Floor Talk March 14

[marketeye]

At the close:

Jeff Coleman, The Trean Group analyst and CME Group pit trader offers this closing market wrap-up.

"Thursday was quite active for price action as corn and wheat extended gains and soybeans continued to slide. Soybeans were once again down as the news of a bumper crop being harvested in Brazil continues to trickle in. Combine that with the logical demise of US bean exports and you see why there is nothing here to catch the beans as they fall. May beans closed down 11.25 cents to end the day at 1435.5 cents per bushel. Wheat was a powerhouse today as it rallied for the sixth straight day as exports climbed 44 percent. This is the longest rally since last July. May wheat futures closed up 14.75 cents to end the trading day at 724.75. It seems a far cry from two weeks ago when wheat was in a grind downward with no support levels to be found. Corn was also strong gliding up 6.25 cents to close at 716.5. Corn just seemed to follow wheat as it has done for the last three trading days. Tonight and tomorrow should be interesting to end the week. Can US beans find support after becoming the red headed stepchild to Brazil? Can wheat stay strong and keep its leash on corn? Hmmmmm…. Could be a good trade tomorrow people. Like a broken record I must state the obvious. Yes the stock market set another high today. BLAH, BLAH BLAH! Y’all know the story. Tomorrow we have quadruple witching as well as CPI and Empire State Mfg at 8:30 am est. and Industrial Production at 9:15 am est. There are other numbers and Richard Fischer speaks as well. Let’s rest up and have some fun tomorrow."

Mike

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At 1:40pm:

The May futures corn contract is trading 5 cents higher at $7.15. The May soybean futures contract is trading 16 cents lower at $14.31. May wheat futures are trading 10 cents higher at $7.20 per bushel. The May soymeal futures are trading $4.90 per short ton lower at $424.00. The May soyoil futures are trading $0.41 lower at $49.11. 


In the outside markets, the NYMEX crude oil is $0.18 per barrel higher, the dollar is lower and the Dow Jones Industrials are 51 points higher.

Mike

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At 7:30am:

USDA Weekly Export Sales:

Corn= 653,300 mt vs. the tradee's 200 to 500,000 metric tons (mt).

Soybeans=783,700 mt vs. the trade's expectations of 700,000-1,100,000 mt.

Wheat= 1.087 mmt, vs. the trade's expectations of 500-800,000 mt.

Looks bullish to me. What do you think?

Meanwhile, Jeff Coleman, the Trean Group analyst and CME Group pit trader, says the soybean market could remain under pressure. In his own words:

"After the big down move for soybeans yesterday (21.75 cents), the slide continued overnight. Beans traded in a range of +3 to -10.25 settling in around a nickel lower, as we approach the day session. With the continued progress of the Brazilian bean harvest and the USDA downgrading US bean exports, US beans are going to be under some pressure for a while. Let’s remember that Brazil is now the largest bean grower in the world and their exports continue to increase. Corn also took a dip yesterday, and overnight, on weak export numbers and from being dragged down by soybeans. Wheat held steady as we’ve seen quite a correction in the wheat/corn spread which approached record levels on Tuesday. May/May wheat corn is now trading 3 over to the wheat after being negative by double digits for the past week. The wheat/corn spreads have been very active and fun to watch providing trading opportunities for customers and locals. The stock market continues to garner the headlines as the Dow made yet another record high and appears headed for new record highs today as jobless claims fell as the labor market improves. The Dow has its first nine day winning streak since November of 1996," he says.

Mike

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At 7:10am: 

Early calls:  Corn is seen 1-2 cents lower, soybeans 5-7 cents lower, and wheat 1-2 cents higher.

Trackers:
Overnight grain, soybean markets=Trading mostly lower.
Crude Oil=$0.44 per barrel higher. 
Dollar=Higher. 
Wall Street=Seen opening higher.

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

More in a minute,

Mike

[roarintiger1]

Almost every market summary and commentary every day has information about Brazil's large soybean harvest and large export expectations.......This is old news.

[Palouser]

News and expectations need confirmation. There are a lot of complexities to soy from S America due to infrastructure, timing and economic conditions (in the case of Argentina) and the ability of N America to cover the physical 'gap'. I expected wheat to come on strong later in the year due to the dynamics of world trade this year but have had to wait for confirmation. The expected large forthcoming crop doesn't eliminate some questions.

[c-x-1]

maybe the new part of the old news is the (continued progress of harvest?), roarin'

[roarintiger1]

Harvest progress for the SA crops?    It's all gonna get harvested at some point right? That's fine, but we have already heard that everyone expects a large crop.  It just seems to me that many are trying to talk this soybean market down, down, & down some more.  Most should be reminded that in doing this, it creates perhaps a decrease in soybeans acres relative to corn here in the U.S.  The soybean price needs to keep pace with the corn price to assure enough bean acres get planted.  Now, if there appears to be a few planting delays on the horizon this becomes a non-issue and less corn acres get planted and in return, we'll get more bean acres.  But until that materializes, it appears that corn acres will win out.

[c-x-1]

right,

remember news or stories are never the reason a market is doing what it's doing. it's always about the money....so, while it doesn't necessarily make any rational sense in the bigger picture why beans are selling for a few days, it probably has to do with the money needing to do what it needs to do in the near term........

..........participants perhaps wrapping up Mar. business needs??

[Palouser]

You say 'remember news or stories are never the reason a market is doing what it's doing, and I say that's at least not a good characterization.

It is the cumulative affect of patterns of expecrtations and actions that are usually the trend of stories and numbers that are very real, even if they do not explain a single day. Of course I'm seldom interested in a single day - or even futures action at all. Futures actions are part of a much larger perspective. The longer term news and figures are a reflection of real physical trends.

I expected wheat to show strength later in the marketing year despite negative issues because of previous physical sales and where and when they occurred. Futures actions then and now mean little to me in that light. The charts show the upsurge I expected and are now easily within sight of USDA projections and I believe will top them for total wheat sales. This tends to be a zero sum game. Futures definitely are not. Therefore I'm experiencing $1.60 basis in my market compared to Chicago.

I understand that a futures trader has different goals and patterns to watch in paper. 'Technicals'? Just doesn't concern me much.

But I'm a producer, not a spec.

[Palouser]

I should say futures are not a zero sum game in relation to physical wheat. It theoretically could be, but it's not set up to be that. Therefore right or wrong in paper vs physical can be much different.

[roarintiger1]

Mike,  The same old Brazil story in the closing comments............How about another same old story.....Isn't  it still dry in Nebraska?   

[c-x-1]

Agreed, Palouser.

I should've been more precise. Large, many month long processes, like our markets here, are the unfolding manifestation of perhaps 100's of thousands of bits of energy, many levels of truth, different angles of reality, varying and evolving situations, etc.

So, in response to roarin' being tired of hearing another bit of news/reality/truth re: Brazil beans because the market is selling 3 days in a row, i attempted to re-explain how pieces of news, reality or truths are CONVENIENTLY used to fit the DAY, even though the news is EVER present. Perhaps a more accurate and truthful response from the pit trader would be, "beans are still selling on this news b/c objects and systems like markets are influenced by universal laws like motion & inertia, and thusly, an OPPOSING force has not yet come along to change this. 

Now, I would even be impressed if marketeye could express floortalk everyday seamlessly like a different page or chapter of THE SAME BOOK without interruption. 

I have a bit of exciting news about the SRW (prompt futures continuation) mkt - it could not quite test the multi month up-trend line before reversing up - this could be bullish news.

.....and in Texas weather news - trees are STILL dying from the 2011 summer drought. Moral - droughts can have long tails....