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Veteran Contributor

Floor Talk May 10

ON TUESDAY:

July Soybeans traded at it's daily limit up of 65¢, hitting $10.91 per bushel. Options traders say the market went 5¢ higher, synthetically.

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At the close:

At the close, the July corn futures settled 12 cents higher at $3.81, Dec. futures finished 10 3/4 cents higher at $3.87 3/4 per bushel. July soybean futures settled 57 1/2 cents higher at $10.84, hitting its 65¢ daily limit at one point in the session, while Nov. soybean futures closed 51 3/4 cents higher at $10.67 1/2. July wheat futures ended 4 3/4 cents higher at $4.61 1/4. July soymeal futures closed at its daily limit up of $20.00 short ton higher at $359.70. July soyoil futures closed $0.61 higher at $33.44.  In the outside markets, the Brent crude oil market is $1.01 per barrel higher, the U.S. dollar is higher, and the Dow Jones Industrials are 187 points higher.

 

Mike

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BEANS JUMP 40¢ on the Report, dropped back down to 24¢ higher. Corn, wheat are up 10¢.

 

At 11:00am:

USDA SAYS:

 

U.S. 2015-16 ENDING STOCKS:

 

Wheat=  978 million bushels vs. trade's expectation of 981 million

 

Corn=  1.803  billion bushels vs. trade's expectations of 1.841 billion bushels

 

Soybeans= 400 million bushels vs. trade's expectations of 426 million bushels

 

WORLD NUMBERS:

 

Argentina soybeans= 56.5 million tons vs. USDA's 59.00 mill. tons last month

 

Argentina corn= 27.00 million tons vs. USDA's 28.00 last month 

 

Brazil soybeans= 99.0 million tons vs. USDA's 100.00 mill. tons last month

 

Brazil corn= 81.0 mmt. vs. USDA's 84.00 last month

 

 

TRADE REACTION:

 

-- Doug Prohaska, Senior Commodity Risk Manager at INTL FCStone Financial Inc., says: 

Ø  As we anticipated, USDA increasing old crop 15/16 corn exports (75 mbu), while lowering other Industry usage 10 mbu, for a net reduction in carryout to 1,803 bbu. The lower carryout moves to the 16/17 S & D.
 
Ø  For 16/17 corn, USDA used 93.6 planted acreage and a normal 91.4% harvested with 168 yield for record production of 14.430 bbu.
 
Ø  16/17 corn feed was increased a substantial 300 mbu from old crop, projected at 5.550 bbu, while also increasing exports 175 mbu from last year to 1.900 bbu. Ethanol and Industry use increased 60 mbu from last year for a lower than expected carryout of 2.513 bbu. However, the 16/17 corn carryout projected among the largest in 30 years, with a stock-to-usage ratio of 15.2%.  
 
Ø  The most notable world corn number was a 43 mmt increase in demand, (1.6 bbu) keeping Global ending stocks nearly the same with a tightening of the stocks-to-uasage ratio of 20.5%.

SOYBEAN BULLET POINTS:

Ø  USDA increasing US soybean crush 10 mbu, and exports 35 mbu, lowering 15/16 US soybean carryout to 400 mbu with a snug 10.7% stocks-to-usage ratio. The lower old crop carryout moves to the new crop S & D exacerbating a snug 16/17 US soybean balance sheet.
 
Ø  16/17 new crop US soybean planted acreage of 82.2 million, (down 300,000)  with a typical 99% harvested at 81.4 million with a high yield of 46.7 producing a 3.8 bbu crop.
 
Ø  USDA increased 16/17 soybean crush another 35 mbu (over their raised old crop crush of 1.880 bbu) to 1.915 bbu, while also increasing soybean exports a significant 145 mbu to 1.885 bbu. resulting in a 305 mbu carryout and an extremely tight 7.8% stocks-to-usage ratio.
 
Ø  Stocks-to-usage of 7.8% cannot tolerate much yield drop, assuming no additional soybean acres are being planted. However, given the US corn crop is approximately 75% planted, and the new crop soybean corn ratio is 2.75/1, some producers may make last minute switching to soybeans from corn. Additionally, given the negative wheat fundamentals, some acreage may find its way to soybeans yet. Time will tell.
 
Ø  World soybean demand projected to increase nearly 10 mmt ( 366 mbu) lowering Global carryout to 68.2 mmt and 2.5% drop in stocks-to-usage ratio to 20.8%.

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--Sal Gilbertie, Teucrium Trading, says that the surprise takeaways from this report have to be lower than expected soybean ending stocks and the across the board increase in global demand for corn, soybeans and wheat to record levels, especially for the 2016/17 season.
“Increasing projected demand seems to be offsetting projected near-term high stock levels, which puts pressure on farmers and mother nature to keep production levels high,” Gilbert says.
Unofficial estimates for South American production seem to indicate the USDA could be overestimating South American production numbers, which further intensifies the need for farmers to achieve high yields in the entire Northern Hemisphere this season, Gilbertie says.
“The season is off to a good start for both early planting progress and emergence, but the demand picture painted in this report will require the weather to be nearly perfect again this season in order to fulfill global demand,” Gilbert says.
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--Jack Scoville,The PRICE Futures Group Senior Market Analyst, says that the big bullish news came in the beans and has been in the beans all day.  
“In Brazil, CONAB, that country’s equivalent to USDA, cut the soybeans production Tuesday more than expected to just under 97 million tons.  It also cut corn production in a big way, but this was pretty well known due to the drought,” Scoville says.  
But the bean cut, although much smaller, was a surprise and sent the market up to start the day, Scoville says.  
“Then USDA came out with bullish ending stocks estimates for soybeans, especially for next year’s crop year.  This really sent the market north.  July Soybeans now have a swing target of $11.15 or so, with a second swing up to about $11.85, although that seems like a lot,” Scoville says.
Scoville adds, “The corn is kind of following beans higher, as ending stocks for this year and next year came in at the low end of trade projections.”
Only the wheat data was negative, but wheat is holding due to the rally in the others, Scoville says.  “Wild day, we should close strong and then we should hold the beans higher now,” Scoville says.

