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02-24-2011 06:58 AM - edited 02-24-2011 02:08 PM
At the close:
May corn futures closed 5 3/4 cents lower at $6.96 1/2. The
soybean contract settled 2 1/4 cents lower at $13.29 1/4. The May
futures ended 15 3/4 cents lower at $7.82 1/2. The May soymeal
futures settled $1.20 per short ton lower at $354.90. The May soyoil
futures settled $0.42 lower at $55.28.
In the outside markets, the NYMEX crude oil is $0.85 per barrel lower, the dollar is lower, and the Dow Jones Industrials are down 44 points.
A breaking crude oil market and lower Dow helped push the grain prices lower Thursday, analysts say. Plus, the USDA Outlook Conference estimate Thursday of the second largest U.S. corn crop since World War II pressured prices. At the same time, traders were shedding 'long' positions. Yesterday alone, 40,000 corn contracts were liquidated.
Matt Pierce, GrainAnalyst.com, and a floor trader is attending the Outlook Conference. He says, "The talk is that farm income is expected to rise dramatically in 2011. Acreage numbers opened a hearty debate over "true" planting intentions with expectations for more wheat due to strong basis in the North. Early water tables showed no threat in Northern states with the South showing slight concern.
USDA pegs average farm price at $5.60 for corn and $13.00 for beans.
Total US acreage up 10 million versus last year to 255 million. This is the largest in 10 years.
Double crop beans between 5-6 million acres is 100% increase year on year. This is expected to boost overall bean production.
Corn yield at 161.7 bu/acre is enormous and questionable. Bean yield at 43.5 (unofficial number not offered by USDA) seems logical and conservative.
Overall the questions remain many with the answers few heading into the planting season."
March corn futures are 6 3/4 cents lower at $6.84 3/4. The
soybean contract is 7 3/4 cents lower at $13.10. The March
futures are 16 cents lower at $7.00. The March soymeal
futures are $3.00 per short ton lower at $348.80. The March soyoil
futures are $0.37 lower at $54.65.
In the outside markets, the NYMEX crude oil is $1.18 per barrel higher, the dollar is lower, and the Dow Jones Industrials are down 82 points.
At the open:
March corn futures opened 1/2 of a cent lower at $6.91. The
soybean contract opened 4 3/4 cents lower at $13.15 1/4. The May
futures opened 4 cents lower at $7.94. The May soymeal
futures opened $3.10 per short ton lower at $353.00. The May soyoil
futures opened $0.90 lower at $55.60.
In the outside markets, the NYMEX crude oil is $1.13 per barrel higher, the dollar is lower, and the Dow Jones Industrials are down 21 points.
USDA Economist released these updated crop estimates at this morning's Outlook Conference:
--2011-12 U.S. corn acres seen at 92.0 million, soybean acres at 78 million.
--2011-12 U.S. Soy Ending Stocks at 160 million bushels.
--2011-12 Soybean crop size at 3.345 billion bushels.
--2011-12 Soybean exports at 1.575 billion bushels.
--2011-12 Corn yield estimated at 164.7 bu./acre.
--2011-12 Corn ending stocks at 865 million bushels.
--2011-12 corn use for ethanol at 5.0 billion bushels. That's 36% of this year's crop.
--2011-12 Corn crop size estimated at a record 13.73 billion bushels, vs. 12.45 last fall.
--2011-12 Wheat crop size at 2.08 billion bushels.
--Total planted acres for 8 major crops seen at 255 million acres.
--2011-12 U.S. agricultural exports at a record $135.5 billion, beating 2008 exports.
--2011-12 U.S. agricultural imports at $88 billion.
Overall, the economist sees supplies remaining tight this year, due to biofuels and demand.
Now, what do you think about these numbers? Too high, too low, not surprising? For some reason, that corn yield number seems high.
Early calls: Corn 3-5 cents lower, soybeans 8-10 cents lower and wheat 3-5 cents lower.
Overnight grain markets=Trading lower.
Crude Oil=$2.92 higher.
Wall Street=Seen opening mixed after another steep losing day yesterday. Crude oil is over $100 per barrel, due to the Libyan violence. Today, the U.S. housing data and weekly energy data will be released.
More in a minute,
02-24-2011 08:07 AM
Looks like the USDA is trying to balance the corn carryout by predicting a record yield. 164.7 bu/ac is a long shot as it would also be a new record US corn yield. They did this last year preicting about 162 and we ended up with an average around 154. Yeah all these new hybrids are very impressive but there are a lot of things that need to happen perfectly with planting dates and weather to even get close to 164.
