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11-27-2012 06:50 AM - edited 11-27-2012 03:31 PM
At the close:
The Dec. futures corn contract closed 12 3/4 cents higher at $7.64. Jan. soybean futures contract settled 24 cents higher at $14.49. March wheat futures finished 24 cents higher at $8.88 per bushel. The Jan. soyoil futures contract settled $0.83 higher at $50.41. The Jan. soymeal futures contract settled $6.50 per short ton higher at $433.40.
In the outside markets, the NYMEX crude oil is $0.59 per barrel lower, the dollar is higher and the Dow Jones Industrials are 72 points lower.
Meanwhile, I have made a new contact with a Brazilian marketing analyst in Chicago. He says the trade is just catching up with the factors we have been talking about all day on this site. He offers up some good thoughts on Brazil and Argentina. In his own words:
In short Mike - no, the market (prior to today) had not really started to build all those factors you mentioned into prices... it has been a very slow recognition by market participants of the aforementioned issues...
The crop in SA at this point is in good shape aside from the excessive wet areas in ARG
Paraguay and Southern BR got the rains they needed this past weekend... and should be ok without rain for another 7 days or so...
maps are bringing in more rains in that timeframe, so I do not think it will be much of an issue. However, the wetness in ARG, yes, it is an issue planting pace is far behind normal at this point and will be delayed even more by continued rains in the coming 2 to 3 weeks many will be forced to plant short crop beans which have much lesser yield potential and the amount of areas that will plant this short crop beans will bring down the national average considerably.
Many are estimating yields in ARG in the 44-45 bpa range, when in reality yields may come in around the 41-42 bpa range not to mention the potential damage to their corn crop so in other words, BR looks good right now with a few dry spots here and there, but nothing major... (at this time) does have the "potential" to bring in over 82 MMTs of beans... but... that is assuming normal weather for the next month or so... which as you and I both know... is never safe to assume.
It is an El Niño year... and that can help it the lowest estimate I have seen for BR is 79 MMT and barring any serious weather issue by the end of Dec... it would be reasonably safe to assume it will produce at least that.
ARG i don't see producing more than 53 MMTs with the potential do have a sub 51 MMT crop if wet weather persists for too long.
It's interesting to note that although many Midwest locations are reporting higher cash basis prices, central Illinois basis has not strengthened much, according to the Dow Jones Newswire. Apparently, end-users are shipping in corn from the western Corn Belt and other spots other than central Illinois.
The soybean market has jumped 24 cents. Wheat is up double-digits too.
Nice rally underway.
At mid-session, the Dec. futures corn contract is trading 4 cents higher at $7.55. Jan. soybean futures contract is trading 20 cents higher at $14.44. March wheat futures are trading 17 cents higher at $8.80 per bushel. The Jan. soyoil futures contract is trading $0.64 higher at $50.22. The Jan. soymeal futures contract is trading $6.20 per short ton higher at $433.10.
In the outside markets, the NYMEX crude oil is $0.19 per barrel lower, the dollar is higher and the Dow Jones Industrials are 11 points lower.
One analyst says, "The soybeans and wheat markets are leading the charge today on two issues.
"One, China is actively buying bean oil from the U.S., lending to thoughts of improved bean exports to crush for its oil and meal. Two, Chinese trade groups are projecting that country will double U.S. wheat imports to satisfy demand shortages and wheat for the feed ration, as well," he says.
This came after talk yesterday that Argentinas wheat harvest underway was showing big yield losses after heavy rains hit during key yield development time, he says.
"Argentine wheat is the current fresh harvest after bad harvest projections out of Australia and Russia," he says.
At the open:
At the open, the Dec. futures corn contract is trading 2 cents higher at $7.50. Jan. soybean futures contract is trading 14 cents higher at $14.38. March wheat futures are trading 10 cents higher at $8.74 per bushel. The Jan. soyoil futures contract is trading $0.59 higher at $50.17. The Jan. soymeal futures contract is trading $3.70 per short ton higher at $430.60.
In the outside markets, the NYMEX crude oil is $1.22 per barrel higher, the dollar is higher and the Dow Jones Industrials are 47 points lower.
Let's step back and take a look at this, folks. Ukraine is set to implement a wheat export ban Dec. 1. Now, there is talk Ukraine will have to halt corn exports by spring. There are whispers of Russia having to slow grain exports next year. Yesterday, I mentioned that a Ukrainian source tells me this in his own words: "If Russia began sales from its Intervention fund that means that the ban is inevitable. The open question is: when?"
