Floor Talk May 3

[marketeye]

At the close:

The July corn futures settled 1 cent higher at $6.12 1/2. The July soybean contract closed 11 3/4 cents lower $14.73 1/2. The July wheat futures finished 1/4 of a cent higher at $6.14 3/4.
In the outside markets, the NYMEX crude oil is $2.61 per barrel lower, the dollar is higher and the Dow Jones Industrials are down 83 points.

One analyst says the markets were weaker due to the strong demand data already in the market. "The exports are strong, but those sales are already in the market.
"Traders are treating today's strong weekly sales report as "buy the rumor, sell the fact". The really big numbers were reported under the daily system last week, and prices were up last week. Now it is more of  a question of "Any more of those out there," he says.

Mike

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At 12:30pm:

It now looks like the CME Group's expanded electronic trading hours will take effect on Monday, May 21st, instead of May 13th. In addition, the expanded hours applies to ethanol contracts too, the CME Group announced Thursday.

This expanding of trading hours must be contagious. Somebody might want to use the number 22 for a lottery ticket or something.

MGEX released its new e-hours today. Here is the statement from MGEX:

"MGEX today announced expanded trading hours for all futures and options contracts, including its Hard Red Spring Wheat (HRSW) contract, beginning Sunday, May 20, 2012 for trade date May 21, 2012. Market participants will now have the ability to manage price risk using the Exchange's flagship contract for 22 hours per trading day Monday through Friday and 23 hours per trading day Sunday to Monday."

Mike

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At mid-session:

The July corn futures trade 1 1/4 cents higher at $6.12 3/4. The July soybean contract is trading 11 1/2 cents lower $14.73 1/2. The July wheat futures are trading 2 3/4 cents higher at $6.17 1/4. The July soymeal futures are trading $2.70 per short ton lower at $427.00 and July soyoil futures trade down $0.51 at $54.20. 
In the outside markets, the NYMEX crude oil is $2.21 per barrel lower, the dollar is higher and the Dow Jones Industrials are down 40 points.

One analyst says, "The strong export sales are supporting the markets today, but I think lack of demand and news that China will sell soybeans from state reserves is bringing the selling to soybeans.  China demand for soy is all new crop, not good for nearby's and might be a sign that the market has peaked.  Overall, corn is seeing new crop weakness on the weather which is great for corn right now.  Wheat, I think is just consolidating the losses from yesterday. I look for spread weakness to continue in beans, due to less new crop area overall. Not a new news item and all the Chinese buying in back and not in front. Corn probably the other way on spreads on a vice-versa kind of thing."

Mike

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At 10:20am:

News: It looks like the new CME Group expanded electronic trading hours will not start on Sunday, May 13, due to the CME Group not filing the right paperwork into the CFTC, the Dow Jones Newswire is reporting Thursday. More later.....

Mike

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At 10:15am:

New crop soybean contracts are higher, while the old-crop is slightly lower. Corn and wheat have found positive territory.

Mike

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At the open:

The July corn futures trade 1 1/2 cents higher at $6.27 1/2, while Dec. is down 1/2 of a cent at $5.30 1/2. The July soybean contract is trading 2 1/2 cents lower $14.82 1/4, while Nov. is down 4 cents. The July wheat futures are trading 1/4 of a cent higher at $6.14 1/2. The July soymeal futures opened $0.20 per short ton lower at $429.50 and July soyoil futures trade down $0.24 at $54.48. 
In the outside markets, the NYMEX crude oil is $1.43 per barrel lower, the dollar is lower and the Dow Jones Industrials are down 45 points.

Mike

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At 8:45am:

Yesterday, there was some folks in here asking why the sell-off in the market. Interestingly enough, AgResource Thursday makes note of CFTC developments with traders and their inability to use CBOT membership value for margin money. Member traders will no longer be offered lower hedge margins.  AgResource tells customers, "The traders' margins will now rise to "speculative" status (just like everyone else). Long liquidation quickened yesterday on the news as CBOT members would have to come up with additional margin funds and they simply got out of or reduced position size in the grains."

