06-25-2012 06:31 AM - edited 06-25-2012 04:45 PM
After the close:
USDA rated the U.S. corn crop just 11% excellent, equal to last week. For soybeans, the good/excellent rating dropped by 3% points to 53%.
One analyst says, "The crop is getting smaller week by week, thus we are adding risk premium to the market. This will get dialed into the market very quickly as the crop shrinks. Watch for signs of the supply not shrinking.The acres and stocks report looms large. "
Meanwhile, Alan Brugler, Brugler Marketing & Management, says the Brugler500 index rating for corn, which is a weighted composite of all 5 ratings categories, dropped to 349 this week. That is the lowest reading for this week since 1988. The 20-year average is 373. Clearly Indiana is having the biggest problems, with 12% of the crop there rated very poor (VP). Missouri and Colorado are also showing some stress, and tell us the problem isn't just on one end of the Corn Belt.
The Brugler500 index for soybeans dropped to 342 from 349 last week. The USDA report is consistent, with IN and MO again showing the largest % of crops in VP condition.
Winter wheat ratings actually improved from last week, due to a big improvement in the winter white states. The Brugler500 index rose to 346 from 341.
At the close:
The July corn futures settled up the 'daily limit' of 40 cents at $6.31, while the Dec. contract settled at the daily 'limit up' (40¢) at $5.94. The July soybean contract ended 40 1/2 cents higher $14.83, while the Nov. 2012 contract ended 50 1/2 cents higher at $14.26. The July wheat futures closed 48 3/4 cents higher at $7.22. July soyoil futures closed $1.43 higher at $51.17. The July soymeal futures finished $9.70 higher at $431.70.
In the outside markets, the NYMEX crude oil is $0.58 per barrel lower, the dollar is nearly unchanged and the Dow Jones Industrials are 138 points lower.
Note: Keep in mind that since we closed 'limit up' today, tonight's limits will be expanded to 60¢. That is wild to think we can move this market $1.00 from 9:30 this morning to 5pm tonight. Wow!
UPDATE: New weather modelsa show better chances of Midwest rains between June 28-July 4.
Dec. corn is still limit-up! That's 40¢, if you had forgotten. What a day. And some traders see plenty of upside this week.
Meanwhile, as prices rise, the trade sees this afternoon's Crop Progress lowering crop ratings by at least 2%-3% vs. a week ago.
The July corn futures trade 33 cents higher at $6.24, while the Dec. contract trades 'limit up' (40¢) at $5.94. The July soybean contract is trading 43 cents higher $14.85, while the Nov. 2012 contract trades 57 1/4 cents higher at $14.32 3/4. The July wheat futures are trading 44 cents higher at $7.17 1/4. July soyoil futures trade $1.74 higher at $51.48. The July soymeal futures are trading $12.50 higher at $434.50.
In the outside markets, the NYMEX crude oil is $1.40 per barrel lower, the dollar is higher and the Dow Jones Industrials are 173 points lower.
Though July hasn't hit that level, Sep., Dec, and March corn are all locked at the daily high trade limit of 40¢. One analyst says, "This is all weather here today. China bought some beans and that all helps. Plus, there is a chance for bullish data on Friday for corn and beans, corn stocks lower than what USDA is implying and planted area in beans not up as much as had been talked. But, overall this is weather. We went home with a cool, if somewhat dry forecast, but now we are hot and dry and we are getting into a big time weather market. Should be fun! Seen specs on both sides, some buying in and some booking profits on longs. No farmer action, unless they are covering shorts, and the commercials not doing much either. Basically, not a lot of selling interest around. Outside markets are negative to grains prices. But, with the weather the way it is we do not care."
Dec. corn briefly hits limit-up!!!!
At the open:
The July corn futures trade 28 cents higher at $6.19 1/4, while the Dec. contract trades 36 cents higher at $5.90 1/2. The July soybean contract is trading 36 cents higher $14.78 3/4, while the Nov. 2012 contract trades 49 cents higher at $14.24. The July wheat futures are trading 26 cents higher at $6.99. July soyoil futures trade $1.22 higher at $50.96. The July soymeal futures opened $11.80 higher at $433.80.