Well, today, guess what? Russia announces that it is selling 62,304 tons of (Intervention) grain.
China, overnight, says it needs 10% more wheat imports next year, after doubling its wheat imports this year. In addition, everytime you turn on your computer, you read about more crop-weather problems from Australia to the U.S. Plains to the corn & soybean fields of Argentina.
Also, have you been keeping up with the soyoil situation. The U.S. exports of this soybean product are through the roof, for this time of the year. The trade says the U.S. needs to raise its soyoil export estimates and lower ending stocks estimates. And that's not all. Guess what? Anytime now, the EPA is set to announce its decision on the 2013 Biodiesel & Advanced Fuel mandate. What's expected? You guessed it, a ramp up of the use of soyoil for biodiesel. The U.S. soybean supplies are already considered tight. We need more soybeans. but, wait, I'm hearing 2013 corn acreage estimates of 100 million. Where will the beans come from to produce more soyoil?
Folks, we have a situation building here. Oh by the way, have you tried to set a fence post, lately, nearly anywhere in the Corn Belt? That's right, it's really really dry down there.
Have you seen the extended weather forecasts for the U.S. Midwest? Not a lot of moisture headed our way.
What I'm trying to say is that as the world reports supply shortages, the outlook to replenish those supplies looks dismal. Has this all been built into the market? I don't think so. The market still believes the U.S. farmer can feed and supply the world. Do you believe that?
I'd be interested in your response. Thanks for sharing.
--Iraq tenders Tuesday for 50,000 mt of wheat from either U.S., Australia, Russia, Romania, Kazakstan or Germany, according to the Dow Jones Newswire.
--China announces Tuesday that it will increase wheat imports by 10% next year.
--Japan seeks 149,481 tons of milling wheat.
Early calls: Corn up 5-7 cents, soybeans 10-12 cents higher, and wheat 5-7 cents higher.
Overnight grain, soybean markets=Trading higher.
Crude Oil=$1.22 per barrel higher.
Wall Street=Seen opening flat with the 'fiscal cliff' concerns taking center stage. Also, a number of reports today will be released: Durable Goods and Consumer Confidence to name a few. Greece's debt issue received good news overnight, as a relief package was agreed upon. That can is at least kicked down the road for the minute, anyway.
World=Asia/Pacific stocks are mixed, and Europe's stocks are higher.
More in a minute,
11-27-2012 08:12 AM
Morning all !
As Mike said , about Argy weather , read this yesterday , As of 11/22 Argy Ag Mis. said they estimated that 59% of corn was planted --- that is about 3 weeks behind last year , corn in Argy can be planted in Dec. So that will push back harvest till Apr/May === Will that add to demand for US corn ?
Also they lowered Estimated area planted by 310,000 hectores to 4.66 . Wonder what that will do the the USDA estimate for them ?
11-27-2012 08:39 AM - edited 11-27-2012 08:41 AM
I've just learned something very interesting. In fact, this may be the first report on this news. My source in Ukraine tells me this morning that on Nov. 23, Ukraine obtained the quota (2 mln tons) for exporting corn to China. This is the first time Ukraine has ever exported corn to China. He says, "The Ukrainian government is anxious to obtain credit for $4.0 billion and expects to pay it off by exporting corn to China over several years."
Hmmm...I find this very interesting. China is certainly seeking out other options for its corn purchases.
11-27-2012 08:49 AM
Thank you for the update, Mike. Supply and demand should move the market, but the market is using many factors in moving price. I think right now available money is the more important. If you talk to 10 investors in the last few months. 9 will tell you, lowering their risk is the top reason for changing investments. The present prices for grains look high to investors, just check some 5 year charts. I believe prices will not rise until true shortages start to happen.
11-27-2012 08:56 AM - edited 11-27-2012 08:58 AM
Wow Mike......thanks for bringing it this AM.......
Does this mean Red Rock is in the chute and we are getting ready for an 8 month ride.......
You know my stance.........peak corn and ROI vs max yield and production.......screwing with the balance........
11-27-2012 09:01 AM
11-27-2012 09:26 AM
Here's an interesting note on the increased value of soybeans in Brazil.
In the southern Brazil state of Parana, 65.6% was the increase in the price of soybeans in one year. According to data from the state Department of Agriculture and Supply (Seab), a bag of soybeans worth, on average, U.S. $ 41.08 in November 2011 and today is worth U.S. $ 68.04, according to an article in Gazata do Povo newspaper.