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Veteran Advisor

Floor Talk January 13, 2021

At the close:

At the close, the March corn futures finished 7 1/4¢ higher at $5.24. May corn futures closed 8 3/4¢ higher at $5.27.

March soybean futures settled 12¢ lower at $14.06. May soybean futures closed 10¢ lower at $14.03 1/4.

March wheat futures closed 4 1/2¢ lower at $6.60 3/4.


March soymeal futures settled $8.30 short term lower at $457.10.


March soy oil futures settled 0.45 lower at 42.18¢ per pound.



In the outside markets, the NYMEX crude oil market is $0.16 per barrel lower (-0.30%) at $53.05. The U.S. dollar is higher, and the Dow Jones Industrials are 67 points higher (+0.22%) at 31,135 points.

Mike

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At midsession:

 

At midsession, the March corn futures are 6¢ higher at $5.24. May corn futures are 8 3/4¢ higher at $5.27.

March soybean futures are 9 1/4¢ lower at $14.09. May soybean futures are 7 1/2¢ higher at $14.06 1/4.

March wheat futures are 3 3/4¢ lower at $6.61 3/4.

March soymeal futures are $8.50 short term lower at $456.90.

March soy oil futures are 0.20 lower at 42.43¢ per pound.

In the outside markets, the NYMEX crude oil market is $0.12 per barrel lower (-0.23%) at $53.09. The U.S. dollar is higher, and the Dow Jones Industrials are 8 points lower (-0.03%) at 31,060 points.

 

Mike

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At 8:48am:

 

The corn market continues its march toward $6 level.

 

What say you?

 

Mike

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11 Replies

Re: Floor Talk January 13, 2021 (Report Day)

My opinion is that supply flexibility is much greater than demand flexibility. Since grains are a commodity, small discrepancies in supply/demand create huge swings in price. If we produce a little too much, no one wants the extra and prices drop substantially. But if we produce a little less than what the market wants, they fight over it ferociously. 

It takes sub-$3 corn to stimulate new demand, and >$6 corn to ration it.

Senior Contributor

Re: Floor Talk January 13, 2021 (Report Day)

What report am I missing today?

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Honored Advisor

Re: Floor Talk January 13, 2021 (Report Day)

I`d of course like to see $10,000 corn, but like Erik is saying $6 corn is going to get a lot of users crying "uncle" if we could just maintain $5 corn and $12 beans for a new plateau we`d be better off, but the markets aren`t there for the producer`s good.   Sounds like rationing is taking place and it`ll be $3 by fall.   Smiley Happy

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Honored Advisor

Re: Floor Talk January 13, 2021 (Report Day)

When there are so many parasites living off the commodity markets this is where we go........ Since monday the majority of futures contracts offered and traded have been by funds managers and speculative traders.  The majority of reports on the activity have been by analysts who make a living talking about the markets and explaining why.  None of those are active in production or use of the commodity being traded.... IMO, that is what creates the 3-6 swing...... we have to go that far to know if demand and supply are actually involved......  It is hard for me to believe that we can take the cbot from a local US market tool to an international world marketing tool and not need any regulative changes.  Maybe there have been a few but I don't see them affecting the manipulation of the market by outside forces that guarantee profit and establish public service carreers by manipulating it.

If we could actually see through this smoke screen today and see how that report affected feeder cattle sales this morning, know what basis changes happened this morning, know if slaughter weights go down in recent weeks,  actually know if brokers slowed hedging grain sales, if farmers kept the trucks at home for a week to see where prices go,..........................it takes a $3 move to see it through the haze.  

With federal intervention in almost every point of commerce working on stimulus, climate, or perceived propriety.  Why do we turn a blind eye to regulation, monopoly creation, corruption and fraud?  Which begins with bringing home the bacon from congress.

