ROI….Worried corn will find more stocks on Jan report with only incremental adjustments to yield… this would leave lack luster trade intact with a little more downside possible…"

 

Mike

------

At 7:30am:

 

USDA Says:

 

Corn ending stocks=848 million bushels

Soybean ending stocks=230 mb

Wheat ending stocks=878 mb

 

Corn exports left unchanged.

 

WORLD

Corn ending stocks=127.2 mmt

Soybean ending stocks=64.5 mmt

Wheat ending stocks=208.5 mmt

 

 

Mike

-----------

At 6:35am:

Early calls: Subject to the USDA's December Supply/Demand Report this morning at 7:30am CST. Watch for numbers and trade reaction right here, immediately after the report is released.

 

Overnight, corn and wheat trade up a few cents, soybeans are off a penny. 

 

Trackers:
Overnight grain, soybean markets=Trading mostly higher.
Crude Oil=$0.42 higher.
Dollar=Lower.
Wall Street=Seen trading higher as 17 countries decided overnight on a new treaty to combat its debt crisis. The treaty will invoke stricter oversight of national budgets. Not all 27 countries in the Euro agreed to the terms.

World Markets=Asia/Pacific lower, and Europe's stocks trade mixed.

 

More in a minute,

 

Mike

Advisor
jrsiajdranch
Posts: 2,100
Registered: ‎05-03-2010
0

Re: Floor Talk December 9

MOrnin Mike kinda odd that with the euro implosion over night that the dollar is weaker. In this topsy turvy world nothin should surprise us tho!

 

I'll bet we printed some more money and then loaned it to them at a negative interest rate!

Senior Contributor
Canuck_2
Posts: 3,699
Registered: ‎05-10-2010
0

Re: Floor Talk December 9

Did the Euro 'implode'?

Story I read was they agreed to stricter controls except a few that do not use the Euro for their currency.

Knowledge is knowing a tomato is a fruit.
Wisdom is knowing not to put it in a fruit salad.
Community Manager
Jeff_a_Caldwell
Posts: 946
Registered: ‎04-29-2010
0

Re: Floor Talk December 9

Just chatted with Don Roose from U.S. Commodities. He said the big takeaway from this morning's WASDE numbers for him lies in the fact it exposes the growing competition the U.S. now faces on the world market, especially for corn and wheat. South America may get all the attention when it comes to our competitors abroad, but countries like South Africa, Russia and China have watched the market move higher over the last couple years and are throwing more skin into the game, basically. That attention on the world's other producers is likely a new fundamental to the grains and could keep a lid on things so we don't see a jump in prices like we did in June of 2010, Don said. 

 

So, what do you think? Is it now "Us against the world" in these grain markets now? 

-----------------------------------------------
Jeff Caldwell
Agriculture.com Multimedia Editor
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Veteran Advisor
Mizzou_Tiger
Posts: 2,183
Registered: ‎11-02-2010
0

Mike..........

[ Edited ]

USDA never misses an opportunity to amaze.......question for some traders if you get a chance........

 

US corn is lower than a year ago, soya and wheat are higher, but not by huge margins when you consider the margins of demand that are being cut in expectations..........

 

World stage has some loftly production numbers...........and even there corn and soya are lower than a year ago.......and wheat somewhat higher..........

 

I guess in the tunnel of today's view........its bearish.........but how is this outlook much different than a year ago.......

 

I still contend that this demand going in the tank thing is all on paper..........

 

I look at acres and demand............and then what a report like this will do to prices...........we are setting up for more volatility..........breakeven for corn is now $4-5........not $2.........and soya are not even being considered in high rent districts because they don't pan out even in $12 plus range............EDIT:  the high rent districts had this figured a year ago, so don't expect more corn acres.............THIS IS GOING TO GET GOOD..........

Senior Contributor
jec22
Posts: 410
Registered: ‎06-03-2010
0

Re: Floor Talk December 9

Well, if we were in a normal world, one would look at the the report and see the USDA predicts corn prices to trade in the 6.50 range and say we have over discounted this crop.  But there is nothing normal in the world. 

I am curious how this phantom corn pile thing works out.  How did they count the Ohio corn crop?

 

Seems like the MF Global fraud is a gift that keeps on giving.  Took a lot of players out of the game for a while. 

So. IA
Senior Contributor
p-oed Farmer
Posts: 396
Registered: ‎05-04-2010
0

Re: Floor Talk December 9

Mike..... Not to be critical  of the one trader that you talked to but.......(Always a but)...... It would appear that he is talking his position a bit?...... Using my crystal ball (HEE HEE)....... I would expect that most of this report has been baked in and I will bet that there are a lot of people that will be very happy to buy a big down move today...... Unless the world in the EU implodes (and this story is getting real old)...... Where will the bear food come from?....... It isn't just the bull that needs to be fed...... Bears need it too....... AS always we will see in a little while...... p-oed

This information is worth what you payed for it...... :~)
Community Manager
marketeye
Posts: 2,891
Registered: ‎05-03-2010
0

Re: Floor Talk December 9

p-oed Farmer,

 

No problem. Which trader's comments do you refer to here?

 

Thanks,

 

Mike

 

Senior Contributor
p-oed Farmer
Posts: 396
Registered: ‎05-04-2010
0

Re: Floor Talk December 9

[ Edited ]

 

 

This is what I was refereeing to.......

 

--Another floor trader says:

"The USDA lowered exports for beans and wheat… they lowered feed use by 5 million bushels. For corn…so carryouts increased across the board… acreage and yield adjustments will be left for the Jan report…
Calls are lower.. across the board but I have not seen any point values yet… the projected  world carryout for soybeans increased by 1 mmt…and we have 9 mmt more beans in the world than this time last year… so the report highlights why we have had such a tremendous break in beans this fall…the large crop last year in South America has meant they have been very competitive this fall..couple that with a slower import pace in general for the World and we have seen weekly sales out of the US falling by as much as 400 million bushels behind last year… the USDA has license to write bean exports down further..
There has been recovering rains this fall in U.S. southwest and in eastern Europe to raise some optimism on wheat production next year in the Northern hemisphere…and there is a rain event for this weekend in Southern Brazil and Argentina that will be closely watched as we have been trending drier there recently..
We come into this report with a large short in beans.. so I would expect a lower start to be fairly well supported… this reports surprises no one who has followed the numbers on a weekly basis ..still think the up or down next week is a function of South American weather and the US dollar…
In general, corn can continue to struggle if we don’t write the crop down on the Jan report… current ethanol production margins are negative for the new calendar year… Chinese corn prices have slumped lower lately and a commercial import margin into coastal Chinese bids.. suggests corn needs to move to 5.50 price additional business. Assuming they are being economic…the ethanol margins to encourage extended coverage would also need to see numbers in the 5.40-5.50 range to find a 4 to 5% ROI….Worried corn will find more stocks on Jan report with only incremental adjustments to yield… this would leave lack luster trade intact with a little more downside possible…"

 

p-oed

 

This information is worth what you payed for it...... :~)
Advisor
hardnox604008
Posts: 5,518
Registered: ‎05-14-2010
0

Re: Floor Talk December 9

I'm short the euro so not surprising that I woke up around 5 am et; just in time to see it rally 100 pips off the lows in about 20 minutes.

 

Nice to have with your morning joe.

 

Currently back in the lower half of the range.

"People of privilege will always risk their complete destruction rather than surrender any material part of their advantage. Intellectual myopia, often called stupidity, is no doubt a reason."

J.K. Galbraith