From the floor August 5

[marketeye]

At the close:

The Dec corn futures settled 3 cents higher at $4.18. The Nov. soybean contract closed 4 3/4 cents higher at $10.29. The Sep. wheat futures ended up the daily limit of 60 cents at $7.85 3/4. So, tomorrow's wheat limit will be 90 cents compared to its regular 60-cent limit. Dec. soymeal is $0.30 per short ton higher at $295.40. The Dec. soyoil futures closed 10 points lower at $42.00.

In the outside markets, the NYMEX crude oil is $0.43 per barrel lower, the dollar is lower, and the Dow Jones Industrials are down 22 points.

Because Russia will begin planting its winter crop in September, this point should be considered, by this analyst. "Should the drought continue through September and early October, talk of acreage reductions of 20 percent to 30 percent will surface.  Farmers are already talking about not planting wheat until rains come. The crop goes dormant in November until spring breaks in April. Some planting could resume then, but the early planting failure would already be priced in. This could push wheat to $10.00 or higher," he says.

Mike

-------------

At 1:15pm:

Informa released new crop estimates Thursday. For corn, the firm estimates a crop yield average of 166, totaling 13.448 billion bushels. That is higher than its July estimate of 13.241 billion and the USDA's last estimate of 13.245 billion.

For soybeans, the average yield is estimated at 43.5 bushels per acre. The crop size is estimated at 3.389 billion bushels vs. 3.385 billion in July and the USDA's last estimate of 3.345 billion.

Mike

---------

At mid-session:

At mid-session, the Dec corn futures are 10 1/4 cents higher at $4.25 1/4. The Nov. soybean contract is 13 cents higher at $10.37 1/4. The Sep. wheat futures are 54 3/4 cents at $7.80 1/2. Dec. soymeal is $5.70 per short ton higher at $298.90. The Dec. soyoil futures are 17 points $42.27.

In the outside markets, the NYMEX crude oil is $0.50 per barrel lower, the dollar is higher, and the Dow Jones Industrials are down 33 points.

One analyst says, "Well we don’t have to figure out how much wheat Russia wont sell this year because the answer is none.They announce exports of all grains are cancelled thru years end and if winter wheat planting in September is off 20 or 30% Then talk of the grain export  suspention  going into 2011 will enter. This had wheat open up the 60 cent limit. Talk of prior sales being cancelled for future shipment has U.S. sales soaring with todays export sales report showing 854 t.m.t. of wheat was sold last week with Egypt a major player. Egypt turned away from the U.S. the last year in favor of Russian wheat and now come crawling back."

Mike

---------

At the open:

At the open, the Dec corn futures are 20 cents higher at $4.35. The Nov. soybean contract is 23 3/4 cents higher at $10.48. The Sep. wheat futures are up the daily limit of 60 cents at $7.85 3/4. Dec. soymeal is $6.60 per short ton higher at $299.00.

In the outside markets, the NYMEX crude oil is $0.44 per barrel lower, the dollar is lower, and the Dow Jones Industrials are down 19 points.

Mike

----------

At 8:30am:

Aside from the explosive news that Russia will ban grain exports for a month, due to the worst drought ever, there are some incredible export sales being announced this morning. Here are the latest announcements from USDA:

--China bought 455,000 metric tons of U.S. soybeans for 2010-11 delivery.

--An 'unknown' bought 111,500 metric tons of U.S. soybeans for 10-11 delivery.

--An 'unknown' bought 110,000 metric tons of U.S. wheat.

Now, having said that, here is an attempt to put the very, very bullish news of Russia's ban in perspective. To put it bluntly, I have a trader telling me this is the peak. He says if he was a farmer, and his dad is and he has some Iowa land. But, anyway, he says the farmer should be selling some into this market. In fact, he said he would  be selling wheat and planting wheat today. Now, the Russian argument. He says, "The wheat market will start out limit-up, but won't be there at the end of the day. Here are some talking points, as to why: The U.S. wheat carryout is at 1.0 billion bushels and we do not need to ration wheat. The world just needs to turn the boats away from the Black Sea and towards the Gulf of Mexico. The U.S. can ship out 400 million bushels of wheat a week, supply the wolrld's needs and handle any shortage. We can ship wheat out of Atlanta, the Gulf, or the East Coast. In the U.S., we have promoted storing wheat, we just need to flatten out the spreads. Keep in mind, Russia will export grain in September."

Mike

---------

At 8am:

I'm checking on updated early calls, because the overnights exploded since 6:30am. Corn closed, in the overnight trading, 18 1/2 cents higher, soybeans up 15 1/2, and wheat up 60 cents. WOW!

NEWS: Russia has announced it will ban grain exports from Aug. 15-Sept. That has sent the early calls for wheat limit up, according to one trader. But, he doesn't think the wheat market will close limit up. I'll tell you in a minute why. I'll be back in a few minutes.