I think ethanol has a problem in its hazy future.................. It may be many things from the same set of masked lips, is it displacing fossil fuels with renewable energy, or is it encouraging the dependance on the demon fuels?  Both views come from the same mouths.  But in this case, 70% of the corn used for ethanol becomes a feed source for humans and animals,  pay attention,  we just saw ethanol production shut down, nearly coming to a stop, while we labeled all farmers and livestock producers (and feeders)..(and processors).......essential workers... Nothing stopped except the feed supplied by ethanol.. .......... Probably coincidence but I wonder where ethanol is when much of congress sees it as "not in the future" or just sees the future as a Jetson cartoon.   Don't think that double standard is lost on the Feeding industry.  Finishing animals gets real serious when feed ingredients start getting unreliable.

 

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Re: Floor Talk January 13, 2021 (Report Day)

BA - the markets are there to balance supply and demand. What balances supply and demand is price. Since commodities are very sensitive to supply/demand imbalances, watching the markets is like watching a pendulum. At the 6 oclock position is the $5 corn and $12 beans that you and I and everyone would like to see permanently. But a pendulum is moving the fastest as it swings through the 6 oclock position.  It spends most of it's time at the highs or lows.

Whether we have $3 corn or $6 corn at harvest depends on the weather and how many of us chase the $6 corn with acres and fertilizer. But whether it's this fall or later, we'll see $3 corn sooner or later because there is still enough reserve capacity in the worlds farms to produce more than we need. So we'll eventually catch up.

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Contributor

Re: Floor Talk January 13, 2021 (Report Day)

That’s sounds like price fixing! We need to have free markets if you will as much as that is possible. What we need to have fixed is all the bad info that USDA uses to determine yields and supplies in the fall. They said we had a record crop and we all knew that wasn’t the case. They need new set of guidelines.  They continue to skew the real market to political whims.

I’m done.

Re: Floor Talk January 13, 2021 (Report Day)

SW - Be careful what you wish for in government "help" with new regulations. As you noted, government climate policies and stimuli and market intervention have created a mess, but the concentration in packers is precisely due to government mismanagement. By taking the US Dollar off the gold standard in 1971, there is now no limit to money creation. Banks make profits loaning money into existence. Aggressive companies can borrow nearly unlimited funds at very low interest rates to buy up their competitors because there is no longer any competition for money (loans). Exxon borrowed on the order of $70 BILLION to buy Mobil in 1999. Last spring, ExxonMobil sold $9.5 billion in corporate bonds paying 1.5% just so they'd have liquidity on hand during the pandemic in case there were any "opportunities". This has happened in many industries, and you can't fix it with anti-trust laws until you fix the $74 trillion credit bubble we are in. Compare that to less than $2 trillion in actual US currency in circulation, most of it overseas.  Of course, the credit bubble will burst on it's own eventually, as all bubbles do.  I have moved from "Just in time" to "Just in case" inventory on all my inputs. Ask yourself how you would manage your farm business if your banker called and said he's sorry, but they're cutting your line of credit in half. I'm not predicting that it will happen, I'm just saying that it could happen.

Honored Advisor

Re: Floor Talk January 13, 2021 (Report Day)

Hey guys, I think a lot of times in these kind of markets, it`s the peripheral that determines price.   The supply is more than normal out of the farmer`s hands, to shake the smaller supply that will be needed, price will have to find that level.  Starting this early as to a more normal July fireworks makes one go hmmmm.

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Honored Advisor

Re: Floor Talk January 13, 2021 (Report Day)

Thanks guys and Erik thanks for another angle to the mess...

Today is pointing out another issue........along the market haze line of thinking   We finally get a limit up move thanks to usda playing the market with those "rely on us" prediction shows.   Since usda signaled funds to move, the picture is cloudy because two days ago we were pretty sure this move was a supply problem...... at least down here  where things are happening "abnormally".   I was so sure of a supply issue that new crop and 2022 crop were moving up in unison ---- but now that the elephant jumped in the pool..... new crop is seperating from old crop  ------- +7 up old crop and 21new crop dec  -4.

We know what the market did today but now we have no idea why.     Other than the fat bash brothers jumped into the pool.

There is way too much casino spec activity in the futures markets ........ but I understand your point.... new regulations will be written by the con artists who shovel fear.