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01-21-2011 06:44 AM - edited 01-21-2011 05:08 PM
After the close:
China bought an additional 8.45 million metric tons of U.S. soybeans Friday, according to the U.S. Soybean Export Council. Some of the purchases are for delivery this year, and some for next year. That brings the total of soybean puruchases, this week, to 11.52 million metric tons. The total value of China's soybean purchases is $6.18 billion.
What do you think, do these additional purchases trump any rain that may fall in Argentina this weekend? What say you?
At the close:
The March corn futures settled 2 cents higher at $6.56 3/4. The March soybean contract closed 2 cents lower at $14.12 1/4. The March wheat futures closed 21 cents higher at $8.24 1/2. March soybean meal futures settled $5.78 lower per short ton at $379.54. The March soyoil futures ended $0.30 at $57.55.
In the outside markets, the NYMEX crude oil is $0.41 per barrel lower, the dollar is lower, and the Dow Jones Industrials are up 61 points.
Informa released new U.S. acreage estimates for 2011:
Corn=90.9 million, up from Dec.'s estimate of 90.76.
Soybeans=76.65 million, down Dec. estimate 77.57.
Wheat=40.99 million, up from 39.502 in De.
Cotton=13.34 million, up 294,000 in Dec.
By the way, private exporters reported to the USDA Friday export sales of 150,000 metric tons of hard red winter wheat for delivery to Jordan during the 2010/2011 marketing year..
The March corn futures are 4 cents higher at $6.58. The March soybean contract is 4 1/4 cents lower at $14.10. The March wheat futures are 14 1/2 cents higher at $8.18. March soybean meal futures are $4.80 lower per short ton at $380.50. The March soyoil futures are up $0.39 at $57.65.
In the outside markets, the NYMEX crude oil is $0.52 per barrel lower, the dollar is lower, and the Dow Jones Industrials are up 41 points.
One analyst says, "The trade wonders if the recent crop failure in the worlds number five wheat exporter Australia will lead to an accelerated buying pattern, especially since the world crops in the US, Canada and Europe don't come to harvest until May.
Profits are put back in long again. as the common theme prevails that corn needs to find a price high enough to convince farmers to plant more acres and slow demand as ending stocks projected at 745 m.b. is about a 40 day supply."
Yet another analyst, "Wheat especially is getting support from the strong USDA sales report, and corn got some support from it too. The weak sister is the beans, which had decent export sales on their own I think beans weakness is the surprise after the big sales to China with more coming today. But the Brazil harvest is starting, too, and that seems to be as big an issue as anything right now. Plus, Argentina had some very beneficial rains this week.
Wheat is the developing bull to me, and corn not far behind, with beans kind of old news now. We will see if I am right.
Informa numbers probably a little bullish for corn and a little negative for soybeans, definitely bullish rice and neutral cotton and wheat.
Volume has been pretty good today. We will get some reports of the rest of the Chinese demand after the close I guess. They bought a lot here this week from what I am hearing."
At the open:
The March corn futures are 1 cent higher at $6.55. The March soybean contract opened 1 1/2 cents lower at $14.12 3/4. The March wheat futures opened 6 1/4 cents higher at $8.10. May soybean meal futures opened $1.90 lower per short ton at $386.00. The March soyoil futures opened unchanged at $57.72.
In the outside markets, the NYMEX crude oil is $0.27 per barrel lower, the dollar is lower, and the Dow Jones Industrials are up 53 points.
Better Argentine weather is pressuring the soybean market, good export sales helps corn and wheat. Also, Informa is expected to release new acreage estimates this morning.
There are some questions ahead of the open:
--Will the funds be buying, following through with yesterday's higher close?
--Will the positive Export Sales push the already low Early Calls into positive territory?
--Will China announce even more soybean purchases today?
--Will the favorable outside markets hold up for the grain trade?
--Has the market fully digested a smaller corn crop in Argentina? Or, is it chewing?
Take a shot at answering, what say you?
USDA releases bullish export sales Friday. For corn, USDA estimates sales at 1.029 million metric tons, higher than trade estimates of 500 to 900,000. Soybean weekly sales were 915,400 mt, above the trade guesses of 450 to 750,000 mt. For wheat, the USDA estimates sales of 1.143 million metric tons, while the trade estimates were 200,000-900,000. For soymeal, the USDA says 232,000 metric tons of weekly sales, above the trade estimates of 50 to 150,000 mt.
USDA will release its Weekly Export Sales Report at 7:30am CST Friday. It was delayed from yesterday.
NEWS: The ethanol industry just got a shot in the arm. The EPA is expected to approve the blending rate of ethanol from 10% to 15% for cars made between 2001 and 2006. The increase had already been approved for vehicles made after 2007. More demand for corn.
--Today, the International Grains Council estimates 2010-11 record-high world rice production, up 2.8% from a year ago.
