Floor talk September 19

[marketeye]

After the close:

USDA says Monday that 10% of the U.S. corn is harvested vs. 18% a year ago.

Mike

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At the close:

The Dec. corn futures settled 1/4 of a cent higher at $6.92 1/4. The Nov. soybean contract closed 19 1/2 cents lower at $13.36. The Dec. wheat futures ended 15 1/4 cents lower at $6.73. The Dec. soymeal futures closed $4.60 per short ton lower at $348.50. The Dec. soyoil futures closed $1.02 lower at $55.84.

In the outside markets, the NYMEX crude oil is $2.38 per barrel lower, the dollar is higher and the Dow Jones Industrials are down 120 points.

One analyst says, "When you don't have any firm fundamentals, combined with a dollar that is running higher and a risk-off mentality, you get lower markets. The rumor that China may be in the market to buy between 2.0-5.0 million metric tons soon, provided support for the corn market today."

Interesting note:

If China raises its pork production just 10% next year, it equates to 1.0 billion bushels of corn needed for feed. That is mindblowing don't you think? The U.S. government has never been in a position to supply China with so much corn. Soybeans yes, but not corn. If this conundrum is realized, what do we cut back on first; exports or ethanol?

Mike

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At mid-day:

The Dec. corn futures are trading 4 cents lower at $6.88. The Nov. soybean contract is 24 cents lower at $13.31 1/2. The Dec. wheat futures are 11 3/4 cents lower at $6.76 1/2. The Dec. soymeal futures are trading $6.30 per short ton lower at $346.80. The Dec. soyoil futures are trading $1.09 lower at $55.77.

In the outside markets, the NYMEX crude oil is $2.33 per barrel lower, the dollar is higher and the Dow Jones Industrials are down 205 points.

Pres. Obama mentioned, in his Monday speech, he wants to reduce the federal deficit by cutting back agricultural subsidies. What do you think?

Mike

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At the open:

The Dec. corn futures opened 8 cents lower at $6.84. The Nov. soybean contract opened 17 cents lower at $13.38 1/2. The Dec. wheat futures opened 13 3/4 cents lower at $6.74 1/2. The Dec. soymeal futures opened $4.80 per short ton lower at $348.30. The Dec. soyoil futures opened $1.00 lower at $55.86.

In the outside markets, the NYMEX crude oil is $2.54 per barrel lower, the dollar is higher and the Dow Jones Industrials are down 221 points.

Mike

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At 8am:

Market noise and news:

--S. Korea seeks 825,000 mt of feed corn for Dec.-Jan. delivery.

--South Korea seeks 330,000 mt of feed wheat for Dec. - Jan. delivery.

--Japan seeks 800,000 mt of feed corn for Oct.-Dec. delivery.

--Beginning with this next marketing year, China's soybean imports could rise by 6.0 million metric tons, Oil World journal reports.

--Illinois Gov. Pat Quinn announced Monday that ADM will sell China 180,000 mt of soybeans for 2012 delivery.

Mike

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At 7:35am:

As all eyes get focused on yield reports coming out of U.S. cornfields, the most important thing to happen this week may come from a guy named Ben. QE3, a financial measure that in the past has boosted ag commodities, could be born. The Fed Reserve meets this week and some believe the central bankers are ready to do 'something' rather than nothing to respond to a U.S. economy that is driving with bald tires and just spinning at every turn. Do you think QE3 is about to hatch?

You might want to keep one market eye on the Fed this week.

Mike

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At 6:25am:

Early calls: Corn is seen 6-8 cents lower, soybeans 7-9 cents lower, and wheat seen 8-10 cents lower.

Trackers:
Overnight grain, soybean markets=Trading lower.
Crude Oil=$0.75 lower.
Dollar=Higher.
Wall Street=Seen trading lower. The concern revolves around a Greek debt crisis that is near the brink of default. In the U.S., President Obama will release his plan to reduce the federal deficit.

World Markets=Lower.

More in a minute,
 
Mike

[marketeye]

Widespread Iowa rains will delay harvest a few days, it appears. But, as soon as it dries, I think you'll see those little yellow things faling out of those big, long pipe-looking things. Over the weekend, I heard some southern Iowa corn that was, measured but not harvested, recorded a 54 lb test weight and 24% moisture. And then a report from southwest Iowa had a guy picking corn with low moisture but only about 80-100 bushels per acre. And, a lot of 'downed' corn still is a problem in southwest Iowa.

Mike

[Mizzou_Tiger]

CAT AND MOUSE.............demand is far from gone, just waiting patiently.............props to the ones making it work..........buy the dips.........everytime we get a 6 in front of corn and wheat and get soya near 13 flat demand shows up with really big shovels........

until world supply comes in line with some extra in the cellar this could be a permanent trend..........with the exception on regional shortages...........demand will get its needs taken care of earlier and earlier if the dips present opportunity.........

[FARM4FOOD]

 Does operation twist count for qe ? As I understand it it is just a move of the balance sheet to the long end of the curve. Will this inflate commodities?

[highyields]

What I find interesting is ol' Ben back in 2008 in an interview said that he studing the great depression thoroughly, but we are tip toeing along a narrow mountain path waiting to fall into a depression in my opinion.   I was reading how the GDP number is just that, a number, it really is a construed number, and it really means nothing, thats just like the Dow Index, its just an Index of around 25 stocks I think, they took the really bad performing ones off the Index list back after the crash of 2008, once again, It means nothing but yet thats what everyone watches, The unemployment number is stuck around 9% some say its double that, but something to do with the unemployment benefits so the total number of unemployeed doesn't get counted.  You want to know what is a good measure of the economy,  watch the Beef market, watch the domestic market and see how many of the High end cuts are used, Thats the best measurement of the economy.   Now I know that depends on what part of the country you live in, at my local little steak house they are full most weekends, course Nebraska has been isoloated from the bulk of the economy down turn.

