Floor Talk June 8

[marketeye]

Way late:

I apologize for missing this export sales announcement this morning. Here it is and maybe the market will still be trading it Sunday night:

USDA announced Friday that export sales of 410,000 metric tons of soybeans for delivery to China. Of the total 60,000 tons is for delivery during the 2011/2012 marketing year and 350,000 tons is for delivery during the 2012/2013 marketing year, and
--Export sales of 120,000 metric tons of soybeans to Egypt during the 2011/2012 marketing year.

I must be slipping.

Mike

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Looking Ahead:

As we try to prognosticate Tuesday's government report and what they might do with corn ending stocks. One merchandiser contact of mine says, "A lot of these dry mills are only buying corn out into July right now and leaving August pretty wide open. Today the big dogs that are planning on using corn all the way through are driving the show with these strong basis levels. Will get very interesting late summer……will basis levels back off after the big guys get more coverage and allow dry mill ethanol to buy at breakeven or profitable levels? Will there still be farmer corn available in August to allow these dry mills who are holding off to keep running? Toss in this weather and it’s going to be a wild summer…"

Mike

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At the close:

The July corn futures settle 4 3/4 cents higher at $5.98, while the Dec. contract closed 7 3/4 cents higher at $5.44 1/4. The July soybean contract ended 1/2 of a cent higher $14.28 1/2, while the Nov. 2012 contract finished 8 1/4 cents lower at $13.33. The July wheat futures settled 12 1/4 cents lower at $6.29 1/2. July soyoil futures closed $0.89 lower at $49.50. The July soymeal futures settled $4.70 per short ton higher at $430.20. 
In the outside markets, the NYMEX crude oil is $1.61 per barrel lower, the dollar is higher and the Dow Jones Industrials are up 65 points.

Mike

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This week I spoke with a South American ag reporter about the hottest topic in Argentina....a national farmer strike.

See this Skype interview addressing the Argentina farmer strike and southern Brazil crop-weather.

Mike

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At 9:55am:

Our friends at Gazeta do Povo, a Brazilian newspaper, report Friday that in the state of Mato Grosso more than 12 million tons of that country's second corn crop will be harvested by the end of the season. Total safrinhya crop in Brazil will be around 30 mmt. Harvest really hits its stride in the second week of June. In all, 2.5 million hectares were planted and about 0.2% of the crop has been harvested. In Paraná, in southern Brazil, 1% of the corn has been harvested.

Mike

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At the open:

The July corn futures trade 1 3/4 cents lower at $5.92, while the Dec. contract trades 2 1/2 cents higher at $5.39. The July soybean contract is trading 1 1/4 cents higher $14.28, while the Nov. 2012 contract trades 8 3/4 cents lower at $13.32 1/2. The July wheat futures are trading 9 1/2 cents lower at $6.32. July soyoil futures trade lower. The July soymeal futures opened $3.60 per short ton higher at $429.10. 
In the outside markets, the NYMEX crude oil is $2.07 per barrel lower, the dollar is higher and the Dow Jones Industrials are down 20 points.

Mike

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At 6:50am:

It's interesting to note that the U.S. is getting increasing competition in the global corn export market. For instance, this morning it's  being reported that S. Korea, one of the largest corn importers, bought corn from India...39,000mt. India's corn is cheaper than U.S. corn. S. Korea did buy 69,000 mt of U.S. corn Friday. But the point is S. Korea would never buy Indian corn before, due to quality issues. I'm also hearing China just struck a trade negotiating deal with Brazil.

Separately, S. Korea Friday passed on importing a tender for U.S. wheat.

Mike

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At 6:25am:

Early calls: Corn 4-6 cents lower, soybeans 10-12 cents lower, and wheat 7-9 cents lower.

Trackers:
Overnight grain, soybean markets=Trading lower.
Crude Oil=$2.50 per barrel lower.
Dollar=Higher.
Wall Street=Seen starting lower, after a global monetary easing program failed to launch. In the U.S., joblessness is taking center stage for companies.

World Markets=Lower.

More in a minute,

Mike

[marketeye]

The market wants to know what the weekend weather is going to be like. What's out there this morning? It doesn't look like much, according to the latest Freese-Notis Weather radar:

Mike

[aaron-neill]

Ha Ha! The market wants to know what the weekend weather will be.  Like there will be a widespread 2" rain show up.  We have had 8 months of above normal temps and below normal precip and they are worried about the weekend.  Newsflash 2012 is the warmest year since records have been kept.  Think thats going to change for July and pollination?  There will be more than one type of firework on July 4th if this weather pattern continues.

[marketeye]

Apparently, there is a lot of focus on the weather outlook for the rest of the June. It's looking hot/dry.

Mike

[425Cat]

Well I can tell you it will be dry until it rains. How about the report coming Tues . Whats the buzz on US corn ending stocks?

Will they leave it unchanged or lower it a bit.

[marketeye]

I'm hearing the USDA will probably not be ready to lower the corn yield just yet. Corn use for ethanol could be flat to slightly higher. But, in general, the report is being as neutral for the corn market. Meanwhile, some in the trade are seeing the report offering bullish data for wheat and soybeans.

Of course, you have to wonder that if it doesn't rain, the report could be trumped quickly by weather.

Mike

[425Cat]

Whats the number being floated for old crop ending stocks on corn

[marketeye]

425Cat,

828 million bushels is the number I'm reading. Here's a complete breakdown of the pre-report estimates.

What do you think? Is that 828 mb too high, right on, or too low?

I hope this helps.

Mike

[jec22]

After listening to the interview at the Pork Expo with E. Taylor,  I am still wondering how he came up with his 164.  The corn plant at this stage needs a lot less water than it will in a couple of months of July/Aug.  Does he see us changing to a cooler/wetter pattern after July 1?    

I know time flies as I get older.  But the last rain is already too long ago and it wasn't that big to begin with.  Looking at less than an inch of rain in the last 4-5 weeks.  Just my backyard, there are garden spots in IA.  This weekend is looking like August.

That being said.   New crop prices are VERY reasonable, no buyer should complain down the road that anything needs to be done to curb supply other than high prices cure high prices.  I realize many hope for corn with a 3,  just like I hope for $200 NH3 and $80 dollar seed corn.

[Buckley_HF]

Cat, I'd like to know what the trade is expecting as well but it's almost a sure thing USDA will not take it lower than 851. Heck, they could even raise it. We've played this game for 3 months. Expect them to lower only to stay same or even go higher. I dont expect anything else different this go around.