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Veteran Advisor

Floor Talk June 3

Win a lawnmower: I'm not kidding. You could win. Enter by sending us a photo of your beautiful farm. Here's how:

 

Here's the link:  http://community.agriculture.com/t5/contests/v2/contestpage/blog-id/farmbeautiful/tab/home

 

 

treefmr,

 

I'm not sure if the Japan farm shot will make the cut. But, I'm sure many of you out there have beautiful looking farm estates.

 

Mike

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After the close:

USDA's Crop Progress Report shows that corn is nearly all planted.

 

Corn
Planted 91% vs 86% Last Week vs 100 Last Year vs 95% 5Yr Avg
Emerged 74% v 54% LW v 96% LY v 82% 5YrAvg
Condition 63% Good/Excellent (72% LY)   7% Poor/Very Poor (5% LY)
 
 
Beans
Planted 57% v 44% LW v 93% LY v 74% 5YrAvg
Emerged 31% v 14% LW v 76% LY v 49% 5YrAvg
 

 

Mike

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At the close:

 

The July futures corn contract finished cents settled $6.55. New-crop Dec. futures ended 7 cents lower at $5.60. The July soybean futures contract closed 22 cents higher at $15.32, new-crop Nov. soybeans finished 21 cents higher at $13.25. July wheat futures finished 3 cents higher at $7.08 per bushel.
In the outside markets, the NYMEX crude oil is $1.55 per barrel higher, the dollar is lower and the Dow Jones Industrials are 72 points higher.

 

One analyst says, "Indeed, there is a bit of shrugging of fundamentals, but we will wait for the planting progress numbers this afternoon to confirm just how far behind we are.  Charts have certainly broken down as new crop prices have collided with the March high and July corn has again failed to break through the consolidation.  Beans have led the move of late as funds expanded their position by more than 20,000 contracts last week.  This injection of cash has allowed markets to firm despite withering cash markets and the possibility of increased planted acres."

 

 

 

Mike

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At mid-session:

 

The July futures corn contract is 15 cents lower at $6.47. New-crop Dec. futures are trading 11 cents lower at $5.55. The July soybean futures contract is trading 19 cents higher at $15.29, new-crop Nov. soybeans are trading 13 cents higher at $13.17. July wheat futures are trading 6 cents lower at $6.99per bushel. The July soymeal futures are trading $5.80 per short ton higher at $453.00. The July soyoil futures are trading $0.03 higher at $48.41.
In the outside markets, the NYMEX crude oil is $1.00 per barrel higher, the dollar is lower and the Dow Jones Industrials are 51 points higher.

 

One floor trader says the corn market has some bullets to trim losses, for now.

 

In his own words:

 

I can explain more from a structure perspective than fundamental…. All along we have thought you can lose 4 million corn acres and 5to 6 bushels below trend and still justify sub 5.00 dollar price…Large corn crop in SA and poor exports flat ethanol…. But planting delays and index roll propping up new crop futures around the floor… we started with very high, un precedented highs in inverses…. And taking profits and rolling indexes from old to new have had there effect… this time of year its’  hard to recruit selling in new crop at lower prices…so when you want to roll 400,000 index longs to new crop its had its effect…. For instance in soymeal the Dow ubs index added 55,000 longs in Februray…now the total is 71,000 longs… and they want to roll to Dec meal starting on Friday… last week there was only 50k open in Dec… so you can see the problem the market has to accommodate these rolls…the deffered leg is thinner so it sees the most movement in price and that is what has happened over the last 10 days…. The new crop bid will end after the roll is complete… June 7th -13th.., after that new crop beans should be concerned about the June 28th crop report that will most likely see a 2 million acre switch from corn….
 
Prevent plant dates are interesting but insurance contacts suggest farmers will make day to day decision taking a haircut per day on insurance payout against.. potential for large corn crop… in the end I think we mud in an additional 3 to 4 % and abandon 2 to 3 million acres… no big deal given good rains in the west… the east has seen beneficial rain… the Volga valley in FSU has seen helpful rains… Australia got good rains for winter planting…and corn is pollinating with high potential in the Delta, and in Mato Grosso….SRW harvest is under way with good test weights being reported in the Delta…
 
I am a bear, average put price for Dec corn is near 4.90….survive pollination with moderate temps and precip and we will lower price potential to $4.00," he says.

 

What do you think?

 

 

Mike

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At 10:40am:

Corn is down double-digits, soybeans rally double-digits. Corn could not break through some resistance levels and technical selling is underway. Also, some folks rolling positions out of July corn, hurting bulls. Soybeans are running higher on technical buying.

 

Mike

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At the open:

The July futures corn contract opened 5 cents higher at $6.66. New-crop Dec. futures opened 4 cents higher at $5.71. The July soybean futures contract opened 20 cents higher at $15.30, new-crop Nov. soybeans opened 16 cents higher at $13.20. July wheat futures opened 6 cents higher at $7.11 per bushel. The July soymeal futures opened $6.80 per short ton higher at $454.00. The July soyoil futures opened $0.20 higher at $48.58.
In the outside markets, the NYMEX crude oil is $0.66 per barrel higher, the dollar is higher and the Dow Jones Industrials are 55 points higher.

 

Mike

------------

At 8am;

Jeff Coleman, The Trean Group analyst and CME Group floor trader, says the traders are bracing for upside potential.

