Floor talk September 22

[marketeye]

At the close:

The Dec. corn futures settled 35 3/4 cents lower at $6.50. Remember, the new corn daily trading limit is 40¢.  The Nov. soybean contract closed 37 1/2 cents lower at $12.83. The Dec. wheat futures settled 33 cents lower at $6.33 3/4. The Dec. soymeal futures closed $9.10 per short ton lower at $335.10. The Dec. soyoil futures settled $1.40 lower at $53.94.

In the outside markets, the NYMEX crude oil is $5.75 per barrel lower, the dollar is higher and the Dow Jones Industrials are down 462 points.

On Thursday, China announced lower manufacturing data for the third month in a row. Also, Europe's financial crisis worsens and the U.S. political division all are weighing on the stocks market and ultimately the commodities markets.

Mike

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At mid-session:

The Dec. corn futures are trading 23 1/4 cents lower at $6.62 1/4. Remember, the new corn daily trading limit is 40¢.  The Nov. soybean contract is trading 28 1/2 cents lower at $12.92. The Dec. wheat futures are trading 17 1/4 cents lower at $6.49 1/2. The Dec. soymeal futures are trading $6.70 per short ton lower at $337.50. The Dec. soyoil futures oare trading $1.29 lower at $54.05.

In the outside markets, the NYMEX crude oil is $4.73 per barrel lower, the dollar is higher and the Dow Jones Industrials are down 413 points.

Mike

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At the open:

The Dec. corn futures opened 23 cents lower at $6.63. The Nov. soybean contract opened 33 1/2 cents lower at $12.87. The Dec. wheat futures opened 20 1/2 cents lower at $6.46. The Dec. soymeal futures opened $7.00 per short ton lower at $337.20. The Dec. soyoil futures opened $1.51 lower at $53.83.

In the outside markets, the NYMEX crude oil is $4.36 per barrel lower, the dollar is higher and the Dow Jones Industrials are down 320 points.

Broad-based selling is sinking all markets, period.

Mike

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At 9:20am:

Egypt buys 240,000 metric tons of Russian wheat. This may add even more pressure to the wheat market.

Mike

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At 8am:

USDA announces fresh soybean sales Thursday. China bought 180,000 mt of U.S. soybeans for 2011-12 delivery.

Mike

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At 7:35am:

The USDA released friendly Weekly Export Sales for wheat, but unfriendly data for corn and soybeans.

Corn=598,100 metric tons of weekly sales vs. the trade's expectation of 650,000 mt.

Soybeans=404,400 mt vs. the trade's expectations of 400,000 mt.

Wheat=679,500 mt vs. the trade's expectations of 475,000 mt.

What do you think? Will these numbers matter when the outside markets are so negative?

Mike

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At 7:30am:

--South Korea buyers have purchased eight cargoes of corn totaling 415,000 metric tons. These are animal feed millers that are doing the buyin, according to the Dow Jones Newswire.

Mike

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At 7am:

Market noise & news:

--S. Korea tenders for 55,000 mt of U.S. corn at a price of $1.67 over the Dec. futures price.

--Japan buys 68,000 mt of U.S. food grains and 96,624 mt of milling wheat.

--China's 2011 grain output is set at 550 million mt vs. 546 million a year ago.

Mike

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At 6:20am:

Early calls: Corn is seen 17-19 cents lower, soybeans 18-20 cents lower, and wheat seen 18-20 cents lower.

Trackers:
Overnight grain, soybean markets=Trading sharply lower.
Crude Oil=$3.83 lower.
Dollar=Higher.
Wall Street=Seen trading lower as investors question whether yesterday's announcement  by the Fed Reserve will help stimulate the U.S. economy. Read the Fed's unusual announcement.

World Markets=Lower.

The Fed's announcement to boost the U.S. economy is falling on deaf ears. Very few positive things are being said about this move by the Fed that is being labeled "Operation Twist". Yeserday's 200-plus plunge in the U.S. stock market continued overnight and has carried over into the commodities markets. Plus, the dollar is rising. Things couldn't look worse for the farm markets Thursday. Weekly Export Sales will be out at 7:30am CDT.

More in a minute,

Mike

[BA Deere]

The punchbowl is empty, we need more juice!  QE-3 Now!!  Or, this sucker`s going down.  The thing is, `operation twist` exposes us to even more risk when interest rates have to eventually do rise.  So if we`re gonna do a QE3, let`s do it once we get into a depression, it won`t be as easy to dig out.

[marketeye]

BA Deere,

It will be interesting to see what OptionEye has to say about "Operation Twist". What I hear is the Fed spent too much time stating that the future looks bleak and not enough time announcing effective solutions. The investors are not buying into this at all.

Mike

[jec22]

The price of crude/gasoline futures keep falling, but the price of gas at the pump is slow to drop.  Cash gasoline is a buck over futures, seems crazy.  Lower gas prices is proven to be one of the best stimulus.  Are they already pricing in higher margins getting ready for losing the blenders credit?

[highyields]

If this corn does take a break, hopefully not a very long break, but how much does this do for corn demand? Demand that we didn't need with this corn crop.   I was told weather this is true or not that ethanol is profitable all the way to $70 crude with $7 corn. 

Someone explain to me why the dollar is going up?   If our economy is going deeper in the tank then why would anyone want to buy the dollar?  My thoughts are the grain traders where short the dollar and long commodities in a spread and now their unwinding those spreads.  I was fairly confident that we wouldn't see another fall price action like last years, but its still early it could start a run up yet earlier then average. 

I'm not for sure what price level is needed for South American producers to plant more acres, think those acres are bought?  The market sure isn't buying many wheat acres when winter wheat is within a few cents of corn price.  

[jrsiajdranch]

High yields, our dollar is going higher because we suck less than everybody else sucks.  So the US is just the least suckiest place to have your money!

[marketeye]

U.S. Takes It Out, Brazil Puts It In

A Brazilian contact of mine has graciously sent this update on the start of the Brazilian soybean planting season for 2011-12. This note is from Robson Mfioletti, an agronomist and market analyst with Ocepar Co.

Paraná, a southern Brazilian state, is allowing farmers to start planting soybeans from this Wednesday (09/21), according to the new agricultural climate risk zoning approved by the Ministry of Agriculture, Livestock and Supply (MAPA). The sowing period in the state, which in previous crops was allowed from the 1st of October, a 10-day early start this year, is in response to requests from entities representing the productive sector, among them the Ocepar.
The expectation is that  Paraná soybean acres will be about 4.4 million hectares in the 2011/12 harvest. You should place a small reduction in the cultivation of soybeans in relation to the last cycle due to increased corn area. But the start of the season is going very positively, although the rains have come a little earlier than expected.
"Thus, producers will have to wait for the most opportune time to deploy the crops in some regions, but we are finding that they are well motivated, especially because of the good prices, "says the Engineer. Agronomist and analyst of technical and economic Ocepar, Robson Mafioletti. He also noted that it is important to respect the term established in the agricultural zoning to ensure the insurance coverage in case of losses due to bad weather, for example.
The producers are optimistic about new crop due to excellent prices of soybeans and corn. In the last 12 months, producer prices in Parana State increased by 12% and 57% respectively, currently prices of corn R$ 22/bag 60 kg and soybean R$ 41/bag 60 kg. 

Mike

[kraft-t]

You do have a way with words,JR  Thanks for the chuckle.

[nwobcw]

  I was going to answer your question on the dollar strength in a factual way but JR took the wind outta my sails.