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01-26-2012 06:21 AM - edited 01-26-2012 05:52 PM
South America Harvest Update:
Reporter colleagues in Brazil checked in today to file this report. In Mato Grosso, farmers are looking at a bumper soybean crop in 2012, according to Gazeta do Povo reporters on the annual Crop Expedition Tour. In northeast Mato Grosso, farmers just starting harvest season are reporting yields of 55 bags per hectare vs. 48-50 bags a year ago.
In Parana, soybean harvest season is just beginning. Soybeans in that southern Brazilian state have suffered from timely rainfall. In the past two weeks, rainfall has been plentiful, but it's too late, field reporters say. In Parana, early soybean production estimates of 14.9 million metric tons have been dropped to 12.8 mmt. For corn, the Parana farmers are expected to harvest a crop of 4.6 mmt vs. 5.86 mmt estimate earlier in the season, according to Gazeta do Povo's Crop Expedition Tour.
At the close:
At mid-session, the March corn futures closed unchanged at $6.34 1/2. The March soybean contract settled 9 1/4 cents higher at $12.22 3/4. The March wheat futures ended 12 1/4 cents higher at $6.53 1/2. The March soymeal futures settled $2.50 per short ton higher at $323.60. The March soyoil futures closed $0.55 higher $51.94.
In the outside markets, the NYMEX crude oil is $0.48 per barrel higher, the dollar is lower and the Dow Jones Industrials are down 33 points.
At mid-session, the March corn futures trade 7 cents higher at $6.41 1/2. The March soybean contract is trading 16 cents higher at $12.29 1/2. The March wheat futures are trading 14 1/4 cents higher at $6.55 1/4. The March soymeal futures are trading $4.40 per short ton higher at $325.50. The March soyoil futures are trading $0.53 higher $51.92.
In the outside markets, the NYMEX crude oil is $1.15 per barrel higher, the dollar is lower and the Dow Jones Industrials are up 28 points.
At the open:
At the open, the March corn futures trade 9 1/4 cents higher at $6.43 1/4. The March soybean contract opened 10 cents higher at $12.24. The March wheat futures opened 10 3/4 cents higher at $6.52 1/4. The March soymeal futures opened $2.70 per short ton higher at $322.30. The March soyoil futures opened $0.41 higher $51.80.
In the outside markets, the NYMEX crude oil is $1.60 per barrel higher, the dollar is lower and the Dow Jones Industrials are up 55 points.
USDA Weekly Export Sales Report is mostly friendly.
Corn=1.04 million metric tons vs. the trade's expectation of 750,000 metric tons (mt).
Soybeans= 592,300 vs. the trade's estimate of 725,000 mt.
Wheat=618,700 mt vs. the trade's expectations of 600,000 mt.
Soymeal=126,600 mt vs. the trade's expectations of 150,000 mt.
Early calls: Corn 8-12 cents higher, soybeans 11-14 cents higher, and wheat 11-12 cents higher.
Overnight grain, soybean markets=Trading sharply higher.
Crude Oil=$0.97 per barrel higher.
Wall Street=Seen trading higher as the Fed Reserve announced that it plans to keep interest rates near zero until at least 2014.
Here's a glance at a conversation Marketeye had with a commodities analyst late Wednesday.
Marketeye: Corn seems to be the floor leader. Has the corn market rallied off of the Russia, Argentina talk that both countries will ban exports? And what is your perspective on the likelihood of that? Has the market already built in the drought weather in South America? Or, will that weather premium remain?
Analyst: The feeling that Argentina’s corn crop has been damaged by the drought is continuing to add underlying support to the corn markets. Traders today are specifically reacting to news that wheat exports from the Black Sea region may slow or stop due to inventory depletion caused by the enormous exports this past fall from there, particularly from Russia and the Ukraine. The trade will turn to the US corn markets for feed supplies to replace any loss of South American and Black Sea exports.
Marketeye: The great stand-off between the commercials and the producers is on. What is it going to take to get the grain out of the farmers’ hands this year? $7 corn, or just high 6’s?
Analyst: Basis is so tight corn prices are already near or even above $7 in a few areas, yet sales are slow. Farmers have had a good run and are flush with cash, so they are not motivated to let their current corn inventories go, regardless of price. Farmers this year will focus on the health of the coming year’s crop before they make a decision to sell corn out of inventory, so we’ll have to wait at least until the beginning of the March planting cycle before basis values loosen significantly. The true picture of the health of the crop won’t be clear until pollination, several months later, so basis values could remain high for quite some time.
Marketeye: Have the funds given up on ag commodities as an attractive asset class? It seems they are pulling out more this year vs. last year?
Analyst: Some aggressive traders have lightened up their positions recently, but asset allocators are looking harder and harder at the agricultural sector as a portfolio diversifier, especially the easily accessible big grains like corn, soybeans and wheat, and they are clearly beginning to include these in their tactical allocation models. Interest in the agricultural sector will likely increase over time, regardless of short-term money flows.
Now, feel free to weigh in with your perspective. What say you, in regards to the analyst's responses?
More in a minute,
01-26-2012 06:40 AM - edited 01-26-2012 06:45 AM
Did we have an export sale? What's pushin grains this morning?
sorry, you answered as I posted.
A pretty nervous market still----I expected steadier(on facts) after the report jitters.
Guess we still got that "lack of onfidence" issue on US data.
01-26-2012 06:40 AM
Investors are lightening up their investments in the ag markets because the Equities are up significantly. We have rallied in Soybeans a bit but no where near the levels of previous year.
01-26-2012 07:02 AM
You bet. I think OptionEye hit it on the head this morning when he says the Fed Reserve's intentions to keep the rates low will cause inflation and that is positive longterm for commodities. The smart money is going long commodities overnight and will continue that in the day session. Are you going long with them?
01-26-2012 07:23 AM
The European crisis and MF Global did a number on the corn market last year and I'm surprised that the ARG drought didn't kick in sooner but when peoples confidence are broken like it was in Nov/Dec it takes awhile to build it back up. Then USDA tries to do their own thing in trying to keep inflation in control on Jan. 12 and the market took it with a grain of salt. The "real" indicator has been the rising basis and with corn inventories shorter then last year at this time. I've been long since Dec. and rode the Jan. report stubbornly, we should see $7.50 sometime this spring or summer.
01-26-2012 07:59 AM
01-26-2012 08:51 AM
Its possilbe that maybe the corn bushels just aren't there. How many farmers forward contract what ended up being more then their usually percentage of corn last year. With less bushels to market in 2012 maybe they want to see what happens. If you forward contract 30% and that ended up being 40% of your actually production you have less bushels to sell on the market
Now with the dry weather down south, Concerns over Russian wheat issues, we have ourselves a bull in the corn bit again.
hardly 2 weeks after a bearish report!!!
just a thought