B-Team Floor Talk for Wednesday, 12.28

[Jeff_a_Caldwell]

March corn was 9 1/4 cents higher at $6.42 1/2 per bushel, March wheat was 6 1/2 cents higher at $6.51 1/4 and January beans ended 1 1/2 cents lower at $11.98 1/4.

Palouser brings up a great point here. What about the supply/demand situation? Think the trade's looking at the S.A. weather factor and supply/demand as two separate, unrelated factors? 

So, where are we headed tonight and into tomorrow? 

I better go wrangle up the gals -- the in-laws and family have all cleared out here today, so all is calm (well, as calm as it can get!). Hope everybody has a great rest of your day and I'll see you here in the morning! Stay safe out there!

Jeff

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Hang on a second! Beans have flipped to the upside, joining corn and wheat in the black: March corn is 8 1/4 cents higher at $6.41 1/2 per bushel while March wheat's 9 cents higher at $6.53 3/4. January beans have recovered from earlier weakness to trade 3 3/4 cents higher, cracking the $12/bushel mark at $12.03 1/2 per bushel.

So, what's in the wide world of sports is going on?! Like Penner said earlier this morning, with such light trading volume, any move like this can happen fairly easily and quickly. So, I guess it shouldn't be too big of a surprise. Maybe all the traders got their profits taken from earlier and are trading things back higher? What's going on?

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We're closing in on mid-session and beans are still lower while corn and wheat are higher:

March Corn: 3 3/4 higher at $6.37

January Beans: 5 3/4 lower at $11.94 

March Wheat: 5 3/4 higher at $6.50 1/2

Just saw some interesting information on this South America deal. It's been all bulls so far, but here's a dissenting opinion. Jim Bower of Bower Trading, Inc., in Chicago said in his customer newsletter this morning that longer-term stressful crop weather in South America could wind up having the opposite effect on the grains than it's having now. Why? 

"IF (and it is a big 'if') weather remains inflammatory into January and February for South America, I can make a case for the 'highs' to be in for '2012,' as sharply higher prices now will only encourage even more production and in some cases reduced demand in the Northern Hemisphere," he said this morning.

That gets me thinking here (yes, there's smoke starting to seep out of my ears!): Say this weather stays hot and dry down south and the crops just wind up looking terrible once the combines start running. Now, say the market adjusts to this South American situation, eventually treating it just like any other market factor (U.S. Dollar, crude oil, etc.). Obviously, there's still not been much resolution of the Eurozone debt crisis, so that's still very much in play. So, does this mean we could be setting up for a major downtrend? Let's hear it! Could it happen? Could we really be hovering around a top for the next 12 months? Will we be kicking ourselves for a year that we didn't sell now? 

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March corn opened Wednesday's session 1 3/4 cents higher at $6.35 per bushel, while March wheat was 1 cent higher at $6.45 3/4. January beans fell 6 cents at the open to $11.93 3/4 per bushel.

Some good comments here from some of you regulars on this South American weather rally over in this discussion. So, how are we trading this thing? Is the psychology outpacing the actual weather? Seems like in cases like this, we tend to factor things in to the trade before they even happen. So, are we doing that with this specific instance? 

More in a few...

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Just chatted with a trader/analyst friend of mine here with AgTraderTalk.com, Kevin Penner, and he told me a couple key things that will shape the markets today. Obviously, attention's still on South America, so much so that yesterday's huge gains in beans have spawned some equally huge profit-taking for beans, but that's spread out to all pits. Also, could be some spreading -- that discrepancy in gains between corn and beans yesterday could have more folks buying corn and selling beans. So, maybe that means corn won't fall out of bed as hard as beans, if that does end up happening today. 

Finally, while the general notion of "crop-stressing weather in South America" is driving higher prices, when you look at the conditions more closely, it's the corn that's really hurting right now. Sure, there are still a lot of beans yet to be planted (that's on hold until some rain falls, as agmr has done such a great job informing us here in the last few days), but you can't stress a crop that's not in the ground yet, and the stress is especially troublesome with the corn crop in the middle of pollination. "There's still really another month before heat will jack up the beans," Penner told me. 

So, between the physical damage to the corn crop down south (being harder on that crop than on the beans at this point) and the idea that spreading's got more traders buying corn, that could be your magic bullish pill for corn today. What do you think?

We'll see when we open up here in a few minutes!

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And, it looks like maybe we've got a profit-taking situation on our hands, and that's why things are mixed right now. Looks like some year-end profit-taking is probably happening. That's at least the case in other commodities. Just saw a report on the palm oil marketplace, which surprisingly (I guess I know as much about palm oil as I do brain surgery!) is tracking this S.A. weather situation closely as well, having shifted its focus over from the Eurozone debt crisis. So, if it's happening in the palm oil market, who's betting that it's happening in the grains here?

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Speaking of China, here's an interesting bit of info -- that country's got an anti-dumping case raised against the U.S. on DDGs. But, they're still the largest export market for U.S. DDGs. So, is this just a political football, or are they genuinely afraid we're dumping DDGs there? 

