11-12-2012 06:11 AM - edited 11-12-2012 02:31 PM
At the close:
The Dec. futures corn contract settled 21 cents lower at $7.17. Jan. soybean futures contract ended 46 cents lower at $14.05. Dec. wheat futures finished 29 cents lower at $8.69 per bushel. The Dec. soyoil futures contract closed $0.37 lower at $47.40. The Dec. soymeal futures contract settled $18.30 per short ton lower at $431.40.
In the outside markets, the NYMEX crude oil is $0.27 per barrel lower, the dollar is lower and the Dow Jones Industrials are 12 points higher.
The markets are really struggling today. If you are a buyer, you're liking this. Speaking of buyers of grain, take a look at what happened to this U.S. business when it built its business model on buying foreign corn vs. a U.S.-origin:
See full story here:Global grain market? You betcha
The Dec. futures corn contract is trading 23 3/4 cents lower at $7.15. Jan. soybean futures contract is trading 43 cents lower at $14.07. Dec. wheat futures are trading 26 cents lower at $8.60 per bushel. The Dec. soyoil futures contract is trading $0.66 lower at $47.11. The Dec. soymeal futures contract is trading $15.20 per short ton lower at $434.50.
In the outside markets, the NYMEX crude oil is $0.18 per barrel lower, the dollar is lower and the Dow Jones Industrials are 14 points lower.
The wheat, corn, and soybean complex are all getting hit hard, down over 3.0% Monday. Here are a few relevant thoughts on this soybean market, according to one of my favorite CME Group floor sources. Let me what you think too. In his own words:
"I would remind the farmer that the last five years have seen a boom in domestic soybean demand, unprecedented in fact, thanks to the bio-fuel mandates. But, markets are adjusting and foreign consumers and producers have not stood still… barriers to GMO product have come down.. acreage in SA and the FSU have grown so much that the former Soviet Union is now a significant player in the feed grain market on a good year adding 30 million tons, pre-Soviet (1991) they were a net importer.
Brazil and Argentina continue to expand both corn and bean acreage. This year, the Brazilian has the potential to surpass the US in total bean production. We produced 80 million tons this year, and Brazil alone is forecast to produce 80-83 million tons. There is no “la Nina” or “el nino” anomaly this year in weather, and so far they are staying on track. Early problems with flooding in Argentina could actually add to bean acres.
And finally, bio-fuel mandates will be mature by 2015 and current ethanol pace with smaller fuel-base thanks to higher café standards and poor economy means that ethanol capacity has most likely maxed. This is starting to feel like a more traditional market subject to more weather and supply than enamored with demand.
Feb Outlook may highlight large new crop carryout in corn, making me want to sell new crop corn now. If I am bullish corn or beans on old crop stocks or logistics, I am bull spreading July.Nov or July.Dec.
But, low water on Missouri River and reservoir is threatening to shut barge traffic below St. Louis. This could hamper winter exports for old crop… watch the St. louis river guage.. at – 4 there is a threat of river closure… it's current forecast to get to that level by Dec 10."
What do you think?
At the open:
The Dec. futures corn contract is trading 10 cents lower at $7.27. Jan. soybean futures contract is trading 40 cents lower at $14.10. Dec. wheat futures are trading 14 cents lower at $8.71 per bushel. The Dec. soyoil futures contract is trading $0.77 lower at $47.00. The Dec. soymeal futures contract is trading $11.70 per short ton lower at $437.00.
In the outside markets, the NYMEX crude oil is $0.16 per barrel lower, the dollar is lower and the Dow Jones Industrials are 92 points lower.
Soybeans are down 36 cents, on the Globex platform this morning.
Early calls: Corn 1-2 cents higher, soybeans 18-22 cents lower, and wheat 6-8 cents lower.
Overnight grain, soybean markets=Trading mostly lower.
Crude Oil=$0.23 per barrel lower.
Wall Street=Seen opening higher, with investors still concerned about the looming U.S. 'fiscal cliff' and global news. Greece approved a budget Sunday, that's good news. Japan's economy contracted in the third quarter, that's bad news for the stock market.
World=Asia/Pacific stocks are mixed, while Europe's stocks are mostly lower.
More in a minute,
11-12-2012 06:52 AM
very interesting comment you posted on the corn possibility yesterday. Seems that corn is strong at these levels. I had buys at 727.5 but never got that low. Lets see what today brings us.
11-12-2012 07:43 AM - edited 11-12-2012 07:46 AM
Yeah, those comments from Tom are usually pretty solid. He has spent a trading career watching the technicals.
Meanwhile, I see where the soy products dropped their daily limits overnight, on the Dalian Exchange. Will this inspire more soybean imports, as China's crush margins improve. And if so, where will the Chinese continue to buy a fresh flow of soybeans? Can the U.S. soybean 'store' hours keep getting extended?
11-12-2012 12:29 PM
My thoughts with regards to soybeans and the current situation might be very biased, but one really has to look at what China is doing. China most likely has cancelled some beans the past couple of weeks. Prices have fallen a buck or more in that time frame. China has thus far imported record quantities of soybeans the past month. Why would they import record quantities at prices much higher than they currently are? China traditionally is a master at marketing. Bean prices are now lower than they were before the drought rally had caught much traction. They more than likely get aggressive in here sourcing beans because there's absolutely zero risk premium built into the market at this time. If things fall apart in SA, they bought at the low. If SA raises a record crop, they cancel these purchases which will send the world prices even lower. I don't know what the typical spread is between U.S. bean price and China bean price, but it's right at six bucks now. This seems like a rather wide spread. Cash will eventually lead the futures price around by the nose. I doubt these current prices buy many farmer owned beans.
11-12-2012 01:20 PM
Good thoughts. And it's your last sentence of your post that started my initial thought of asking the floor trader to weigh in. I have farmers asking me if they should sell now, before more damage is done. I say there has to be a South American weather rally coming (maybe many days away) and (to your point) China will likely keep buying.
Note: For those reading this site for the first time, I always remind folks that I am not an adviser.