Floor Talk October 14

[marketeye]

At the close:

At the close, the Dec. corn futures finished 5 1/2 cents lower at $3.79.  Nov. soybean futures closed 3 1/2 cents lower at $9.10 1/2.

Dec. wheat futures end 10 3/4 cents lower at $5.08 1/4.

Dec. soymeal futures close $1.90 per short ton lower at $315.80. Dec. soyoil futures are trading $0.25 higher at $29.04. 

In the outside markets, the Brent Crude oil market is $0.03 higher per barrel, the U.S. dollar is lower, and the Dow Jones Industrials are 184 points lower.

Mike

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At mid-session:

At mid-session, the Dec. corn futures are trading 3 1/2 cents lower at $3.81.  Nov. soybean futures are trading 1/2 of a cent higher at $9.14.

Dec. wheat futures are 9 1/4 cents lower at $5.09.

Dec. soymeal futures are $0.60 per short ton lower at $317.10. Dec. soyoil futures are trading $0.25 higher at $29.04. 

In the outside markets, the Brent Crude oil market is $0.37 lower per barrel, the U.S. dollar is lower, and the Dow Jones Industrials are 115 points lower.

Matt Pierce, Futures International LLC, floor grain trader, says that demand and weather are driving the markets.

"Wheat is giving back gains on better rain forecast for southern plains. Corn is fading back as harvest moves into high gear. Market failed to hold key technical level. Beans holding gains on good demand and technical momentum," Pierce says.

Mike

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At 8:55am:

I guess the rumors were true. China is showing big interest in U.S. soybeans.

Private exporters reported to the U.S. Department of Agriculture export sales of 235,000 metric tons of soybeans for delivery to China during the 2015/2016 marketing year. 

The marketing year for soybeans began Sept. 1.

Mike

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At the open:

At the open, the Dec. corn futures are trading 1 3/4 cents higher at $3.86.  Nov. soybean futures are trading 4 1/2 cents higher at $9.18.

Dec. wheat futures are trading unchanged at $5.19.

Dec. soymeal futures are $0.70 per short ton higher at $318.40. Dec. soyoil futures are trading $0.37 higher at $29.16. 

In the outside markets, the Brent Crude oil market is $0.23 lower per barrel, the U.S. dollar is lower, and the Dow Jones Industrials are 6 points lower.

 Mike

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At 7:00am:

Early calls: Corn 1-2 cents lower, soybeans 1-3 cents lower and wheat 1-2 cents lower.

Trackers:
Overnight grain, soybean markets = Trading lower.
Brent Crude Oil = $0.03 lower.
Dollar =Lower.  
Wall Street = Seen lower, with more big earnings reports coming.

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

More in a minute,

Mike

[marketeye]

Covering the World Food Prize in Des Moines, Iowa, today. Right now, the Global Agricultural Productivity Report (GAP) is being presented.

So, the global production growth is stagnate for the second year in a row. In order to meet the demand of 9.7 billion people, expected to be the consumption level in 2050, GAP growth must increase by 1.75% annually. The current rate of growth is 1.72%, while in low income countries the rate is even lower at 1.5%. 

And in the U.S., the productivity growth is stagnating. A big concern for these researchers of the GAP Index.

"Farming is not a lifestyle, farming is a business," a South African ag leader was quoted recently, regarding the help that country's farmers help needed.

Personally, I would think these stats and this trend should catch the eye of commodities markets.

What do you think?

Mike

[elcheapo]

So, if I read this right, we are running out of
Food...at worse, the US is "max out" since
We haven't grow for a whole.

Amazing

And Chicago tells us we have an over supply
Problem, this markets can't go up.

[sw363535]

The south African statement is just the difference between histories and an avoidence of responsibility.  The US has been assisting their agriculture for years and I am sure they don't want to take that over...  Agriculture has been a "supply europe" industry in a foreign land for decades.  There is not a family farm culture as we know it.

But the US agriculture is currently changing to a business as well..  Slow like frogs in water on the stove as we know...

-----------

US grain production is tied to water use for a high % of our production... Technology will probably not produce a "waterless crop"  So production has some limits that may be difficult to overcome even at high grain prices..

But of course there is always a limit to what can be paid for food.... 

Commodities markets may eventually represent a small share of the global production..  as end users work through the idea of a "reliable and available supply"...  Eventually the feeder in Iowa and the producer in Iowa (for example) are not going to let that supply chain and It's control,  get stretched too far.

[sw363535]

A smart phone attempt to solve a problem

[sw363535]

An attempt

[sw363535]

Hooray

[ECIN]

cheapo said ----    Amazing

And Chicago tells us we have an over supply
Problem, this markets can't go up

Well cheapo - I beg to differ here - your on the right track - but have the wrong people here - how about the USDA - and there BS - its not the windy city boys - they rade what ever they A-holes say - nothing else .

[wglassfo]

As farmers we may weep and curse the USDA, chicago boys and anybody else we can line up in our sights

However, I will speak to grain prices only, as that is what I do and know best

Doesn't it seem that the heavy lifting is done by the law of supply and demand by the use of basis

Chicago is paper, but down on the farm, we have this thing called basis, which tells us, if the end user wants our grain and how badly they want it. The end user uses basis to adjust the price up or down accordig to their supply or lack of supply

I have sold grain on a basis contract, when I think the basis is favourable, acording to what has been paid in the past, or I may sit on my hands if the basis is not to my liking

I have also sold on a cash method if I think the combined price meets my target and my estimation of the market

In my mind, chicago paper means very little. It is what the end user will pay me for my product and my ability to sell, when they want my product the most

Yes the price will go up and down each day, mostly driven by the chicago price, but that is short term price flucuation

 However, if chicago is too far out of line, either way, in the bigger picture, then your basis or my basis may or may not adjust, according to the end users need for supply. If the chicago price goes down, but basis does not adjust, then I know my end user does not see the need to pay me any more than current bid.

If the basis makes a move, that is telling me what my end user has for supply and demand needs or anticipated needs

I believe Palouser said it best when he said that chicago is a lagging indicator

I have taken it one step further and pay a lot of attention to my local basis

I know our CD has some bearing on my price, compared to the USD but currently, our end user is paying a decent harvest basis for soybeans

I am betting our local market will pay even more on soybean basis as they work through the current deliveries and have to bid the beans out of the on farm bins and elevators. Our local crop was [for the most part] not the best, thus our basis will have to equal the currency exchange plus the cost of transportation, from those of you that had a good crop. If you don't want to sell enough, then my basis will have to go higher as the law of supply and demand works within the market system.

Chicago is only one part of the price, and at most a daily moving part. The bigger adjustment factor is the basis, which is more long term

If you think chicago is out to get you, then take a paper postion and beat them at their own game

That is not easy, my friend, and no, with all the electronic trading, chicago is not all buddy buddy, lets get the farmer types

People trade soybeans in front of a computer screen,, all over the world. They are not buddies, they take bets against each other.

These are the people that trade what we call paper, and they could care less about your or my basis, but we should understand the role basis plays in our price

What do you think??

[sw363535]

Nice representation wglassfo... it is going to be interesting to watch what basis evolves into as the trade becomes totally international...

I think the laging indicator laggs more than ever.... as we go along.... and basis may evolve into the "supply" contract market...

Usda's roll in the lagging is hard to ignore the last several years...  They are still living by that near record level production for corn and pushing bean numbers up and nearly every farmer interview i see in media says not so good... "we just want to get this one over"..."it has been a tough year"