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11-21-2011 06:45 AM - edited 11-21-2011 02:10 PM
At the close:
The Dec. corn futures settled 12 1/2 cents lower at $5.97 3/4. The Jan. soybean contract closed 20 1/4 cents lower at $11.48. The Dec. wheat futures ended 6 3/4 cents lower at $5.91 1/2. The Jan. soymeal futures settled $9.00 per short ton lower at $291.30. The Dec. soyoil futures closed $0.99 lower at $49.89.
In the outside markets, the NYMEX crude oil is $0.74 per barrel lower, the dollar is higher and the Dow Jones Industrials are down 270 points.
All markets are down double-digits. One trader explains the markets this way:
"As you know grains are not only regarded as commodities but as asset classes. European debt crisis is certainly overshadowing the market with a "risk off" mentality prevailing...ie funds raise cash across all asset classes. Fear of recession also translates into less demand for commodities ( less meat consumption means less feed, less travel means less gas means less ethanol etc. Export inspections for corn were good today but in general they have been poor; bean export inspections were bad. Even though stocks use is bullish for next year, USDA carryout numbers have been bearish and the fear is a recession will take the edge off next years stocks use numbers. Finally, we are clearly responding to the dow (- 300), gold (-500) and crude (-180) today. ..RISK OFF."
The Dec. corn futures are down 14 3/4 cents lower at $5.95 1/2. The Jan. soybean contract is trading 19 1/4 cents lower at $11.49. The Dec. wheat futures are trading 11 1/2 cents lower at $5.86 3/4. The Jan. soymeal futures are trading $6.30 per short ton lower at $294.00. The Jan. soyoil futures are trading $1.14 lower at $49.98.
In the outside markets, the NYMEX crude oil is $1.62 per barrel lower, the dollar is unchanged and the Dow Jones Industrials are down 323 points.
One analyst says, ""This move lower for me is almost completely due to the EU situation and the collapse of the debt talks here in Washington. There is little in the world of grains to suggest this kind of a move lower. Volumes still on the light side due to MF and the holidays. This is usually an up week, but the outside markets are saying no to that idea right now. All in all a bad day, spec selling primary I think, and some funds probably trying to cover some calls in other places by selling grains."
At the open:
The Dec. corn futures opened 11 cents lower at $5.99 1/2. The Jan. soybean contract opened 15 1/2 cents lower at $11.52 3/4. The Dec. wheat futures opened 9 cents lower at $5.89. The Jan. soymeal futures opened $5.80 per short ton lower at $294.50. The Jan. soyoil futures opened $0.79 lower at $50.33.
In the outside markets, the NYMEX crude oil is $1.69 per barrel lower, the dollar is higher and the Dow Jones Industrials are down 240 points.
Europe's debt and the U.S. debt concerns are sparking a broad-based sell off.
News & Noise:
--China's October soybean imports were 3.8 mmt, up 2% on year.
--China's Jan-October corn imports are down 36% on year.
--For October, China imported 304,405 mt.
--Egypt bought 240,000 mt of Russian, Ukraine and Kazakh wheat.
Here's a technical look at the March corn futures pattern by Tom White, FutureRoad.net analyst and floor trader. He says:
"We have generally held a bearish intermediate view in this market as we felt that the recent consolidation was part of a fourth wave correction (Eliott Wave Principle). We finally broke out of that congestion as the market held at the top of a triangle on the dailies. Last week, several charts showed the potential for trend line breaks on an intermediate chart (60-minute) and then on a daily chart. These trend-line breaks helped to fuel selling which were then reinforced with negative reversals, a technique developed by Andrew Caredwell. The charts reinforce some of these concepts. However, the “longer-term” weekly charts are still not convincing as to the bearish view. And as we don’t have any short-term objectives (i.e. the trend line break targets have been met and we are holding just above the .786 retracement level), we don’t have a strong bias that the market will continue lower this week. We also think that we will make a move back to 628 at some point during the upcoming week."
Early calls: Corn, soybeans and wheat down 8-11 cents.