The dollar will have to raise ALOT before we see it impact commodites by a huge amount, by huge amount I mean down below $5/bu for corn.  What the local rent rate is now for ground around here $5 corn your losing money,  beans below $13, your out of the money.  

[bigrock4076903]

MT - you have called the market well this past year and I really value your opinion.   You are why I now read this site again.  What is your estimate in how long before we see a bounce back up IF it comes back?  I want to sell some 2012 corn and waited wo weeks too long.

[GoredHusker]

If you are a chart follower, you will see we've been in an upward trend since June 30th, 2010.  You can draw a line from the bottoms showing support.  Very few times in the past 15 months have we dipped below this line.  If the upward trend is to stay intact, one would assume sometime this week we will see the market lift.  The million dollar question right now is whether or not we make new highs like we've done the past 15 months.  I think we all know this upward trend will eventually peter out.  However, we just don't know when.  Another similarity of this time and recent past history is the fact that each time we corrected the market down, it has fallen a dollar.  This morning, we put in a dollar correction from the recent high. 

[dafeeder]

 Dear Enduser,

The corn market has dropped $1 from the last highs, while some HRW wheat areas received good rains, a big lot of the areas received under 1 inch, which did nothing to solve the long term drought issue.  Don't you think it's time to get some just incase coverage?

[jec22]

Ag subsidies represent a small part of the Dept. of Ag. budget.  Is the rest going to take a hit also.  Ending direct subsidies I would think would be a given.

http://www.ourdime.us/566/budgetinfo/the-deptartment-of-15-agriculture/

With the drop in corn, do you think we should raise the ethanol mandate?  🙂

[Mizzou_Tiger]

a year ago it was an easy call if you believed in what I was seeing.........we are very elevated compared to a year ago.......takes a steady diet of news to keep a bull happy........we are into harvest and the world is shakey............depending on how you draw the line and what chart, the dailys pulled out a year show support is near where we are right now.........if you draw that line a little more aggressive we actually punched through it in late June and have not gotten back over.........that line is acting as resistance, but it still is a positive trendline, just a flatter slope........

as for global hoop la........some would argue this with me, but most of it is noise..........like I stated before, we are all in this together and I doubt it just falls apart.........I mean look at today, things were tanking and about 2PM central we heard something out of EU and the dow put 1% back on in 60 minutes..........there is a lot of pent up demand to play these markets..........all the market needs to see is that we are treading water towards the shore.........if we start swimming all the better..........

demand is not dead..........contrary to popular belief..........see Marketeyes comments on some major demand rumors and sales......and those rumors are circulating farther than just Ag.com..........and remember, USDA cuts on demand have been pretty hefty.........they HAVE TO HAPPEN to keep carryout close..........WHAT IF THEY DONT AND THIS CROP GETS SMALLER.........

supply........if you followed my post over the last year, you know the first place I looked this time last year to set this bull run up was the acreage dynamic (interesting dynamic this year as corn and soya have been taking wheat and cotton acres, this drought has shown why that only works if weather cooperates, which makes that dynamic unique again if we need less wheat but can't grow corn or soya) brought on by Russian drought, HRW country, La Nina, and SA..........well guess what, some areas got a little shot of rain, but not near enough to even hope for a successful sowing and they are set up for more sun and wind.........La Nina appears to be poised to make a run again........sounds like SA is off to rocky start with early soya as its too dry to sow..........not to mention they have infastructure, government, and ethanol issues that will limit their contribution somewhat..........

as for our crop.........heard two reports today that there is a pretty big area in NIA, Dakotas, MN and other areas that are seeing some nasty looking soya after last weeks frost........they thought it might be OK..........NOPE, black beans is what I hear........have to imagine some corn got hammered too.........

further south..........reports of better than expected yields does not mean 150 plus nat avg is on the table..........it just means we might not fall much lower than 12.5B crop..........IMO we are around 12.2-12.3B...........gotta remember that a lot of great corn was grown up north last year..........and we didnt have the issues other areas have had this year.........wouldn't say thats the case this year.........soya crop will be sub 3B............

timing........we did this dance last fall........Sept and Nov were weak..........look for a bounce as yields are buttoned up and acreage battle comes forward..........and YES THERE WILL BE ANOTHER BATTLE...........2011 crop will bring a physical premium sometime in 2012..........I would anticipate the ebbs and flows to follow similar to 2010-2011..........end users will work hard to button up needs before they need it as we realize this crop really isn't there............we ran hard into Feb and then again right before planting and then in August..........I have to imagine if Japan's disaster had not happened we might ran harder in early spring............

one thing I learned this year..........and one thing that was confirmed...........learning was that soya demand is more elastic than I thought........I guess because of the general oil complex.........which could get interesting since some other oil seeds had reduced plantings and yields.............there was more old crop corn out there, BUT I THINK we really wrung out the bushels and ran on the edge, which means that bullet is not in the gun..........and remember, last year we went into a weak crop with a big carry behind us........this year its cut in half with another weak crop, we are making that difference up with reduced demand..........I have a hard time swallowing that pill..............confirmed, end users will wrap up needs earlier as reality of deficits arise.......