In the outside markets, the NYMEX crude oil is $1.19 per barrel lower, the dollar is higher and the Dow Jones Industrials are 158 points lower.
--USDA announces that China bought 120,000 mt of U.S. soybeans Monday for 2012-13 delivery.
--The Ukraine 2012 grain harvest is estimated to be 20%-30% below a year ago.
--Hot temperatures for Europe are seen through September.
--AgResource noted in its daily newsletter to customers Monday that corn is seen as the CBOT floor leader this week. "The market closed last week trading a 159-162 BPA US corn crop yield, but the stressful upcoming weather pattern looks to drop that total to 154-156 BPA.
Such a yield is 10 BPA below the USDA WASDE corn yield forecast, which would knock off some 850-900 Mil Bu off of 2012 US corn production," AgResource analysts say.
Early calls: Corn 15-17 cents higher, soybeans 30-31 cents higher, and wheat 15-17 cents higher.
Overnight grain, soybean markets=Trading sharply higher.
Crude Oil=$0.65 per barrel lower.
Wall Street=Seen lower, as hopes fade, regarding this week's EU Summit helping that part of that world's debt crisis.
More in a minute,
06-25-2012 07:17 AM - edited 06-25-2012 07:19 AM
06-25-2012 07:52 AM
The hot weather for the next two weeks means one thing. Instead of worrying about finding corn for Aug/Sept use, that has now been changed to finding corn for the next 15 months. Those early planted acres, some of which was contracted for Aug/Sept, may now be sold at the lows---that is going to sting if the crop is really short for those guys.
Have to laugh at those that think $6 dollar corn is panic level. If farmers couldn't handle the wild increases in equipment, seed and fertilizer, rent, etc, we would be gone along time ago.
06-25-2012 08:11 AM
around here, the hog guys have been spending money like it was being printed in their confinement buildings, even with $6 to $7 corn pretty normal for the last couple of years. Ethanol plants have been spewing steam into the atmosphere and paying positve basis on old crop corn for many months. Same with soybeans, the basis at the plants has been positive.
Really hard to believe that $6 to $7 corn will cause any "demand destruction" at this point and even a run up to the $8 level would seem to not be a huge percentage swing right now. Not saying this will happen but just pointing out that there seems to be some slack and profit in these huge users of corn.
If any end users did need cheap corn, they have had many months to hedge themselves. Only the idea that they were going to buy it for $3 has probably kept them from hedging. That is the risk of gambling on grain surpluses.
We were flooded in southern Minnesota in my area, with huge lakes in fields after seven inches of rain in a couple of days. Now it looks like a blessing as all of the lighter ground without irrigation is starting to roll the leaves. All the replanting due to the flood seems like a minor ordeal now compared to widespread drought.
06-25-2012 08:16 AM - edited 06-25-2012 08:20 AM
Jeff Caldwell is scouting crops in southcentral Iowa today. If you don't know, Jeff is about 7.0' feet tall. Wouldn't you say Jeff? Just kidding. But, he is probably 6'3 or more. Anyway, this photo shows some very tall corn. This corn is in the tassel stage needing plenty of water. In the last ten days, this area has received rain. But, the market wants to know if it will get any in July? Tall corn, like this crop in the picture, will require a lot of moisture to fill out those ears. Will it get it?
Thanks Jeff. Oh, and yes, you are oustanding in your field.
06-25-2012 09:37 AM - edited 06-25-2012 09:38 AM
I would look for an announcement later this week or next that China has purchased a large amount of corn. I'm guessing that they will have covered their 2012 needs at least and probably some of 2013. We may have seen the lows for a while.
06-25-2012 09:51 AM - edited 06-25-2012 09:57 AM
Nearby up 28 BUT basis eroided by 7 cents this morning so net is only up 21 locally. The games they have begun.
I have waited this long, braved many doubts, had experts say unkind things about my marketing (probably because they did NOT get a cut).
Think I'll play this game of chicken just a little longer.
06-25-2012 09:55 AM