01-03-2012 06:29 AM - edited 01-03-2012 02:13 PM
At the close:
The March corn futures settled 12 cents higher at $6.58 1/2. The March soybean contract finished 19 3/4 cents higher at $12.27 1/2. The March wheat futures closed 4 1/4 cents higher at $6.57. The March soymeal futures closed $6.10 per short ton higher at $319.20. The March soyoil futures closed $0.69 higher at $53.11.
In the outside markets, the NYMEX crude oil is $3.85 per barrel higher, the dollar is lower and the Dow Jones Industrials are up 216 points.
Corn hits 2-month highs. There's talk on the Dow Jones Newswire about the oats market not following the corn market higher. I know the saying use to be that "Where oat prices go corn prices will go". But, do you think that is still the case? Do you still consider the oats market a leading indicator for corn?
The March corn futures are trading 9 1/2 cents higher at $6.56. The March soybean contract is trading 26 1/4 cents higher at $12.34. The March wheat futures are trading 11 1/4 cents higher at $6.64. The March soymeal futures are trading $5.60 per short ton higher at $318.70. The March soyoil futures are trading $0.88 higher at $53.30.
In the outside markets, the NYMEX crude oil is $3.43 per barrel higher, the dollar is lower and the Dow Jones Industrials are up 214 points.
One analyst is saying the higher markets are a reflection of South America's weather.
"Disappointing rains in southern Brazil and Argentina over the weekend, along with light rains at best for both in the coming week to 10 days are the fundamentals for today," he says.
Specs seem to want stocks and commodities as well, as most markets are up and up kind of big today, he says.
"I guess the macro news is good, too! So lots of spec buying along with very little selling interest yet from specs or producers. A nice way to leave 2011 behind."
At the open:
The March corn futures opened 16 cents higher at $6.62. The Jan. soybean contract opened 31 cents higher at $12.29. The March wheat futures opened 16 cents higher at $6.69. The Jan. soymeal futures opened $8.00 per short ton higher at $317.40. The Jan. soyoil futures opened $1.28 higher at $53.37.
In the outside markets, the NYMEX crude oil is $3.70 per barrel higher, the dollar is lower and the Dow Jones Industrials are up 245 points.
Below, you will see photos of drought-stricken corn from Argentina. These photos show corn around Buenos Aires, the main region of production in Argentina. However, Brazil has problems too, according to a Brazilian agronomist that I talked to this morning. He says, "Brazil's conditions of crop is poor in southern Brazil (RS, SC and PR) and parts of Mato Grosso do Sul, Mato Grosso and Paraguai."
Looks like the funds are heading back into ag commodities. As of Dec. 27, the funds upped their net longs that week by 75,137 contracts to 293,566, according to the CFTC Report.
What do you think? Will the sideline money continue to flow back into this market in January?
"In like a lion". That's the phrase for the first day of trading for 2012. No overnight grain markets, but European grain markets are trading sharply higher and the global stock markets are strong.
Early calls: Corn 10-20 cents higher, soybeans 20-30 cents higher, and wheat 10-12 cents higher.
Overnight grain, soybean markets=Trading sharply higher.
Crude Oil=$2.71 per barrel higher.
Wall Street=Seen trading higher, off of strong global markets and anticipation of U.S. manufacturing data and minutes from the Fed Reserve meeting.
More in a minute,
01-03-2012 06:38 AM - edited 01-03-2012 06:55 AM
Since I've been gone, I know the market has been pricing in the dry South American weather. This morning, I have received more photos from a Brazilian agronomist of that crop weakness in Argentina. I see a a lot of "pineapple-looking" leaves in these pictures. How long will the market trade this SA weather?
Again, these are photos of corn in Argentina. The market is watching for new weather forecasts, to be released this week, regarding January weather for Argentina and southern Brazil.
01-03-2012 06:55 AM
depends on how widespread.
If it is as big an area as ours was, it will support the market into next fall crops, and will have stronger effect since it follows problems here. It would be the 4th crop in the last five with big problems somewhere.
2010 wheat in asia & Australia, 2011 wheat in US. 2011 fall crops in US. Now possibly 2012 corn in SA.
01-03-2012 07:00 AM
Extremely high temperatures, drying winds and lack of accumulated rainfall in December (not exceeding 20 mm in much of the region) has put the corn production on a yellow alert , and farmers agonizing waiting for rain in the coming week.
To the northwest of Pampa core region, where the last millimeters of rain (22/12) were more encouraging, and corn were planted later, the situation is better.
Since Thursday, December 22 weak and isolated rainfall developed over the core region . The accumulated vary significantly by presenting a weekly rain of more than 20 mm concentrated in the strip east of Santa Fe. The most important record is found in Irigoyen (Santa Fe), with a weekly cumulative 32.4 mm. The rest of the region received rain, but below 5 mm, which continues to aggravate the water shortage across the region. Only attenuated the increased demand of water was the lower air temperature significantly lower in this period compared to the previous.