Mike

---------

At 6:25am:

Early calls: Corn up 5-7 cents, soybeans up 5-7 cents, and wheat up 30-35 cents. Ukraine canceled some wheat exports and the buyers are now looking to buy from the U.S.

Trackers:

Overnight grain=Trading sharply higher.

Crude oil=Trading $0.34 per barrel lower.

Dollar=Trading lower.

Wall Street= Seen opening flat as investors await the release of the U.S. jobless claims report, this morning. The most anticipated report, the nonfarm payroll, will be released tomorrow. Also today, investors await the monetary policy announcements from the European Central Bank and the Bank of England.

World Markets=Mostly higher.

More in a minute,

Mike

[SWMICH]

Mike,

I wonder how much the grains will drop if Russia gets a big  widespread rain ?  It sounds like their wheat is beyond saving with any rain.  Does anyone know what condition their wheat is in?   I think there is a lot of  wheat in storage in the world.  A good rain in some of these drought  pockets could drastically drop prices.  Also, why is soybeans still going up when just a few months ago, South America had a bumper crop?  I sold 1000 bu. of soybeans out of the field  this  Oct. for $9.75 and looking at selling more out of the field  this week.  At least I won't have to put it in the bin.      

  .   

[BA Deere]

Terrific job keeping us informed Markeye!  I`m a little disgusted with the 'analyst for money', this latest run up caught `em will their pants down. For Heavens` sake, just before the run up they said "better finish up your last 10% new crop sales before fall!!!"  Don`t these jokers have access the growing conditions around the world? The Russia deal should have been something they were keeping a eye on a month or two ago. I just thank God I had a gut feeling NOT to follow their advice on "finishing up sales". Why do I sent a check to these clowns, again?

[NDf]

I see buy the rumor/sell the fact type tradeing today, but I do not have the guts to try it. Maybe some dec corn puts would be a wise buy.

[zman343]

Interesting that in 2007 when wheat started its historic run it took 5 months to rally from $4.25 to near $8.  This year it has happened in less than 2 months.  The market is way way overbought and should be running into some historical resistance.  Like in 07/08 you have to be ready for big upside moves followed by big downside moves.  At any time I think this wheat market could correct $1 to $2 and then turn on a dime and rally another $3 or $4, again just like 07/08.

The underlying fundamental story (Russia drought) is bullish but a market that moves like this is far more speculative than anything else.  The supply/demand picture is not as bullish as it was in 07/08.  I would guess that most pure hedgers have been blown out of positions and are either in put options or completely open.

Who knows where the ultimate top in this market will be but we all know that when it ends it won't be pretty.  I still expect to see a global production response next year, which could result in record ending stocks once again and much lower prices.

[giolucas]

As a trader, I am not picking the top to this market whether it is wheat, corn or soybeans.   I also do not think that the ordinary investor has caught wind of what is going on with the grains.  As these novice investors come in and buy which cause the market to move higher, then there will be opportunity to sell.    I will follow the trend until the trend tells me otherwise.

[floydboy]

The wheat market would drop big-time because of a big rain in Russia, not that it would save any of the current crop but because it would provide hope for their winter wheat crop (planting of that crop normally gets started in the second half of this month in Russia)

[Artifice]

Either you believe there is a crisis and hold, or if you think the world has gone nuts, creating a crisis that isn't there, then you scale up sell, seelking to harvest excess speculation.

Remember, the world does not get smarter, newbies are born daily.

Was crude worth 120 and 150 in 2008, no, but it traded there briefly.

Artifice 

[RichILL]

Mike,  Thank you once again for the insightful reporting!!!  Are there any large short positions still around?  If so they must be in intense pain.  It will be interesting if any importers try to cover future needs, it could turn into self induced panic buying and price run up.  How badly is this affecting livestock margins?  Are there many endusers caught short on covering needs?  I know our harvest will most likely begin early but if the endusers didn't price their needs earlier, ouch!  It will be interesting down the road to see how Russia is viewed as a reliable supplier.  With their export ban scheduled to last a month it could be they don't really know just how much wheat they have on hand and need to do an inventory.  I know I wouldn't want to be a Russian wheat grower today.  It will be interesting to see how he comes out down the road.

[jec22]

Thanks Marketeye.  Heavy farmer selling(both corn and beans) reported before the open in this area of Iowa this morning.  On corn I would suspect alot of those sales are on PL contracts.  So if this is a top, farmers are doing a great job of taking advantage of it---not something that usually happens.  Endusers should be able to push the basis a little more.  Those bean exports are really impressive.  Looks like we can have a big crop and still see strong prices with such a big demand globally.  My question would be not how high could we go, but how much downside risk do they see.