Floor Talk February 10 (Report Day)

[marketeye]

At the close:

At the close, the March corn futures settled 3 1/4 cents lower at $3.88 per bushel.
March soybean futures finished 9 1/2 cents lower at $9.69.

March wheat futures finished 8 cents lower to $5.21 3/4. The March soybean meal futures closed $2.70 per short ton lower at $326.90. March soyoil futures finished $0.56 lower at $31.45.

In the outside markets, the Brent crude oil market is $2.92 lower per barrel, the U.S. dollar is higher, and the Dow Jones Industrials are 138 points higher.

Mike

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At mid-session:

At mid-session, the March corn futures are trading 1 cent lower at $3.90 per bushel.
March soybean futures are trading 3/4 of a cent higher at $9.79.

March wheat futures are trading 5 3/4 cents lower to $5.24. The March soybean meal futures are trading $1.30 per short ton higher at $330.90. March soyoil futures are trading $0.40 lower at $31.61.

In the outside markets, the Brent crude oil market is $2.30 lower per barrel, the U.S. dollar is higher, and the Dow Jones Industrials are 97 points higher.

Mike

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USDA SAYS:

U.S. Ending Stocks:

U.S. 2014/15 soybean ending stocks= 385 million bushels, compared to the trade’s average estimates of 398 million bushels and the government’s January estimate of 410 million.

Corn 2014/15 ending stocks= 1.827 billion bushels, compared to the average trade estimate of 1.879 billion bushels and the USDA’s January estimate of 1.877 billion.

Wheat 2014/15 ending stocks= 692 million bushels, vs. the average trade estimate of 689 million bushels and the USDA’s January estimate of 687 million.

WORLD PRODUCTION

Brazil’s 2014/15 soybean production= 94.5 million metric tons, compared to its January estimate of 95.50 million metric tons. Brazil’s 2013/14 soybean output is estimated at (    million metric tons vs. the USDA’s January estimate of 86.70 mmt.
Argentina, the 2014/15 soybean output= 56.0 mmt, vs. the USDA’s January estimate of 55.0 mmt. For 2013/14, Argentina’s soybean output is pegged at (     mmt, compared with the USDA’s January estimate of 54.0 mmt.

So, what do you think?

TRADE REACTION
--Jason Ward, Director of Grains and Energy, Northstar Commodity, says that the USDA made some notable changes to the US Balance Sheet:
 
“Corn stocks dropped 50 million bushels to 1.827 billion bushels. The trade estimate was for stocks to increase by 2 million bushels, so it certainly caught the trade by surprise.
Now, how they dropped stocks is worth noting.
They cut feed usage again by 25 million bushels, down to 5.250 billion bushels
They left exports unchanged at 1.750 billion bushels
The big change was the corn used for ethanol which was increased to a new record 5.250 billion bushels (+75 million bushels)
This seems like a tall order for the ethanol sector to achieve, but Oct/Nov/Dec corn used for ethanol was a record, and usage has declined for Jan/Feb with margins declining, but they still remain ABOVE the weekly average we need to grind. We now need to see corn used for ethanol ABOVE 100 million bushels/week the remaining 30 weeks of the marketing year. Not an impossible feat, but certainly a tall order.
 
Soybean stocks fell by 25 million bushels to 385 million bushels. The average trade guess was for stocks to fall just 10-12 million bushels.
USDA raised exports by 20 million bushels, they raised crush by 15 million bushels, then they raised imports by 10 million bushels giving a NET 25 million bushel reduction.
 
Wheat was a build in stocks by 5 million bushels increasing from 687 million bushels to 692 million bushels, exports declined by 25 million bushels and imports declined by 20 million bushels.
 
 
World Carryout Numbers
Corn increased to 189.6 MMT from 189.2 MMT (total bushels 15.7 million bushels)
The US stocks came down, Argentina’s corn crop was increased, but the net in the world was quite small at 15.7 million bushels, but it holds a little bearish lean as it was higher than last month.
 
Soybean stocks fell to 89.3 MMT from 90.8 MMT (down 55 million bushels from last month)
The all important Brazilian soybean crop fell 1 MMT to 94.5 MMT, but to counter that Argentina was increased by 1 MMT to 56 MMT, so South America as a whole was NET unchanged from last month.
 
Wheat stocks in the world increased to 197.9 MMT from 196 MMT, a world increase of 70 million bushels, nothing too positive to report here in the world numbers for wheat, Ward says.

