Floor Talk October 25

[marketeye]

At the close:

The Dec. futures corn contract closed 12 cents lower at $7.42. Nov. soybean futures contract finished 6 cents lower at $15.64. Dec. wheat futures finished 11 cents lower at $8.72 per bushel. The Dec. soyoil futures contract finished $0.39 lower at $51.45. The Dec. soymeal futures contract settled $0.50 per short ton lower at $481.40.


In the outside markets, the NYMEX crude oil is $0.43 per barrel lower, the dollar is higher and the Dow Jones Industrials are 1 point higher.

Mike

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At mid-session:

The Dec. futures corn contract is trading 7 1/2 cents lower at $7.47. Nov. soybean futures contract is trading 9 cents lower at $15.61. Dec. wheat futures are trading 7 1/4 cents lower at $8.76 per bushel. The Dec. soyoil futures contract is trading $0.44 lower at $51.40. The Dec. soymeal futures contract is trading $2.00 per short ton lower at $479.90.


In the outside markets, the NYMEX crude oil is $0.43 per barrel lower, the dollar is higher and the Dow Jones Industrials are 3 points higher.

Mike

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At the open:

The Dec. futures corn contract is trading 1 cent lower at $7.53. Nov. soybean futures contract is trading 4 cents lower at $15.66. Dec. wheat futures are trading 3 cents higherat $8.86 per bushel. The Dec. soyoil futures contract is trading $0.20 lower at $51.64. The Dec. soymeal futures contract is trading $0.40 per short ton higher at $481.80.


In the outside markets, the NYMEX crude oil is $0.43 per barrel lower, the dollar is lower and the Dow Jones Industrials are 73 points higher.

Mike

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At 9:25am:

--USDA Thursday announced  that 120,000mt of soybeans were sold to an 'unknown' buyer.

Mike

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At 7:30am:

USDA releases Weekly Export Sales:

Corn=142,300mt vs. the trade's expectations of between 150,000-375,000 metric tons.
Soybeans=522,200 mt, compared with the trade's expectations of between 600,000-900,000 mt.
Soymeal=176,500 mt vs. the trade's expectations of 150,000-250,000 mt.
Wheat=572,000 mt vs. the trade's expectations of 250,000-450,000 mt.

What do you think? Still pretty weak corn business. Also, I see where South American corn is $50/ton cheaper on the world market vs. U.S. corn.

Mike

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At 7:00am:

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

Trackers:
Overnight grain, soybean markets=Trading mostly lower.
Crude Oil=$0.43 per barrel lower.
Dollar=Lower.
Wall Street=Seen opening higher, with corporate earnings season in full swing. Also, today, U.S. Weekly Jobless Claims Report will be released and the Chicago Fed Activity Index.

World=Higher.

More in a minute,

Mike

[roarintiger1]

It looks like wheat should be the leader........

[GoredHusker]

Both beans and corn missed their mark due to cancellations.  Corn was a direct result of China cancelling.  For soybeans, it was reported as unknown.  However, it was more than likely China.  I have a gut feeling our soybeans are just insurance for the Chinese.  If SA grows a record bean crop, we'll see a lot of cancellations.  

[jec22]

I have had a few contracts that I wished I could cancelled over the years.   How does that work?  Do they pay a penalty?

I am been thinking about the story John W. wrote on conservation not being tied to insurance in the new farm bill.  I totally understand his concern.  But, I think maybe we are seeing a change for being ''paid' to conserve thru DCP, etc, to being 'fined' by a agency like EPA for not controlling erosion.   Just a thought.

[Kstater85]

Cancelled is a word used by the industry.  I better descriptor is washout.    Either way the equity in the contract gets paid to the damaged party.  

[Red Steele]

Why do they cancel then if they have to pay the current difference in contract costs as a penalty? Are there shipping costs that differ and make this work, or some basis moves?? Chinese are not stupid people, they are very intellgent and obviously must make money through cancellations to make the moves work to their favor. If I try to liquidate a forward contract that I have made, my penalities invariably out weigh any advantage I would receive, why does it work so differently for foreign grain buyers???

[Kstater85]

Most typically they do this to take advantage of other opportunities in the market.   Today if I had bought corn delivered Dalian, China six months ago from the USA I could ask to cancel that contract with the USA seller (usually giving him some modest consideration for doing so) pay the penalties and then buy corn from Brazil $30 a ton cheaper. 

Because the Brazil corn is so much cheaper than the USA the Chinese can buy it and more than pay for any costs associated with canceling the USA purchase.

[sschevelle33]

They also get to take advantage of the news helping drive the price down for future purchases.

[too close for comfort]

At $50 a ton cheaper, plus the extra shipping costs to he port, plus the difference between the dollar and real, is there the incentive to expand acres that everyone thinks?

[sw363535]

Too close,

Crop Insurance at these prices will be an incentive----if the prices stay or rise going into spring.