Floor Talk March 8

[marketeye]

At the close:

The May futures corn contract settled 12 cents higher at $7.03. The May soybean futures contract finished 2 cents lower at $14.71. May wheat futures ended 1 cent higher at $6.97 per bushel. The May soyoil futures contract closed $0.27 lower at $50.34. The May soymeal futures finished $0.90 per short ton lower at $435.20. 


In the outside markets, the NYMEX crude oil is $0.30 per barrel higher, the dollar is higher and the Dow Jones Industrials are 52 points higher.

Mike

----------

At 1:20pm:

Corn is 8 cents higher, while soybeans and wheat are lower Friday.

Mike

-------

At 11am:

USDA Says:

Corn carryout= 632 million bushels vs. avg. trade estimate of 649 million bushels

Soybean carryout= 125 million bushels  vs. the avg. trade estimate of 122 million bushels

Wheat carryout= 716 million bushels  vs. the avg. trade estimate of 713 million bushels

WORLD PRODUCTION

Brazil soybeans= 83.5 million metric tons vs. avg. estimate of 83.4 mmt.

Brazil corn=72.5 mmt vs. the avg. trade estimate of 72.6

Argentina soybeans=51.5 mmt vs. the avg. trade estimate of 51.0 mmt

Argentina corn=26.5 mmt vs. the avg. trade estimate of 25.6 mmt.

TRADE REACTION

--One analyst says, "It was the simplist of all reports. The USDA left corn and bean ending stocks unchanged from the month prior. It was interesting that higher imports helped offset lower exports. Were seeing the effect of 4 years of U.S.farmers going to South America to buy cheap land to farm and we're now seeing measurable crop sizes coming back to the U.S. for usage. The beans too saw ending stocks unchanged. The USDA said , yes we have over exported so far, but the record crops from Brazil the next  90 days will dramatically slow U.S. exports averaging out the demand pace. When we come in Monday the trade will say, what report, and go back to near term news to trade," he says.

--Alan Brugler, Brugler Marketing & Management president, says, "USDA cut projected world corn ending stocks just about as much as the trade had expected. Global production was reduced to 854.07 MMT and feed use was increased 2.61 MMT. Nearly all of that increase in feed & residual use was the 100 million bushel hike in the US projection. Non-feed use was reduced, however, with the change in projected total use only 430,000 MT. Global carryin was also increased 150,000 MT from last year, softening the stocks draw down.
Bulls were disappointed in the beans, as USDA hiked projected ending stocks vs. the previous report rather than shrinking them.  Global production was cut 1.5 MMT (all Argentina), but assumed crush use was also cut back 1.48 MMT to cancel that out. Chinese numbers were UNCH. The loss of crush activity was in Argentina, with USDA essentially saying that Argentina would maintain their export program in order to generate the tariff revenue, and any shortfall in production will come out of domestic crush activity.
World wheat ending stocks grew more than the trade had expected, due to revisions to 2011/12 data that resulted in a rise in old crop ending stocks to 655.48 MMT. The 2012/13 numbers were revised by increasing production by 1.8 MMT.

--Sal Gilbertie, Teucrium Trading president, says, "There were few surprises in today’s report, although the reality of the old crop tightness in US soybeans does not seem to be adequately reflected. Not only do old crop supplies for corn and soybeans remain particularly tight, but projections for soybean exports from the US are expected to be almost entirely supplanted by South American exports, which seems optimistic given the relentless demand we’ve seen by the Chinese for US soybeans and the building shipping delays at Brazilian ports. Old crop soybeans may still have some price rationing ahead. Wheat is well balanced and global demand for all grains remains healthy."

--One analyst says, "The report showed unchanged ending stocks estimates for corn and soybeans, which was a little bullish for corn and bearish for soybeans.  It is what I expected, though, as I think USDA wants to see the quarterly stocks report yet.  USDA cut production for both in Argentina but left Brazil alone which is not bullish, either.  Wheat showed more stocks here and around the world, bearish wheat for sure but people have been selling wheat due to the rain and snow in the Great Plains.  Most of the bearish reaction so far has been in the beans, and I think this has to do as much with the LatAm numbers, especially Brazil not changing."

--One floor trader says the report smacked the bean and wheat markets, but spiked the corn market up 12 cents, back to ubnchanged and then May corn jumped up 4 cents. Meanwhile, wheat dropped 3 cents and soybeans fell 14 cents. Overall, the report is a "non-event".

 Mike

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At the open:

The May futures corn contract opened 1 cent higher at $6.92. The May soybean futures contract opened 10 cents higher at $14.83. May wheat futures opened 3 cents lower at $6.92 per bushel. The May soyoil futures contract opened $0.12 lower at $50.49. The May soymeal futures are trading $5.30 per short ton higher at $441.40. 


In the outside markets, the NYMEX crude oil is $0.03 per barrel lower, the dollar is higher and the Dow Jones Industrials are 31 points higher.

Mike

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At 8:45am:

Jeff Coleman, Trean Group analyst and CME Group pit trader, says the market has anticipated this morning's upcoming WASDE Report for awhile.

