10-01-2012 06:55 AM - edited 10-01-2012 02:43 PM
I found corn piling up in southwest Iowa. This pile has 1.7 million bushels in it. A tarp will be placed over the pile today, according to the elevator manager.
--In September, Brazil exported a record 3.5 million tons of corn.
At the close:
The Dec. futures corn contract settled 1/2 of a cent higher at $7.56. Nov. soybean futures contract finished 40 cents lower at $15.60. Dec. wheat futures are trading 20 cents lower at $9.07 per bushel. The Dec. soyoil futures contract finished $1.45 lower at $51.21. The Dec. soymeal futures contract closed $12.40 per short ton lower at $474.50.
In the outside markets, the NYMEX crude oil is $0.27 per barrel higher, the dollar is higher and the Dow Jones Industrials are 63 points higher.
The Dec. futures corn contract is trading 1 1/4 cents lower at $7.55. Nov. soybean futures contract is trading 38 cents lower at $15.63. Dec. wheat futures are trading 27 cents lower at $8.75 per bushel. The Dec. soyoil futures contract is trading $1.55 lower at $51.11. The Dec. soymeal futures contract is trading $10.80 per short ton lower at $476.10.
In the outside markets, the NYMEX crude oil is $0.23 per barrel higher, the dollar is higher and the Dow Jones Industrials are 156 points higher.
Al Kluis, Kluis.com analyst, says the weakness today in soybeans and wheat is on increased farmer selling and slow demand.
"It is Golden Week in China where virtually all businesses and the stock and commodity exchanges are closed. This translates into a slow week for export demand," Kluis says.
Regarding the corn market, you also have some hedge pressure, a lot of investors will wait till day 3 or 5 of the first quarter to start buying, he says.
"I expect money to flow in the grain markets later this week. The weakness is a good opportunity to buy - not the time of the year to sell," Kluis says.
Soybeans fall 34¢, corn only slightly higher.
--NYSE Liffe Exchange in London halted trading this morning, due to a technical problem in Paris. Trading will resume later today.
--Celeres estimates Brazil's 2012-13 soybean crop at 79.08 million tons.
At the open:
The Dec. futures corn contract is trading 6 1/2 cents higher at $7.62. Nov. soybean futures contract is trading 14 cents lower at $15.86. Dec. wheat futures are trading 9 cents lower at $8.93 per bushel. The Dec. soyoil futures contract is trading $1.03 lower at $51.62. The Dec. soymeal futures contract is trading $4.60 per short ton lower at $482.30.
In the outside markets, the NYMEX crude oil is $0.64 per barrel higher, the dollar is higher and the Dow Jones Industrials are 147 points higher.
USDA announces that 100,000 mt of optional origin corn has been sold to Mexico Monday.
The trade is looking for corn to be 55% harvested in this afternoon's USDA Crop Progress Report.
From a trip that took me from central to southwest Iowa, I witnessed a lot of corn already out of the field and a lot of harvest action underway, this weekend. I might have seen just as much soybean cutting as corn harvesting. The southwest Iowa yields are pretty reasonable.
BIG pile of corn: One elevator I stopped into this weekend, has a corn pile with 1.7 million bushels on it. The location manager says the corn will be tarped today. With today's prices, that's a whole lotta money sittin outside. Area farmers are being offered a 16¢ under basis. Demand for the corn is still pretty good. Right now, most farmers are choosing deferred pricing DP.
Early calls: Corn 4-6 cents higher, soyheans 10-12 cents lower, and wheat 8-10 cents lower.
Overnight grain, soybean markets=Trading mostly ower.
Crude Oil=$0.49 per barrel lower.
Wall Street=Seen opening higher, as European stocks rebound and investors await another speech by Ben Bernanke.
More in a minute,
10-01-2012 08:13 AM
Mike...... Wondering as to where you are getting the info that most farmers are "DP ing" corn...... I am hearing that a lot is being offered up for sale?...... Just curious....... p-oed
10-01-2012 08:21 AM
Hope they get that tarp on ASAP.
Something elevators tend to hate- big outside supplies without ownership. With DP they have 100% of the quality risk with limited upside.
On the other hand don't have the cash tied up, but money is free these days anyway.
10-01-2012 08:29 AM
Can you explain further how deferred pricing works? In other words, I was told farmers are choosing to DP beause they are still bullish. So, what is usually the arrangement on a DP contract? Is it a contract? How is the arrangement structured? What are the storage feed like, higher than any other deal?
Thanks for sharing,
10-01-2012 09:00 AM
I'll just weigh in on what I know about DP'ing Grain. When you DP grain you give the elevator the right to move the grain if they want it. unlike open storage where you where suppose to be able to get the same bushels you hold in. In other words if I hauled in 1000 bushels in Oct on open storage then the elevator has to keep 1000 bushels in storage to back that up. DP I think they have to be insuranced or bonded to do the same thing. Some say that DP isn't the safest for farmers if the elevator would go bankrupt but what are you going to do about it. And I think like Iowa has different laws vs. Nebraska in DP grain.
My local coop requires you to DP wheat, that way if they have a big fall crop they don't have to have a bin dedicated to keeping unsold wheat around. Usually the DP contract is for one year. Sometimes they renew it sometimes they don't want to.
Their ususally is more of a charge for DP grain. Like my wheat I believe it was 5 cents for the first month then 3.5 per month after that per bushel.
Thats what I know, If I'm wrong let me know.
10-01-2012 09:53 AM
Out here DP means that title to the grain passes to the owner of the company in return for the ability of the farmer to price later in return for not having to pay storage costs.
In volatile times DP can be a risky strategy. The farmer is deprived of the protections of state contingency funds set up to reimburse farmers for grain lost in storage due to business failure or any other loss in storage the site owner can't cover, generally speaking.
Why a farmer would choose the DP strategy in these markets is unknown to me unless that's a requirement for getting the right to deliver during harvest and there are no options. Savings on storage may be illusory in the end.
10-01-2012 10:35 AM - edited 10-01-2012 10:36 AM
There are some elevators out here in SE NE that that is the only way they do business, Farmers don't have a choose of "open storage" anytime of the year.
Like the river terminal in Neb. City, I don' t think there isn't any open storage anymore.
The way that Palouser describe it is the way my contract reads. the title of the grain passes to the company and then you can price later.