05-01-2013 06:35 AM - edited 05-01-2013 03:22 PM
At the close:
The July futures corn contract closed 3 cents lower at $6.46. The July soybean futures contract finished 26 cents lower at $13.73. July wheat futures closed 10 cents lower at $7.21 per bushel. The July soymeal futures finished $10.10per short ton lower at $404.40. The July soyoil futures ended $0.37 lower at $48.65.
In the outside markets, the NYMEX crude oil is $2.96 per barrel lower, the dollar is lower and the Dow Jones Industrials are 89points lower.
The July futures corn contract is trading 1/2 of a cent higher at $6.50. The July soybean futures contract is trading 24 cents lower at $13.74. July wheat futures are trading 6 cents lower at $7.25 per bushel. The July soymeal futures are trading $7.30per short ton lower at $407.20. The July soyoil futures are trading $0.69 lower at $48.53.
In the outside markets, the NYMEX crude oil is $3.06 per barrel lower, the dollar is lower and the Dow Jones Industrials are 68points lower.
Alan Brugler, President Brugler Marketing & Management LLC, says maybe the fundamentals are ignored
because the US crop doesn't matter anymore?
"Big production expansion in the Black Sea for wheat. Big jumps in corn and soybeans in South America. A couple week planting delay that "might" hurt final US yields doesn't move the meter when you have record supplies of corn and beans available for export at South American ports. Then there was the Purdue (?) piece that reminded us that Indiana didn't plant until May 15 in 2009 and had a record yield.
He adds, "The funds clearly are less enamored of commodities, with a stock market at record highs begging them to move capital in that direction. They'll come back to ag for the summer when there is a story, but right now it looks to me like they are doing the typical Wall Street thing of "sell in May and go away". If they are selling the commodity ETF's, that will take a lot of long futures positions out of the market."
We're falling hard & fast Wednesday. Who believes this lower market is all about weather? Or, are you in the camp that this is all about the huge amounts of spec money that has left the ag markets. Should we have seen this coming? Are you telling me that in past years you have seen a May 1 5% planting rate NOT move this market higher. And are you telling me that you have seen a May 1 5% planted rate, 12-18 inches of snow for Minnesota and parts of Iowa on May 1 and tight supplies on May 1 NOT move this market really higher? I don't believe it. In any other timeframe of ag markets, that bullish list of fundamentals I just laid out would rocket this market to the moon. So, what is really going on here?
Maybe the big money has exited stage left. Maybe Jim Meade's point, earlier today, carries some water. This market's tail is being wagged by people that don't know a corn cob from a telephone booth? sniff....sniff...Something doesn't smell right.
What say you?
Energy Information Agency reports Wednesday that last week's U.S. ethanol production totaled 857,000 barrels vs. 853,000 in the previous week. Ethanol stocks were estimated at 17.0 million barrels vs. 17.6 million a week ago. The trade expected the opposite.
At the open:
The July futures corn contract is trading 6 cents lower at $6.43. The July soybean futures contract is trading 20 cents lower at $13.78. July wheat futures are trading 12 cents lower at $7.18per bushel. The July soymeal futures are trading $5.50per short ton lower at $409.00. The July soyoil futures are trading $0.72 lower at $48.50.
In the outside markets, the NYMEX crude oil is $2.07 per barrel lower, the dollar is lower and the Dow Jones Industrials are 55points lower.
--Overnight, liquiation of long positions kept pressure on the markets.
--Plus, a new extended weather outlook shows drier conditions for the Midwest states. We'll get a refreshed version of the weather models around 11:00am today.
--Asia, Europe, and the FSU regions of the world are on Holiday.
--No deliveries against the May corn, soybean or soymeal contracts, with today being First Notice Day.
Early calls: Corn is seen 5-7 cents lower, soybeans 10-12 cents lower, and wheat 7-9 cents lower.
Overnight grain, soybean markets=Trading lower.
Crude Oil=$1.20per barrel lower.
Wall Street=Seen opening higher, ahead of the Fed Reserve's policy announcement and U.S. manufacturing data.
World=Asia/Pacific stocks were higher and Europe's stocks are higher.
More in a minute,
05-01-2013 07:30 AM
Mike, just got a call from a brother in nw ia. heavy snow there. winter storm warning for fairmont mn up into wisconsin. i hope this "drier" forecast you mention comes true. Might just be some NWS forecasters going short. Naw, that would never happen!