02-24-2011 08:16 AM
To me....this just confirms that they expect demand to be real strong..... If we drop from the expected "lofty" yields will lead to some real fire works over the next few months.......p-oed
02-24-2011 08:27 AM
The corn yield seems a little high, since most increase acres of corn will come from outside the "corn belt", except the preventive planting acres. I don't believe there will be to much shift away from pasture or alfalfa that hasn't already happened. Both cattle and alfalfa have an excellent price right now. Can the acres of winter wheat out west that hasn't emerged yet be planted to sorghum or corn? Well the weather allow the farmers to get into the fields and plant the corn at proper time this spring? Correct me if I'm wrong but our these number put out by the USDA now just a guess? The trade can trade these numbers but the truth is there isn't enough corn to get us through the summer, my local ethanol plant has a $7.00 bid up for this summer, We could raise as much corn as what the USDA predicts but WILL WE, remains the question. The word IF is the highest priced word in the world when dealing with commodity markets, In order to raise that high of an average yield, you need above average weather throughout ALL of the nation this next summer.
I read another post on another site that the author was in Mexico and some of the corn that froze down there had been tasseling. They have to come to the US for corn at some point I would imagine, I feel bad for the farmers down there, and with that kind of adverse weather patterns in place, having a record high yield seems a little optimistic.
Add to that record cattle on feed at record high prices, the demand for corn is going no where.
especially after the sell off a couple days ago.
if the function of price is to control supply and demand it hasn't done it yet.
02-24-2011 08:53 AM
We are entering the plateau of trouble. While crude will pull corn up with it, at some point we hit the 'big recession' button again. Looks to me like we are going to redo 2008, maybe supersized...meaning the recession will hit most in the global community.
Most countries are in worst shape than in 2008, in regards to debt. We learned next to nothing from 2008, priced a big SUV lately?
I think you play this market like we are doing a 'rerun', If crude can back off in the next week or so, we can hopefully take the danger off the table for now. But all economies are built on cheap energy....and that hasn't changed.
With those numbers this morning, is there still any room for the upside...or did they hit it today? Demand in another issue. Ethanol is probably pretty safe with 100+ crude. So the way to cut demand....is a recession. Copper has already pulled back over $30, signaling a decrease in industrial demand.
We will get higher than most think. I am beginning to wonder if the new grain market model will look like: WWWWWW.
02-24-2011 09:35 AM
I'm guessing 164 is just trendline yield. No one knows the weather this season so what other number would you use . Fall 2010 was perfect, no ruts, fertilizer is down, tillage done. We are in great shape to handle a late spring if we should get one. Lots of new iron out there raring to go. Farmers flush with cash may try new technology quicker. Seems like a good year to set a record. Who"s in! Not to mention we just plain need the grain.
02-24-2011 10:26 AM
You bring up some good points. I agree, the farmer may be more prepared for this crop than in previous years. And add this thought, because there has been some extra forward selling, don't you think there will be less last minute acreage switching? I could see last minute switching if the farmer used the 'board' more. But, most farmers do not use the futures market. So, if you are already committed on sold crop, you will be handcuffed, as far as switching acreage at the last minute, right? Or, is this thinking off-base/
02-24-2011 11:01 AM
Has there really been extra forward selling this year? The reason I ask stems from a couple of reasons. First, we haven't had a bearish USDA report for nearly a year. It seems like every report the USDA has put out since June has been bullish. With that in mind, why sell? Second, the elevators haven't shut off buying like they did in 2008 due to margin call exposure even though we're higher than we were when they shut everyone off. This leads me to believe that there's actually a lot less forward selling this year rather than more. While I can't speak nationally, I know there's been a lot less local forward selling thus far. The local elevator manager was telling me about the margin call they had the other day. I asked if it was a record, and he said not even close. In 2008, they had margin call upwards of four times greater. I also read a report yesterday that stated nearly 50% of producers haven't yet made up their mind on cropping decisions.
02-24-2011 11:29 AM
It would be very interesting to hear feedback from others, regarding your inclination of less forward-selling. You might be right. Let's see how folks respond. It seems farmers are holding on to what's left, but the bulk of it is forward-sold. Again, let's see if we can get some folks to weigh in on this?