06-09-2011 06:52 AM - edited 06-09-2011 05:56 PM
After the close:
One technical trader says, "First objective in I'm still looking for 810 .. Not Bad eh and I didn't care what report had to say."
Separately, I also spoke to one of the 'big', maybe even the biggest commercial Thursday. On the issue of whether commercials are sitting on all the corn, this person wasn't really agreeing with that (Are you surprised that was the response?. He agrees it's in the hands of the end-users, but spread out amongst ethanol producers, feeders, processors and the like. He stressed that this year is different than any other in that we agree the usage going forward commands a big 2011 crop. In addition, he hates to see the USDA play 'god' just two weeks before the big acreage report. And then he says it's all about the yields from here on out. The market will really be focused on what the yields will be. We have a lot of weather in front of us before we know yields.
The July corn futures are trading 21 1/4 cents higher at $7.85 1/4, Dec. corn opened 19 1/4 cents higher at $7.13. The July soybean contract is 3 1/2 cents lower at $13.97. The July wheat futures contract is trading unchanged at $7.48. The July soybean meal futures contract is trading $0.70 per short ton higher at $373.50. July soyoil is $0.29 lower at $57.65.
In the outside markets, the NYMEX crude oil is $1.49 per barrel higher, the dollar is higher and the Dow Jones Industrials are up 128 points.
Volatility is reigning here. Wow, the markets look a lot different now than at the open. Corn is just 12 cents higher, soybeans are 6 cents lower and wheat is down 7 cents.
RECORD: July corn reached a new All-time record price this morning at $7.92!
At the open:
The July corn futures opened 26 1/4 cents higher at $7.90 1/2, Dec. corn opened 26 cents higher at $7.20. The July soybean contract opened 9 1/2 cents higher at $14.11. The July wheat futures opened 22 1/2 cents higher at $7.70 1/2. The July soybean meal futures opened $5.70 per short ton higher at $378.50. July soyoil opened $0.09 lower at $57.85.
In the outside markets, the NYMEX crude oil is $0.61 per barrel higher, the dollar is higher and the Dow Jones Industrials are up 68 points.
The floor is very loud!
Here's an early look at how this corn market might trade this morning. On the over-the-counter market, after the report was released, corn traded up 36 1/4 cents at a high of $7.30. It has since fell back to 24 1/4 cents higher at $7.19. So, the traders wanted Dec., not Sep. corn. They stepped in and bought big and then started digging into the numbers from this report and backed off a bit. So, when the floor trade opens, the chance of corn hitting limit up is weakening, one trader tells me.
Here's what I mean about fluctuating Early Calls. Now I'm hearing corn could start 15-20 cents higher, soybeans mixed, and wheat up 5-7 cents.
As always, I'm hearing conflicting reports on the Early Calls. Keep in mind, the calls can change as we move closer to the open. So, now they look like this:
Corn= 15-20 cents higher.
Soybeans= 3-5 cents lower.
Wheat = 3-5 cents lower.
"Very bullish new-crop corn. 695 new-crop corn takes into account lost acreage due to flooding. They cut the percent harvested is what they did, no changes to usage anywhere.
Old crop corn unchanged, and viewed as neutral so it should be a bear spread day where Dec 11 gains on July 11.
The beans were slightly negative across, with a 10 million bushel increase in old that carried over to new.
Both old crop and new crop wheat were slightly tighter than last month. So, a friendly view there. Also look at the extreme strength we are seeing in European wheat this morning.
Story today is how tight new crop corn is and USDA leaves yield unchanged at 158.7. So we have NO YIELD ADVERSITY from that figure or carryout drops even further."
Another trader says:
"Opening calls are higher, but I wonder a bit why. I thought the soy was not all that bullish at all, especially in new crop and I was calling that lower. Wheat was I thought neutral for the US, and the corn was positive. I guess the world numbers are very posuitive. USDA must feel comfortable about dropping corn acres here before the survey. I think corn can probably be 10 higher and maybe more but I see nothing that tells me the others should be. But, calls are higher across the board. "
Another analyst's reaction:
"The USDA report this morning was considered bullish for corn with the market called 10-20 cents higher on the opening. Wheat and soybean numbers carried a bearish tilt but the markets will likely be dragged higher by corn. US ending stocks were pegged at 730 million bushels, unchanged from last month and compared with expectations near 705 million. For the 2011/12 season, ending stocks are pegged at just 695 million bushels as compared with 900 million bushels last month and trade expectations near 770 million. This is a 5.2% stocks/usage ratio which would be the second tightest on record. Yield was left unchanged at 158.7 bu/acre but planted area was revised down by 1.5 million to 90.7 million acres and harvested acres down by 1.9 million to 83.2 million. As a result, production is expected to come in at 13.2 billion bushels which is down 305 million bushels from last month and 55 million below expected usage. Feed usage for the new crop season was revised down by 100 million bushels. World ending stocks for the 2011/12 season came in at just 111.89 million tonnes, as compared with 129.14 million tonnes last month and 117.44 million this year. This is a 12.8% world stocks/usage ratio which is the third tightest on record and the tightest since 1973.
