Floor Talk March 10 (Report Day)

[marketeye]

At the close:

The May corn futures contract settled 10 3/4 cents lower at $4.78. The May soybean futures contract ended 39 cents lower at $14.18. May wheat futures finished 13 cents lower at $6.40 per bushel. The May soymeal futures contract closed $13.10 per short ton lower at $447.70. The May soyoil futures finished $0.46 lower at $43.86.
In the outside markets, the NYMEX crude oil is $1.49 per barrel lower, the dollar is higher and the Dow Jones Industrials are 60 points lower.

Mike

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At mid-session:

The May corn futures contract is trading 6 cents lower at $4.83. The May soybean futures contract is 24 1/4 cents lower at $14.33. May wheat futures are 4 1/4 cents lower at $6.49 per bushel. The May soymeal futures contract is trading $8.00per short ton lower at $449.80. The May soyoil futures are trading $0.20 lower at $44.12.
In the outside markets, the NYMEX crude oil is $0.20 per barrel lower, the dollar is lower and the Dow Jones Industrials are 63 points lower.

Tim Hannagan, WalshTrading Inc. grain analyst, says Monday's WASDE numbers were already baked into the market. "Corn and beans had friendly numbers but funds were too fat with profits on Ukraine news and always take profits after monthly reports all leading to selling. In otherwards the numbers were priced in," Hannagan says.

Mike

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REPORT REACTION:

--Jack Scoville, PRICE Futures Group vice-president, says the USDA did not cut the ending stocks as much as expected, and the reaction has been strong since specs are very long.  "USDA kept the change down in part by increasing imports nd that might be the thing sticking out to people.  It also cut the crush, not a good thing for a demand rally.  So, the reaction is big and might get bigger as USDA implies we are getting high enough priced to change the overall supply to the market.  The corn data showed a smaller than expected change too with exports going up but nothing else.  The trade had looked for more.  Wheat a non event, world rice data bearish, us data not so much.  Futures tested some support areas on the reaction have bounced, but I think we go back there to make sure and we might just move it on through and on to lower prices for the month," Scoville says.

--Sal Gilbertie, Teucrium Trading, says that today’s report suggests no major change in global supply demand expectations for the 2013/14 season. "Some traders were expecting further reduction in South American corn crops due to weather concerns, but this was not reflected in the report. Wheat remains balanced, with steadily increasing global consumption being met with adequate supplies to date. The real story in the numbers is an increasingly tight global soybean balance sheet. Soybean production in South America was reduced slightly even though global import and export activity across the soy complex was raised. United States soybean stocks were reduced 5 million bushels, helping keep the global balance sheet for oilseeds somewhat tight."

--One analyst says: "With these reports, be careful in selling weakness and buying strength, because the markets can end up making their way back to where they were before the report was released."

Soybeans fell to 33¢ lower and have now put on 10¢. So, beans are down 23¢. Corn is down 7 cents. The trade is surprised the beans are getting hit so hard. Apparently, a lot of Brazilian cargoes of soybeans canceled over the weekend from China. Maybe corn has rallied enough, 80-90 cents in the last 5-weeks. Plus, the funds have gone long these markets and maybe that is a concern for the market.

--Rich Nelson, Allendale Inc. grain analyst, sizes up the report like this: "Trade disappointed over the lack of any serious decline in US bean stocks and Brazil bean production. We are concerned USDA may attempt to manage soybean stocks similar to last year. Last year stocks were left unchanged at 125 million bushels from February through the September reports."

--Peter Meyer, PIRA Energy Group analyst,  says "Two items of interest.  Market reaction.  Even though both corn and soybean ending stocks were lowered, the knee-jerk reaction of the market was to hit the sell button.  This speaks volumes about the Fund positioning in these markets, both of which are long.
 
The second item of interest was unchanged feed & residual demand in corn.  The PEDv situation is on everyone’s mind as it pertains to feed demand.  I find the lack of movement almost comical.  Soy meal production was lowered by 250K short tons which may have something to do with corn feed demand staying unchanged but it seems far-fetched to this cynic."