--IGC says world wheat stocks, for 2010-11, are higher at 185 million metric tons. Also, 2010-11 world corn production was dropped 1.0 million metric tons, with losses in the U.S. and Argentina.
Early calls: Corn down 2-4 cents, soybeans down 3-5 cents, and wheat mixed.
Overnight grain markets=Trading mostly lower.
Crude Oil=$0.32 higher.
Wall Street=Seen opening higher as Google and GE reported higher fourth quarter earnings.
Weather-wise: Hot/dry is the outlook for Argentina's corn and soybean crop until Monday. Brazil is expected to be in good shape, with plenty of moisture near-term. The late planted Brazilian soybeans are starting to show signs of Asian Soybean Rust.
More in a minute,
01-21-2011 08:30 AM
We have not really even started to ration demand like we need to.......we do not have enough acres for corn, wheat, cotton, and soya......S.A. will be lucky to break even......
IMHO we have just begun......
01-21-2011 08:59 AM
thanks for your hard work. I think the big factor today will be the big export number. I do not think that the day today stuff matters that much . I tend to agree with Pal. and I am so glad that he shares with us.
01-21-2011 10:59 AM
News out of D.C. this morning that may influence prices -- EPA's ruled E15 is okay for use in cars and light trucks made from 2001 to 2006 (vehicles made from 2007 to today were OK'd for E15 late last year). Obviously, the ethanol industry's pretty pleased.
So, does this just make the demand picture even tighter for corn? The drought-stressed crops in South America appear to be improving, though. Think these factors offset each other on the demand table?
01-21-2011 12:27 PM
Agree on wheat!! What is the biggest number in recent IGC? Yes it is Russia 23 mln tons up on new crop!!
What is that but a geuss ????
A harder point is that Ukraine have had a very nice winter so far!!
The market will be nervous at least until we have a clue on harvets in France , until that time ,we can loose opportunitys
and get new once a week later.
Corn and feed wheat is another story for me...
Right now I am 40% up on my early bought wheat.....it is greedy to don`t sell , but I keep them
01-21-2011 12:37 PM - edited 01-21-2011 12:39 PM
ok here is my take, its pretty simple, supply is tight and being drawn down each day by a demand that is barely being rationed at best and current production that keeps hitting walls, like Argentina with corn and soya, like Australia and U.S. with wheat, etc..........
Only way to fix this is to ration with higher prices and get more supply.........problem with higher prices is a lot of the 2010 crop was bought at a much lower price and when you cost average that with were we are now margins are still healthy and many end users feel that prices will break at some point so as long as margins are good we will keep buying.......
Acreage as it relates to supply........I pulled some numbers and I will see if the table I paste in sticks......you will see that we do not have enough acres to cover cotton, wheat, corn, and soya.......I have been preaching this since Nov of 2010.......and if we have another sub-par crop performance like 2010 we are in deep $hit........
|Acres in Millions||Total||US|
|Using 160 corn and 44 soya national average, with a 92% and 98% harvest|
|* bare minimium acreage estimate for the 4 core crops and using 1996 total acreage number|
|** 1996 had the highest total US acreage planted from 1990-present at 334|
01-21-2011 01:07 PM
Great information. Let's move this forward. So, this picture of tight supplies, growing demand, needed rationing, and production problems, is getting well seeded in people's brains. Now, what do you do about it, in regards to your risk management plan? How will you adjust or will you adjust your marketing plans for the rest of any old-crop you have on-hand ('09, '10), and new-crop (2011, 2012)? What are some ways folks can get their buy/sell targets wrapped around this scenario?
01-21-2011 01:23 PM
Possession is 9/10ths of the law and physical old crop will likely bring a premium until 2011 N.A. crop comes online.......IMO market has not taken into account the acreage battle yet......look at 2011 harvest prices, they look good, but they don't look like prices that will pull 12M acres out of the wood work.......
Risk include "political intervention" and input cost exposure......its hard not to look out into 2011 and 2012, but I would be hesitant to book much 2011 yet and no 2012 yet......
Guys are going to manage their acres with past success and profits, which means corn will likely get a good chunk of 2011 acreage increase, but does not mean its enough and probably means soya could be in trouble......
01-21-2011 02:11 PM
I pretty much agree with your outlook Tiger.
I think it will take a miracle if we get the supply jitters down all in one year. OK, maybe that overstates it, but the demand is steady, and as I try to remind others, food/feed demand is not like widgets in the manufacturing model. I think that some rationing will occur at higher prices yet, as it did in 2008. But by then ending stocks will not improve to any degree.
The kicker is - if we don't have good crops globally - and especially throughout the Midwest - then it really gets dicey. If one believes that China is looking at importing corn due to trends related to building a middle class, etc., then the pressure is on (and I think their purchases of feed wheat from the Aussies is proof positive of what's coming). It's clear what the trends for importing soy is - and this trend is NOT going to change for years. Temporary plateaus, MAYBE, but not for any length of time.