PRICE OUTLOOK: December corn looks poised for an upside break-out with 708 3/4 and 727 3/4 as next upside targets. If there are any further weather issues, 778 1/4 becomes next target."
A wheat analyst's perspective:
"It looks like wheat got both bullish and bearish numbers. Old crop ending stocks at 809 are lower than trade estimates, while new crop ending stocks at 687 are surprisingly higher than estimates. They also lowered world wheat production by 5 MMT, but raised ending stocks 3 MMT; they raised old crop ending stocks and lowered wheat feeding by 2.5 MMT. Not sure how they justify lowering wheat feeding, though.
Corn was a bigger surprise with new crop ending stocks well below estimates at 695 million bushels. That’s very tight carry-out. old crop ending stocks down slightly at 706. Plantings were lowered 1.6%, production 305 lower than May’s estimate. Pretty bullish numbers for corn; on top of yesterday’s very strong day corn could easily be limit up.
Beans didn’t get any bullish numbers but won’t be left behind by strong corn and wheat prices."
Kept corn yield at 158 bu. acre. Crop size at 13.2 vs. 13.505.
U.S. 2010/11 Ending Stocks:
Wheat 809 million bushels
Corn 730 million bushels
Soybeans 180 million
New Criop Ending Stocks:
Wheat 687 million bushels
Corn 695 million bushels
Soybeans 190 million bushels
HRW 776 million bushels, higher than trade expectations.
(CORRECTION)--Early Calls: Corn 15-20 cents higher, soybeans 5-10 cents lower, and wheat 3-5 cents lower. Keep in mind, these Early calls can fluctuate as we get closer to the open.
USDA will release Weekly Export Sales at 7:30am, along with the other monthly reports. A lot to digest today.
Separately, USDA announced Thursday that Japan bought 160,801 mt of U.S. wheat.
--Japan is 75% covered on July-Sep. fed corn import needs, a trade group reports to Dow Jones Newswire.
--China's June soybean imports are seen at 5.0 million mt, up 4% on the month and lower on-year.
Early calls: Subject to this morning's USDA Supply/Demand and World Production Reports at 7:30am CDT. We will have the numbers for you and reaction right here.
Overnight grain, soybean markets=Trading mostly higher.
Crude Oil=$0.74 higher.
Wall Street=Seen trading higher. However, all eyes are on the initial jobless claims report set to be released today.
More in a minute,
06-09-2011 07:17 AM - last edited on 06-09-2011 08:06 AM by marketeye
Before we get into this busy day, just wanted to thank you for the effort and the insight you provide. Always useful on a day like today.
06-09-2011 07:18 AM
In a delayed note on what drove yesterday's market, one analyst sent me these comments this morning:
--"Domestic corn basis rallies again--very unusual to have interior corn bid higher than CIF corn.
--Highest weekly ethanol grind since early Jan.
--Rumors Canada scrambling to buy corn.
Canada buying corn? What is your reaction to the analyst's perspective?
06-09-2011 07:52 AM
A little more on the numbers so far (at least for corn and wheat -- just now getting to the bean numbers, which aren't as tight, it looks like):
In its monthly World Supply/Demand (WASDE) report released Thursday morning, USDA lowered both wheat and corn stocks based on inclement crop weather in key areas for both crops. Thursday's report shows corn ending stocks 35 million bushels lower than last month's estimate, reflecting a lot of the planting delays and generally bad weather this spring. The new numbers also indicate a "stocks-to-use ratio of 5.2% compared with the 2010/11 forecast ratio of 5.4%," the report shows, adding that corn production is still pegged at a record 13.2 billion bushels, though that's cut 305 million bushels from a month ago.
"Corn planted area for 2011/12 is lowered 1.5 million acres from March intentions to 90.7 million acres. Planting delays through early June in the eastern Corn Belt and northern Plains are expected to reduce planted area, more than offsetting likely gains in the western Corn Belt and central Plains where planting was ahead of normal by mid-May," according to Thursday's report. "Harvested area is lowered 1.9 million acres, to 83.2 million with the additional 400,000-acre reduction reflecting early information about May flooding in the lower Ohio and Mississippi River valleys and June flooding along the Missouri River valley."