Overnight grain, soybean markets=Trading lower.
Crude Oil=$1.50 lower.
Wall Street=Seen trading sharply lower, after the failure of the U.S. 'Super Committee' to decide on deficit-cutting measures. The committee had the weekend to come up with a plan to implement by Nov. 23. It will not meet that deadline. Automatic deficit-cutting measures will kick in as a result of a failed plan.
More in a minute,
11-21-2011 07:10 AM - edited 11-21-2011 07:11 AM
A U.S. leading indicator index is showing economic expansion. The indicator shows:
--An increase in building permits.
--Higher manufacturing hours.
--An increase in consumer and capital goods demand, along with consumer expectations.
Ahh, finally some good news huh?
11-21-2011 07:52 AM - edited 11-21-2011 09:12 AM
The economy is improving, the big question are the government deficits around the world going to destroy that recovery. Many jobs here aren't being filled, I guess they can't compete with Uncle Sam's unemployment checks or lack of a trainable(NOTE, I did not say educated) work force. The focus on the need for a degree, has left some of the best designers and inventors out of the industry. But if you are management with a degree, and you want a justification for a higher salary, you use the degree as a filter to pad your pocket.
I don't know what will happen when the destruction caused by the greed comes to full light. MF Global is no doubt the tip of the iceberg, and to think Corz. was a possibility for Treas. Secy.
So how does it affect marketing? Interesting times we are in. US demand for grains is great. Hogs being fed to higher weights. Cattle consuming more grains has forage is depleted. So until crude drops below 70 bucks, ethanol will roll on. Sugar is tight supply, so despite all the anti corn sweetener bs., demand for it will be strong---not all the world is full of political agenda food critics.
Most interesting, the global deficits are flipping these markets around daily, but the soil moisture deficits are of no concern. I am sure congress can just pass a water stimulus plan and take care of that small issue. The east doesn't have this problem, but out here we borrowed moisture from 2012 to finish 2011. I suppose that makes us modern smart tiger farmers.
11-21-2011 08:05 AM
has been a lot worse..........we are not doing too bad and have to just keep plowing forward...........it takes time......the deficit thing needs attention........
that said the outside macros have been killing this grain market for months...........no direction and grabbing for straws.......problem is all the straws have been bearish.........fundamentals have not changed......
depending on your location, breakeven for 2012 inputs could be as high as $5/bushel with average farm yields.........some will be less, some will be more............we are not buying acres right now........
11-21-2011 08:07 AM
I'm getting the feeling the market is eyeing the demand for wheat that is replacing corn around the world. This could be an interesting dynamic that hasn't gotten a whole lot of attention. Wheat remains unusualy cheaper than corn.
11-21-2011 08:13 AM
Here is an unscientific look at how the economy is doing.
Was at a Santa Claus Parade on Saturday and overheard a couple of men talking.
One was telling how busy they were at their plant. Lots of overtime, he was going into work again after the parade.
Now here is the kicker,
his quote "the Texas plant is swamped so they are sending work up here for us to do"
Sounds like your economy is doing OK in some areas.
11-21-2011 08:16 AM
could you take a quick minute and look at the export chart I put together........and then give me your thoughts..........IMO the only lagger is soya........wheat and corn is rocking........IMO of course
11-21-2011 08:26 AM
so heres my twisted take on this..........I agree we likely see some more downside before basing for a few weeks and then start our climb..........too much headwind.........
as for acres........corn is king right now..........that said as prices drift lower and inputs drift higher, it will become a question of risk, because of COC hits to yields and less productive soils and climates...........as the risk goes up the acres will go down.......
there is a big differene between going from 85M acres to 91M acres...........and 91M to 94M...............
I still think corn is king and all this talk of wheat replacing corn at a rapid pace..........I just dont buy that, maybe alittle, but not earth shattering.........and corn has a limited area of planting success without great risk.........compared to wheat and soya.......
little comment on my export chart to date............IMO it still shows corn and wheat rocking higher.......soya are laggin a bit..........
11-21-2011 08:47 AM