Mike

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At 8:15am:

On top of what the USDA released in its Weekly Export Sales, here is a new announcement:

--USDA says 232,000 mt of U.S. soybeans were sold Thursday to China for 2012-13 delivery.

WoW! Are you watching this? These soybeans are flying off of the cargoes!

Mike

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At 7:30am:

USDA releases bullish Weekly Export Sales Thursday:

Corn=3.47 mmt compared to the trade's expectations of 2.6-3.3 million metric tons (mmt).

Soybeans=1.732 mmt vs. the trade's expectations of 900,000-1.4 mmt.

Wheat= 711,500 mt vs. the trade's expectation of 550,000-850,000 mt.

Mike

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At 6:30 am:

Early calls: Corn 1-2 cents higher, soybeans 1-2 cents lower, and wheat 4-6 cents higher.

Trackers:
Overnight grain, soybean markets=Trading mostly higher.
Crude Oil=$0.41 per barrel lower.
Dollar=Higher.
Wall Street=Seen trading higher ahead of more corporate earnings and the U.S. Weekly Jobless Claims Report.

World Markets=Asia/Pacific stocks trade mostly lower, while Europe stocks are higher.

 The national radar shows plenty of rain in the Upper Midwest, especially in Iowa, NE Kansas, eastern Nebraska, Minnesota, northern Missouri. A lot of farmers continue to watch raindrops drip from their uncovered, unsheltered equipment this week. It's raining on into Michigan and Wisconsin.

More in a minute,

Mike

[rusureofit]

WoW! Are you watching this? These soybeans are flying off of the cargoes!

Yes, I am watching the huge grain shipments being bought for probably way less than in reality they should be worth....On Twitter this morning it is being called the "Great Grain Robbery."

[glenlivet18]

Wondering if there will be more selling today.  Crude oil is down hard this morning, S&P starting to follow.  I think it was more than just increased margins that caused the farm markets to drop 20-30 cents from their highs yesterday. 

[giolucas]

What more positive or bullish information do we need than DEMAND!!!! The outside markets are playing a big factor but if we get tight on inventory and something pops in the weather that is detrimental.........well we can assure higher prices.  I think yesterday was more profit taking. 

[Farmerjoe79]

When is the market going to realize that were running out of corn? Maybe the USDA will report what is really out there this time.

[too close for comfort]

Hi Mike great job as usual. Have any of the traders ever said " the Chinese are talking about selling so we're going to be watching for them to be in the market to buy when it gets to a certain price", or is it just us here? I love the way the Chinese work the market. I wonder if Jr has ever tried saying he's going to sell his bean meal back into the market to lower the price?

[Farmerjoe79]

Just a way they can work the market down so they can buy more.

[highyields]

With the new trading hours, are the keeping the pit trading or are they just going to electronic trading, then with our grain bids they aren't really based on the over night, so does anyone know how that will work? 

[marketeye]

The trade is not surprised of China's buying today, since that country just came off of a Holiday break. And yes, some in the trade say China's crush margins are still positive at these price levels. Corn is appealing too, as it drops.

One analyst says, "China's demand is helping to push a record export pace in the U.S."

The other thing talked about amongst traders is next week's May Supply/Demand Report that is expected to cut ending stocks and raise exports.

Mike

[Buckley_HF]

I'm a little confused boys. After the last USDUH report everyone in chicago said that they have now decided they WILL NOT drop pipeline levels of corn to under 801 mb. Why would ANYONE now expect for them to do so? No one believed their numbers last report, it was like they forgot the march 30 report ever happened. I'm just confused on why any trader would think they will drop US carry out below 801 now?! You can't have your cake an eat it too. I'm tired of these traders expecting huge drops in stocks levels only to have USDA do nothing and the market tanks. Maybe we should expect USDA to up ending stocks 100-200 mb because of all the 90 day corn we planted!