The net result for prices, according to USDA, is a "farm price" for corn between $6 and $7 per bushel, up 50 cents/bushel from last month's estimate.
The world wheat situation is just as tight. Thursday's report pegs U.S. wheat ending stocks 15 million bushels lower than last month's guess at 687 million bushels. Though that's above the previous 10-year average, it still sent USDA's wheat price estimate 20 cents higher than a month ago, to $7 to $8.40 per bushel for the farm price, "reflecting both tighter domestic supplies and higher expected corn prices.
"Global wheat supplies for 2011/12 are projected slightly lower this month as an increase in beginning stocks is more than offset by lower production," according to Thursday's report. "Persistent dryness, particularly in France, but also in Germany, the United Kingdom, and western Poland, has reduced yield prospects for EU-27. Production is also reduced 1.0 million tons for Canada as flooding and excessive rainfall, particularly in southeastern Saskatchewan and adjoining areas of Manitoba, are expected to reduce spring wheat seeding."
06-09-2011 07:53 AM - edited 06-09-2011 07:56 AM
Well to be expected...........they are at least acknowledging a corn problem..........but not to the extent they should, but its June so whatever.........
surprised that HRW production is still hanging on..........reports that I keep hearing are, well its better than we thought, but the good is at average and the bad is below...........which means its not going to hit average............
soya are a sleeper, but again its June...........acres are too high and yield is falling..........I will reiterate this again, June planted soya do not yield like April and May soya.............I have seen it year after year, last year being another example...........they do good, but not great............and 2009 and 2010 were decent soya years for some major growing areas, including some northern teir states which planted early the last couple years and the soya were planted in May...........
I think the thing that is going to get us on the production side is that a lot of ground up north was not planted near as timely as in the last couple of years, that will trim things. and because its a tough spring, the tough dirt was planted last or in tough conditions which means its already behind the 8 ball and can not afford any stress............stress that is likely showing up with this heat and/or water soaked feet...........
06-09-2011 08:02 AM
Yes Mike Canada apparently is 'buying US corn.
I have posted earlier about our basis and how it was at export levels until maybe 2 months ago.
And yes lots of corn left Ontario for the US all winter.
Now apparently we are short, at least according to basis as it continues to rise on a regular routine.
All winter basis was -C$1 for 56lbs now it is + C$0.20-25 that is an increase of over C$45/tonne. Spot price now around C$310/t.
BTW finally got into larger elevator but was not able to speak to grain buyers as they were busy, phone calls, radio dispatches and head man walked through with a nod of his head and disappeared into his office. Busy day I think.
So spoke with a 'worker' about their corn available.
He says 'Oh they have corn left (did not say who owned it) a least a couple of silo's' and they probably have 30 plus silo's and a pile on the ground last fall. He did not say how big those silo's were. So I asked about a shortage of corn in Ontario and he said 'we have enough to supply our customers, I think. There maybe shortages in some areas.'
His reliability, not as great as those in the office but a little bit of info towards availability of corn.
Remember my discussion with small elevator the other day said they had ownership of more than they liked. They also said many farmers had 'run out of corn to sell back in January'.
Also hearing comments that basis is rising because 'farmers are not selling'.
So I wonder do the farmers have it to sell?
Are the farmers just too busy right now trying to plant with all the rain?
Are the farmers holding because they are concerned with the corn they have planted (or have not been able to plant)?
Remember we had excellent yields in most of Ontario last year and with these good prices maybe 'the farmer' just does not need the money so is waiting for higher $$$
Also comments in Ontario of farmers with corn presold for 2011 fall delivery that are having trouble getting enough corn planted in some areas.
One person told me a while ago that 'there is a lot of corn booked from Michigan for delivery in August and September'. Suppose he was right? or just wanted to buy my corn?
06-09-2011 08:08 AM
Here's a full wrap-up of the corn, wheat and bean numbers.
06-09-2011 08:56 AM - edited 06-09-2011 08:57 AM
these cuts are not a guarantee............both in corn and soya...........demand has been showing signs of fluctuation when corn is above $7...........however IMO demand has been playing a game of cat and mouse, trying to buy dips.............classic China story...........however as it becomes more apparent that worldwide stocks are dwindling...........including more wheat yield cuts in Europe.........our corn crop will likely fall another 200-400M........our soya crop is likely overstated in production............and more and more..........demand might not think $7 and $14 is too bad after all............
I know a lot of people think livestock will just go away with higher grain prices............IMO it will not go down that way..........livestock prices needs to get back to were they were in April..........and if grain stays higher they will have to........someone is going to feed livestock, big boys or elsewhere.............