 

"The big three grain markets were all higher overnight with new crop soybean futures leading the way. Follow through buying from Friday combined with this weekend’s wet cold weather has traders worried about late planting for soybeans now. July soybean futures were up 28 cents overnight trading at $1538 per bushel and November soybean futures were up 25 cents on heavy volume. July corn futures look like they’re going to make a run to the magical $7 level rising by 7 cents to $668 per bushel. Wheat followed suit as July wheat futures rose 7 cents overnight to end the session at $712.5 per bushel. Today’s grain trade should be interesting and very busy as traders have decisions to make about their positions in grains."

 

Mike

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At 6:40am:

 

Early calls:  Corn is seen 5-7 cents higher (old-crop), soybeans 28-30 cents higher (old-crop), and wheat 9-10 cents higher. Meanwhile, new-crop corn 5-7 cents higher and soybeans are seen 25-27 cents higher.

Trackers:
Overnight grain, soybean markets=Trading higher.
Crude Oil=$0.46 per barrel higher
Dollar=Lower.
Wall Street=Seen higher, ignoring the lower world market concerns.

World=Asia/Pacific stocks were lower and Europe's stocks are higher.

 

 

 

More in a minute,

 

Mike

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11 Replies
Highlighted
Veteran Advisor

Re: Floor Talk June 3

Fund money may be moving back into corn.

 

Hedge funds and speculators upped their corn 'long' positions by 80% to 98,370 futures and options contracts in the week ended May 28, according to Friday's Commodity Futures Trading Commission Report. Net longs still dropped 49% from the end of March.

 

Mike

 

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Advisor

Re: Floor Talk June 3

Japan rice farmers

 

Mike, maybe time for Iowa to take some lessons from my Japanese farmer friends.  They are professionals with the water!

 

 

 

079.JPG

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Veteran Advisor

Re: Floor Talk June 3

tree fmr,

 

Thanks for posting those pictures from Japan. I hope everything is going well there. Well, I have seen some Iowa fields that look like this. In fact, I drove by a few just outside of Des Moines that have this look to them. Not sure how well rice would grow here.

 

Speaking of water, a longtime marketwatcher and farmer says history shows too much water doesn't mean longterm rallies.

 

SoyRoy says, "After suffering through one of the hottest, driest summers in history, who can blame farmers for being afraid of another summer of drought. The fear was compounded  by an almost total lack of moisture recharge over the winter.  Now we are locked into a weather pattern that is directly the reverse of what most farmers thought. The weather rally that most observers thought would be in place by now is in fact causing price improvement. However the cause is not what we anticipated it would be.
            The characteristics of the recent price move are different than they would be if the problem was fear of dry weather.   A normal weather market takes a long time to develop. The peak of a dry weather rally usually comes in middle to late summer.  In less the weather pattern is in a prolonged spell,  the top usually comes a day or two before a general rain storm large enough to relieve the crop stress.
            A weather rally caused by excess rainfall comes much earlier in the growing season. It is unusual for a wet weather problem to be severe enough to reduce yields nationwide. The peak of this type of weather rally usually ends the day planting progress reports reveal more than expected planting progress. With the old crop supplies so tight this year, the effects of delayed planting and cool weather maybe exaggerated. With current corn planting progress at 86% as reported last week and with the rains that fell most of the week, reduction in planted acres may support prices for most of the summer at a higher level than anyone thought a month ago.
            My experience, from 44 years of farming, is that excess rainfall at planting time and cooler than normal temperatures rarely have a lasting positive effect on grain prices. Will conditions this year be different enough to support prices at a higher level all summer? Time will tell. However, this rally looks like a selling opportunity for those farmers who have their crops planted.  We can hope that this weather rally results in new crop bids getting high enough to result in a profit with normal yields."

 

Roy Smith

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Senior Advisor

Re: Floor Talk June 3

Treefarmer -- on that bottom photo -- you sure you didn't take that of Hobby hunting for his golf ball in southern podunk county ?

 

Thanks for the pics.

 

BTW -- here in east central new Kansas  - the local weather chick said that for the month of June -- last year -- we got a total of ??????  1 tenth of rain -- boys thats not much .

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Veteran Advisor

Re: Floor Talk June 3

ECIN-----how much rain have you had in M/A/M this year??

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Senior Contributor

Re: Floor Talk June 3

Ray I'm about 90 miles east of ECI. We had 2.5" total in May.

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Veteran Advisor

Re: Floor Talk June 3

The NCGA is tooting the horn of the U.S. corn grower. Did you know this stuff?

 

U.S. corn farmers exported $7.6 billion worth of corn last year--ne of the few U.S. products with a trade surplus.
•    95 percent of all corn farms in the U.S. are family owned, and family farmers grow 90 percent of America's corn.
•    America's corn farmers have cut soil erosion 67 percent by using innovative conservation methods.
•    The energy used to grow a bushel of corn decreased 43 percent, thanks to family farmers' use of technology.
•    The land required to grow a bushel of corn has decreased by 30 percent.
•    Corn farmers have reduced greenhouse gas emissions by 36 percent, thanks to improved farming practices.

 

 

I guess the one that sticks out for me is the 30% less ground needed to produce a bushel of corn. That seems like quite the reduction. And it might just be this number that will have to grow, in the future, with less land and less water. Just a thought.

 

 

Mike

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Honored Advisor

Re: Floor Talk June 3

I am a bear, average put price for Dec corn is near 4.90….survive pollination with moderate temps and precip and we will lower price potential to $4.00," he says.

 

What do you think?

 

I was in the Bass Pro Shop in Council Bluffs, Iowa yesterday afternoon and I think I saw several of his "cousins" stuffed and on display there.

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Senior Contributor

Re: Floor Talk June 3

Mike, what time frame is involved on that 30% less acreage to grow a bushel? Or is this vs. the rest of the production world?
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