• Here's a wire story on that 

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Was it profit-taking, did the weather abruptly change in South America, or was Don Roose right about the China trade trend yesterday? Whatever it is, it looks like the big-time bull run from yesterday may be already running out of gas. Early calls for the grains are corn and wheat both 3-5 cents higher and soybeans 2-4 cents lower, according to private sources.

Those calls are based on some mixed overnight prices; at 6:45 AM CST, March corn was 3 1/4 cents higher and March wheat was 3 1/2 higher, trading to $6.36 1/2 and $6.48 1/4, respectively. January soybeans, which soared more than 36 cents higher in Tuesday's trade, dipped by 5 1/2 cents to trade at $11.94 1/4 per bushel in the overnight trade.

So, did anyone capitalize on yesterday's big run, or do you think there's still plenty of upside potential here waiting in the wings? 

B-Team's in today. I'll try to get to the bottom of all this as the day goes on!

[Nebrfarmr]

Sold a few more bushels yesterday, within 1/2 cent of the top.  I figure if I sell a little on the rallies, I might not hit the top, but won't hit the bottom, either.  I still have 25% of this years, and 80% of next years left to sell, so I can still get in on a rally.

[Jim Meade / Iowa City]

I sold a couple of loads and put orders in on a couple more.

[breakout 99]

Thanks for the floor talk Jeff, always interesting.  Thing about the SA corn crop getting smaller is I would think that has implications in the old crop futures months since their harvest comes well ahead of ours.  (old crop/ new crop spread +5 yesterday).  Question is how wide will that spread go.

[agmr]

ARGENTINA WEATHER FORECAST. SOURCE :  NATIONAL WEATHER SERVICE

[jrjfarms]

So, did anyone capitalize on yesterday's big run, or do you think there's still plenty of upside potential here waiting in the wings?

I am holding tight on sales. Two months ago corn was cash 6.27 at local elevator, yeasterday 6.04.

This early in the ball game I will not sell below that. If I wasn't happy with it then, nothing changed now.

We have traded china rumors, the gold market, some crude oil markets, overseas financal markets,

now drought in SA, and more than some I have forgotten. Everything but our poor crop. I don't know

where more acres of corn will come from in this country. Has anyone ever notice how many corn and

bean acres are taken out of production, in the last 10 years, I bet every county has taken out a few for

housing, factories, even in Boone Ia they have taken out farm land and more to go with super wal-mart.

I don't thank they have a handle on the drought and flood damage.

[GoredHusker]

Where does all this lite volume talk come from?  Yesterday, the March soybean contract posted it highest volume.  Today, it's posting another extremely large volume and more than likely takes out yesterdays volume total. 

[Jeff_a_Caldwell]

Right you are, Go Red! I think a lot of folks just automatically thought we'd have light volume this week, as that's usually the case in this week between Christmas and New Year's. But hey, don't blame me -- I'm the B-Team! Ha!

Speaking of Big Red, your boys going to whup up on those Gamecocks in the Cap One Bowl? Wouldn't it be great if all us Big 12/Big 10 teams knocked off all those SEC guys?!

[Palouser]

You say, "That gets me thinking here (yes, there's smoke starting to seep out of my ears!): Say this weather stays hot and dry down south and the crops just wind up looking terrible once the combines start running. Now, say the market adjusts to this South American situation, eventually treating it just like any other market factor (U.S. Dollar, crude oil, etc.). Obviously, there's still not been much resolution of the Eurozone debt crisis, so that's still very much in play. So, does this mean we could be setting up for a major downtrend? Let's hear it! Could it happen? Could we really be hovering around a top for the next 12 months? Will we be kicking ourselves for a year that we didn't sell now?"

Mike [sorry, meant Jeff], it is VERY telling that supply/demand is not referenced in this poppycock scenario. Or inventories. And that is how poppycock is generated. Just drop any salient points that can't be dropped in the real world and ANY scenario works.

COULD IT HAPPEN????????? ONLY IN A TRADERS DREAMS (obviously he will buy the positions far ahead of time to profit beyond his wildest dreams!) !!!!!!!!!!!!!!!

[agmr]

Dec 28

Update Paraguay soybean production:

Field scouts have dramatically reduced this yr paraguayn soybean crop due to adverse hot-dry weather by 15% already. If weather remains unfavorable , losses could be as high as 35%.-

Paraguay was expected to pick up a record 8,5-9,2 mln tonns this yr. Located in the heart of SA , between giants Arg & Brz , Paraguay is the 4th largest soybean exporter and has one the highest world s avg yields : 3,000 kgs/Ha.-

There was mass planting in late sept- begining of oct as farmers bet on early seeding in order to be ahead of La Nina forecasts.Lack of rainfall since December mainly affected the south, a region where production is abt 50% of Py ttl crop.

Although some rainfall over the weekend brought relief, the forecasts indicate high temps and rainfall below average over the next two months. Dry conditions also affect soybean regions in Brz /Arg. The crops most affected are those who are in stage of formation and grain filling.

Some varieties proved to be more sensitive to weather conditions. Field tours indicate tht they look green when seen fm outside, but when you come in you see defoliated plants and pods starting to fall.

We ll be touring Arg and Brz  next 15 days and keep u posted.