In general, the corn crop is in good to fair condition It is in flowering stage, with many lots already filling, and exhibiting worsening symptoms from water stress. What are they? Pollination failures, loss of basal leaves, loss of leaves that fall short of the pin and above. Also lots that have not formed the ear, and even it is noteworthy that those going to silage plots were not included in the required volume to justify it. The affected crop is the one sown in early September.
The most difficult areas are those that had less rain in November and were marginalized in precipitation of December 22, as is the case of southern Santa Fe and northern Buenos Aires. Typical of the latter is the General Pinto, where the situation is most serious. Corn there is already being cut into forage for not having formed cobs , mainly in the fields sown during September and early October. The same is true in coastal areas of northeastern Buenos Aires. The later planted has a chance to improve but significant rain is needed in less than ten days.
Soy is reaching the stage where you begin to see the pods. In general, the plants have failed to close the lines . On areas more complicated that were sown later, you begin to see spots, areas of drought and loss of plants. In general, soybeans is resisting the adverse conditions of weather, what could be called good to fair condition. However, yield potential deterioration is already in the cards.
The most serious situation is the ability to complete second-seeded soybean plantings . In the southern province of Santa Fe and in several areas of northern Buenos Aires up to 60 to 70% of the plantings are still in the waiting and you have to add many acres planted where germination failed and must be replanted.
The situation at the moment is far from the fierce gravity that had the 2008/09 drought cycle, when the soybean crop was only 31 million tonnes and maize at 13.1 million, about half of the forecasts for the current campaign.
In the west of Buenos Aires the first soybean crop is the most affected, with very little development, loss of plants caused by low humidity and high temperatures necrosing the edges of the leaves and systematic attacks of insects.
Meanwhile, in many areas the sowing of grain, which occupy about 19 million hectares, is paralyzed by the lack of water.
Nationally , farmers have completed sowing 85% of the planned area for soybeans up to date , jan 3rd.
With the situation as it is right now, it is expected a loss of 2 mln tons of soybean crop production for every passing week from now on without timely rains.
Corn field in La Carlota county, Cordoba
Consulting firm Celeres and Abiove from Brazil yesterday kept their initial estimates for the current Brz crop at between 74-75 mln tons ( same as last USDA dec report) .They both have also acknowledged that their estimates are very conservative as due to weather problems they prefer to wait for the actual harvest to gain speed to have a better picture of national yields in the next 30 days . Initial harvest began in the center and west center of BRZ .
During the 3 day wknd , beneficial rains fell in stressed fields of MGDS of up to 40mm , relieving some of the stress and stopped further deterioration. In Parana some rains fell in Sta Catarina and the east of the state. Farmers in Parana estimate that 15-25% on 2/3 of the state crop potential have been lost . In RGDS only isolated showers , some locally heavier ,mostly disappointed again.
The first official figure came out yest from the Chamber of the country , placing the crop at 7,2-7,5 mln tons from an initial estimate of 8,7-9,2 mln tons. The Chamber also acknowledged that figures are preliminary and “mostly subject to further reductions.
Soybean field affected by drought in Alto Parana , Paraguay
In our opinion ….hard , very hard to see december USDA crop estimates of 136 mln tons for the 3 countries combined come true. We continue to believe , as said 15 days ago , that conservatively we lost 8-10 mln tons already in SA .
01-03-2012 07:02 AM
Thanks for supporting Jeff last week. On this South American deal, there is more to this than meets the eye. They are not growing more corn for their health. Yes, some are chasing this corn market. But, the story not being talked about is that Brazil, in particular, needs more corn. Brazil is raising a lot more hogs, a lot more poultry, and their overall demand for corn is rising. If we keep hearing of a crop shortage, Brazil may not only be importing U.S. ethanol, but corn too.
01-03-2012 07:11 AM
Your description and pictures are just as the southern US was on July 5th, If similar you have 6+ dry weeks of 100+ temps coming. The losses will be so great you won't even have to guess.
01-03-2012 07:43 AM
We might actually touch limit up today.......doubt we close there but we could bump our heads......
01-03-2012 07:50 AM
You're right, in a sense. For the last 8-of-10 weeks, the U.S. corn export sales have lagged a year ago totals. But, for the 2011-12 Marketing Year, the corn sales are only 6% behind vs. the USDA's 13% year-to-year drop estimate. So, not bad.
01-03-2012 08:04 AM
The bears are going to have to face it......we had a seasonal harvest correction combined with some major macro issues.......fundamentally nothing changed to bearish, if anything it got more bullish.......we are now seeing things reflect the situation.......