"Many analysts have agreed upon today's WASDE numbers, sending the grain markets lower over the past two weeks. Trading volume has been reduced ahead of this number and by the massive outflow of cash from all the major commodity funds. Especially Goldman Sachs. The futures spreads in corn, beans and wheat have become very active and volatile. As a result the CSO (Calendar Spread Option) markets have become a very useful trading tool. Volume in CSO’S has been rising consistently as the spreads become much more volatile and fun to watch. This might be something for all of us to pay more attention to. In the equities markets the jobs numbers came out better than expected so the stock market continues to make daily record highs," he says.

Mike

--------

At 7am:

--China reports that its February soybean imports totaled 2.9 million tons, 39% on-month.

--China's Jan-Feb soybean imports totaled 7.68 million tons, 9% on-year.

---It looks like Smithfield Foods is being urged to split into three different companies, according to the Dow Jones Newswire Friday. Hmmmmm....financial trouble for one of the biggies?  I'll look for more details.

Mike

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At 6:45am: 

Early calls:  Corn is seen 2-4 cents higher, soybeans 3-5 cents higher, and wheat 1-2 cents lower.

Trackers:
Overnight grain, soybean markets=Trading mostly higher.
Crude Oil=$0.07 per barrel higher. 
Dollar=Higher. 
Wall Street=Seen opening higher, with eyes on the U.S. payroll data Friday.

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

More in a minute,

Mike

[giolucas]

Good Morning Mike,

What time does the report come out?  Thanks in advance.

[marketeye]

Gio,

Today's USDA/WASDE Report will be released at 11am CT.

Mike

[farsider]

Good Morning Mike,
Any talk with the future change of trading hours will there be a return to a 7:30 release time for usda reports or has that become a pernament change in the eyes of the usda ? Maybe to soon to ask with the recent change by the CME group.

[luisvieira]

In Brazil, the market is bullish about soybean prices. The reason is that the Argentinean crop was revised down to 49.4 million tons by Lanworth consultancy. On the other hand, the estimates for corn were increased from 24.9 million tons to 25 million tons. Brazil would harvest 80.8 million tons of soybeans and 76.8 million tons of corn, according to Lanworth.

[highyields]

There is a story about Smithfields on the Wall street Journal Site,   I can't read it since I don't have an subscription.  

I can't figure out what goes wrong with these big companies.  Is it that the CEO thinks he HAS to be paid mulit millions?   I have no idea what he was paid but when you own everything from the sow to the ham, you should be able to make money on that hog.    I know $7 corn isn't nice to feed but for some reason these hog guys never thought it would go that high,  my neighbor told me last june that they where buying any corn,  hey your gambling with farm, at least buy an option to protect profitablity.  

on another note I was told that you sell hogs out a year in advice now?  is that true?   If you know what your getting for your hogs then wouldn't you do everything in your power to protect your cost?   

I haven't been at the computer for the last few days, can anyone tell me why the stock market is making new highs?  Have I missed something? 

[marketeye]

farsider,

The latest word from the USDA, on this topic, is that no change is scheduled. So, I don't think anything will happen right away.

Mike

[roarintiger1]

Mike,   Has there been any more information out of Argentina about the farmers holding on to their soybean crop?   Shouldn't harvest be starting soon for them?  Any info on Argentina would be appreciated.   

[jrsiajdranch]

Shareholder urges Smithfield Foods to consider split

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Thu Mar 7, 2013 10:05pm EST

(Reuters) - Continental Grain Co, one of the biggest shareholders of Smithfield Foods Inc (SFD.N), has sent a letter to the board urging it to consider splitting the leading U.S. hog producer into three units.

In a letter filed with the U.S. Securities and Exchange Commission on Thursday, Continental Grain also said Smithfield should consider initiating a regular cash dividend.

"There should be a regular dividend along the lines of what competitors like Hormel (HRL.N) or Tyson (TSN.N) pay, which would encourage a more stable shareholder base, while returning capital to shareholders," Continental Grain, which owns about 6 percent of Smithfield stock, said in the letter.

It noted that since the current Smithfield management took over in mid-2006, the company's stock has declined by 26 percent while, including dividends, Tyson has returned about 70 percent and Hormel has returned 131 percent.

The shareholder said it was willing to meet with Smithfield's board and management to discuss its plan for the company.

Paul Fribourg, the head of Continental Grain Co, quit Smithfield's board in September 2009 over a disagreement with the company's plan at the time to issue $250 million worth of shares of common stock.

Smithfield Foods, the nation's largest pork processor and hog producer, could not immediately be reached for comment by Reuters outside of regular U.S. business hours.

Privately-held Continental Grain, which was established in 1813, invests in agribusiness in the United States and internationally.

(Reporting by Sakthi Prasad in Bangalore; Editing by Stephen Coates)

[marketeye]

roarintiger1,

I just heard from our Argentinian contact, late yesterday. The early harvest yields are coming in normal, or average, as described.

Hope to have more later.

Mike