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--Jason Roose, U.S. Commodities, says that the lower U.S. soybean ending stocks was the highlight of the USDA report today, the tighter balance table from 440 to 305 mln , this was a surprise to the trade increasing demand ,with larger exports and increasing crush, the smaller world ending stocks on soybeans is the driver behind these numbers .

 

 

Mike

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At mid-day:

At mid-day, the July corn futures are trading 10 cents higher at $3.79, Dec. futures are 8 1/4 cents higher at $3.85 per bushel. July soybean futures are 53 1/2 cents higher at $10.80, while Nov. soybean futures are 46 3/4 cents higher at $10.62 1/2. July wheat futures are 4 1/2 cents higher at $4.61. July soymeal futures trade $20.00 short ton higher at $359.70. July soyoil futures are $0.47 higher at $33.30.  In the outside markets, the Brent crude oil market is $1.06 per barrel higher, the U.S. dollar is higher, and the Dow Jones Industrials are 192 points higher.

 

Mike

 

At 9:00am:

Private exporters reported to the U.S. Department of Agriculture the following activity:

  • Export sales of 40,000 metric tons of soybean oil for delivery to China during the 2015/2016 marketing year; and
  • Export sales of 20,000 metric tons of soybean oil for delivery to unknown destinations during the 2015/2016 marketing year.

The marketing year for soybean oil began Oct.1.

 

Mike

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At the open:

At the open, the July corn futures are trading 1/2 of a cent higher at $3.69, Dec. futures are 1/2 of a cent higher at $3.71 per bushel. July soybean futures are 13 cents higher at $10.40, while Nov. soybean futures are 11 cents higher at $10.27. July wheat futures are 1 cent higher at $4.57. July soymeal futures trade $6.30 short ton higher at $346.00. July soyoil futures are $0.11 higher at $32.94.  In the outside markets, the Brent crude oil market is $0.37 per barrel higher, the U.S. dollar is lower, and the Dow Jones Industrials are 72 points higher.

 

Mike

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Planting is going gangbusters, or so the USDA says. In yesterday's Floor Talk several of you said you were unable to get planted due to the cool, wet weather. Does this mean that we're going to see a slowdown in planting progress -- according to the USDA that is -- in the next few weeks? 

On a personal note, I did some planting in my "garden" yesterday. Now, I'm from the Midwest where I can dig down for miles and it's all soft black soil. Being a recent transplant to central Texas I now understand why they throw some longhorns on the land and let them graze -- about 6 inches below the surface I hit some sort of rocky, sandy clay that nearly busted my shovel. There really is no place like Nebraska. 

 

Here's what happened overnight:

 

Brent Crude Oil = 1% higher. 

West Texas Intermediate Crude Oil = little changed.

Dollar = up 0.1%.

Wall Street = U.S. stock futures higher in pre-market trading. 
World Markets = Global stocks rise along with metals, oil.

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20 Replies
Highlighted
Veteran Advisor

Re: Floor Talk May 10

Where are those 26 Million Bushels of Beans? Whose hiding them?

 

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Advisor

Re: Floor Talk May 10

Market will trade the numbers "as is" for the moment but I'm thinking 2-3 million acres in some of the wetter areas switching from corn to beans.

 

That'll be partly weather driven one way or the other and the location and extent of the rains after the window in the 6-10 isn't clearly in sight yet.

 

Market is also looking at the planting progress number "as is" but I'm thinking more about the pockets that are struggling. Probably still 10M of the 20M+ acres of potential corn in areas with notably slow progress.

 

If the window doesn't open up quite a bit I think the shift will be on.

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Frequent Contributor

Re: Floor Talk May 10

Lets hope some of these unplanted corn acres get switched to beans.

 

This corn market could use some positive news.

 

Any takers out there?

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Veteran Advisor

Re: Floor Talk May 10

Eastern belt is behind. Looks like a late, wet corn harvest east of the Mississippi. If the corn all gets planted.

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Honored Advisor

Re: Floor Talk May 10

I would venture a guess here.........that NO market adviser saw this coming.  And they have cost their clients millions of dollars.    Heck,  I certainly don't need any help at losing money marketing grain.  I can do that all by myself.  Smiley Wink

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Advisor

Re: Floor Talk May 10

Presently a moving target, a failure is always a possibility and if it does then I'll have to respect that.

 

But my guess is that the funds will defend their longs in beans.

 

FWIW, the chart currently, and I mean right at this moment, suggests that we had an upward flat correction and are heading into the 5th wave of this move.

 

There are no hard and fast objectives for that but FWIW, by the rule of proportionality the push has already taken 5 to an equal travel as 1.

 

1X wave 3 gets to about 11.10 basis SN. And of course it can extend almost infinitely, but I do grow this stuff in order to ultimately sell it.

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Senior Advisor

Re: Floor Talk May 10

Yep, just checking back on some old headlines and talk topics -- 4 weeks ago, "Sell, Sell, Sell" -- seed still in the bags, hauling some grain.

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Re: Floor Talk May 10

👍👍up up and away..then big crop and 👎👎down down  lol

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Honored Advisor

Re: Floor Talk May 10

Well they just got 10,000 bu of my old Crop at more than $10
May delivery and they want me to haul real slow as they are basically full and June is fine with them.

They are buying beans today.

A gavilon terminal
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