05-01-2013 07:39 AM
Come on guys, what's wrong with the trade running the market limit up on monday, then tanking it all week, only to have snow fall this weekend where all the planters are rolling this week, then run the market limit up next Monday?!? JK. I do think we will see a bigger jump in planting on Monday's report than I initally thought a few days ago. Whether that planting was the right thing to do or not only time will tell. It takes some real discipline to not go when it's fit when you have a less than ideal forecast facing you. Here in ECIL it looks like the rain in the forecast is diminishing somewhat, knock on wood, but we are still a couple days away from going. Ground is still saturated. Yesterday and today will help with that. Have a good one. Gotta put finishing touches on planter and FC tractors.
05-01-2013 07:48 AM
I dont' see why anyone expects tick by tick or even week by week consistency in markets traded as heavily as the commodities. People with money a world away and with different objectives make trades based on criteria we don't agree with or even understand. But, when the market touches a point we expected or perhaps only hoped for, do we act? Do we hedge?
Producers are by nature speculators. Producers on a site like this one have no need for speculation - they are long the commodity. They can get selling prices by calling up the elevator. So, producers on here are by default at least somewhat interested in hedging. Hedging commodities is not a tick by tick business. Pick a price or time and pull the trigger. What is all the excitement about?
Oh, some of you are Texas hedging? That is not hedging. That is not speculation. That is madness.
05-01-2013 10:36 AM - edited 05-01-2013 10:42 AM
One market analyst describes the market by simply stating this:
"This is China POMI data and demand fears, today. Spec money is leaving commodities as index keeps getting weaker. That is part of it. But, the selling today seems tied to the release of the Chinese POMI data. I think that is when the market started to break down. The ethanol data brought corn back to where it is now. It is the way the market is these days. Smiley faces one day and frowney faces the next. Makes it real hard."
Yet another analyst with The Hightower Report says, "The weak action in the agricultural commodity markets is mostly due to negative sentiment towards the broader-commodity complex. This is the first day of May so capital allocation and positioning will be active. The trade in corn and wheat is countervailed by positive weather influences such as cold temperatures in the west that may adversely impact wheat and wet conditions across the Corn Belt to end the week which will shut down most corn planting. Keep in mind, a planters have been rolling in IA, NE, and parts of MO since last Friday. The soybean action reflects a weaker fundamental picture with weak cash markets in Brazil, signs of an increase in exports this month, and the potential for more soybean acres next crop year. Strong crush margins in the US and steady meal demand will keep the downside limited for old crop soybeans."
What do you think?
05-01-2013 10:47 AM
If the trade thought that we would have less ethanol then that just proves how dumb the trade is as a whole. (no offense guys) Why would ethanol stocks be lower? Gas demand is down, ethanol margins are good, why not grind alot of corn?!?!?!?!
Its all about money supply and flow,, commodities lost their shine,,,,
05-01-2013 11:20 AM
The idea that spec money is leaving commodities - and that is a log term negative - is a real hoot and proves that ideas about how the market behaves is a very shallow concept to many. This is non-news of the most laughable type. I'd compare it to Hollywood gossip that tries to make everything not important very important for readership value.
If spec money is leaving the 'market' it makes little difference in the long run on price. Every contract is balanced and the physical need/production makes the market. The idea that spec money leaving = a lower market price after than as compared to before is a misleading and mistaken idea (and the reverse is also true).
On the other hand the ebb and flow of spec money isn't going to change. It's contracts on a margin and money can flow in and flow out. 'Where' would the money go? Equities? Then why did it ever come to commodities?
Time to get over the idea spec money is any more than increased volatility. And it isn't quitting commodities. Why would it? Money can be made going up OR going down. If computer algorithms can eke out money with volatility then this market should be perfect. If volatility is too big a risk then if grains are going to be depressed then the market should be perfect. Or are the big boys losing more money than usual and can make more money elsewhere? Ha! Then individuals don't stand a chance. If the money is going elsewhere then where is it going?
The whole 'Specs are leaving commodities ' is a big sham for media types and some few analysts to write about. It will be forgotten.
05-01-2013 11:24 AM
Ethanol production was up and stocks lower, this would imply increased ethanol demand. More demand for ethanol and diminishing supply of corn should lead to higher old crop corn prices. In this crazy Chicage money pit, seems like anything can happen. Forget fundamentals!