--Mike North, President Commodity Risk Management Group, says that with regard to the much anticipated numbers from South America, it was a wash. 
“Argentine soybean production grew by 1 MMT to overcome the 1 MMT reduction to Brazilian production.  Beginning stocks on all three fronts (corn, soybeans, and wheat) all saw increases which fell to the bottom line of the balance sheet and left ending stocks higher by .49 MMT in corn and 1.85 MMT in wheat. “
Soybeans saw a greater crush number, both here and around the world to cause world ending stocks to drop by 1.52 MMT.  Domestic balance sheets saw minor adjustments,” North says.
 The most noteworthy is the increase in ethanol grind of corn, North says. 
“EIA projects larger 2015 gasoline consumption, giving cause to the USDA to raise the corn grind for ethanol.  However, with compressed margins at the plant, will all of the current plants be able to maintain full production capacity?  It will take a little while to flesh this out, but the trade will certainly be paying very close attention to weekly ethanol production numbers.”

--Peter Meyer, PIRA Energy grain analyst, says that despite these low oil prices, ethanol use was raised once again, this time by 1.4%, while feed use was trimmed by .5%.  "Not sure I agree with the continued ethanol crush increases but it looks like the World Board does feel that DDG’s will substitute for feed corn here.
 
Meyer adds, "US soybean exports up 1.1% from January along with crush moving up to just under 1.8 billion bushels makes sense.  Combined Argentina/Brazil soybeans production was left unchanged at 150.5M MT will probably raise some eyebrows but we see production pretty much the same at 94M MT for Brazil and 56M MT for Argentina."
 
Not much else in the report I’m afraid, Meyer says. 

--Jack Scoville, PRICE Futures Group vice president, says it's an interesting reaction to what appears to be a bullish report.  "Soybeans and Corn ending stocks estimates dropped more than expected, especially domestic use on corn and all use on soybeans.  Yet, the market is selling off after an initial reaction higher.  Wheat estimates are negative on the US and world sides.  For South America, a wash there as BRZ production was dropped a million tons and is now at the high end of most trade expectations while Arg was up a million tons and could be even higher.  So, nothing much there.  I guess with these numbers I would have expected more upside.  Exports were left alone for Corn which is OK.  Increased for beans I guess they fet they had to.  Domestic use up for both.  As I said, I would have expected a little more upside reaction today."

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At the open:

At the open, the March corn futures are trading 1 1/2 cents lower at $3.89 per bushel.
March soybean futures are trading 4 cents lower at $9.74.

March wheat futures are trading 5 cents lower to $5.24. The March soybean meal futures are trading $1.40 per short ton lower at $328.20. March soyoil futures are trading $0.33 lower at $31.68.

In the outside markets, the Brent crude oil market is $0.20 lower per barrel, the U.S. dollar is higher, and the Dow Jones Industrials are 83 points lower.

Mike

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At 7:20am:

FYI:

The month-to-date average prices that will determine the revenue lock-in price for farmers who buy RP crop insurance.

December 2015 corn =$4.14

November 2015 soybeans= $9.71.

Mike

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At 7:10am:

Early calls: Corn 1-2 cents lower, soybeans 1-2 cents higher, and wheat 2-4 cents lower.

Trackers:
Overnight grain, soybean markets = Trading mostly lower.
Brent Crude Oil = $0.01 higher per barrel.
Dollar =Higher. 
Wall Street = Seen higher, as investors await the bailout of Greece.

World Markets = Europe stocks were mixed, Asia/Pacific stocks were mostly lower.

More in a minute,

Mike

[crophugger]

Those corn acres just keep sliding away into the sunset.

[Blacksandfarmer]

I can still make money on beans at $9.71. Its tough to beak even at $4.14 corn unless you have no land debt or harvest record yields.

[roarintiger1]

I think that your soybean ending stock number is a mistake.

[Hobbyfarmer]

Hmm...300 million bu.... that was the favorite # the USDA could find and loose at will under Clinton. Used to be in the corn side but with inflation and everything guess it moved over to beans?

[marketeye]

roarintiger1,

You are correct, Sir! I made the change. Sorry. Thanks for catching that mistake.

Mike

[roarintiger1]

Thank you Mike for all you do!

[ECIN]

Thanks Mike

[WCMO]

So, corn and soybeans dropping before the close just because  . . .  reports not bullish enough?

[marketeye]

You are very welcome. I'm trying to find a way to get this farm economy turned around for folks. We are in some very interesting times. I hope the information will help, somehow.

Mike