Mike

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At 11am:

USDA/WASDE SAYS:

U.S. Ending Stocks:

Corn= 1.456 billion bushels

Soybeans= 145 million bushels

Wheagt= 558 million bushels

The government raised corn exports, left ethanol useage at 5.0 billion bushels. Soybean exports were raised by 2.0 million bushels.

Globally, the USDA says:

Brazil corn= 70.0 million metric tons, equal to its January estimate

Brazil soybeans= 88.5 mmt, below the USDA's January estimate of 90.0 mmt.

Argentina corn= 24.0 mmt, equal to the USDA's Jan. estimate

Argentina soybeans= 54.0 mmt, equal to USDA's January estimate.

Mike

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At the open:

The May corn futures contract is trading 4 cents lower at $4.85. The May soybean futures contract is 8 cents lower at $14.49. May wheat futures are 1 cent lower at $6.52 per bushel. The May soymeal futures contract is trading $5.20 per short ton lower at $452.60. The May soyoil futures are trading $0.03 higher at $44.35.
In the outside markets, the ICE Brent crude oil is $0.79 per barrel lower, the dollar is lower and the Dow Jones Industrials are 44 points lower.

Mike

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At 8:00am:

Early calls: Corn is seen 5-7 cents lower, soybeans 6-8 cents lower, and wheat 2-4 cents lower.

Trackers:
Overnight grain, soybean markets=Trading lower.

NYMEX Crude Oil=$1.34 per barrel lower.
Dollar=Lower.

Wall Street=Seen lower, after weak China market data was released Monday.

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

More in a minute,

Mike

[giolucas]

Does the USDA really care if the price of Beans are $20 or $9?   I hope not, but I have a feeling that this report will have to be BULLISH FOR BEANS.  BEANS are flying off the shelf too quickly. 

[425Cat]

More important is how the market responds

[giolucas]

WHACK!! Can I have another?

[sw363535]

Hey crafty,   --------- this is your conspiracy theorist calling ------------ Catch the quote from those market analysis folks at Allendale,,,,,,,

"Trade disappointed over the lack of any serious decline in US bean stocks and Brazil bean production. We are concerned USDA may attempt to manage soybean stocks similar to last year."

[farmerinontaro]

Too funny sw...

"may attempt to manage soybeans stocks"

allendale just waking up & smelling the coffee?

[sw363535]

-Peter Meyer, PIRA Energy Group analyst,  says

I find the lack of movement almost comical.  Soy meal production was lowered by 250K short tons which may have something to do with corn feed demand staying unchanged but it seems far-fetched to this cynic."

It aint just me.  -------- This is as accurate as usda has ever been -------- It has never been based on anything but a mathmatical formula with "what if" input. Even though we were handing them the actual data.     The change in the last 4 years is this.  When there are big surpluses it isn't obvious how manipulated the numbers are-------- and when supplies are tight ------- it is.

The folks getting skewered are the analysts and the end users when the market doesn't work to maintain supply.

[sw363535]

Doing the best they can to ignore export #s

[marketeye]

A couple of things outside of the report. First, I'm being told by multiple Brazilian sources that soybean production estimates keep getting smaller by the day. And, you know the saying, "A small crop keeps getting smaller."

Also, it looks like China is planning for longterm animal feed supplies from the North and South America:

This note was sent to me as it appeared in Brazilian media Monday.

The Council of the Chinese State has released a report that predicts that the global grain production will average 550 million tons from 2013 to 2023. The number is below the record of 2013, when a volume 602 million tons was produced in the world.

China also revealed its strategy of food production for the country in the next decades. The Asian country wants to increase its output of food for human consumption such as rice and wheat, but intends to reduce planting animal feed. Therefore, the projection is that more soybeans would be imported from both Brazil and Argentina, and more corn would be brought from the United States in  the next decades.

The Chinese self-sufficiency on food would be reduced from 95 percent of the necessity to 80 percent in the next 20 years.

Mike

[highyields]

Don't forget about the Ukraine, The Chinese at one time placed alot of money in the Ukraine ag infrastructure.   Not all the gain of feed grains well come from the US.