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Veteran Advisor

From the floor February 22

Wheat Options Talk:


One trader says there's nothing stopping these markets to go limit down again tomorrow. He says, "Anyone with a rudimentary feel for logic wouldn't have too much trouble imagining how the Middle East and their hefty appetite for US grains has been throroughly disrupted and is in no way showing signs of being resolved any time soon.  As for what this means to our markets, one can only give a gut-check, knee jerk response, which seems to be cover your exposure.  And unfortunately for this arena, there were a lot of open spec. longs coming into Tuesday's action.  That was certainly the case in other markets too."

 

Mike

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At the close:

The March corn futures settled 'limit down' 30 cents at $6.79 3/4. The March soybean contract closed 'limit down' 70 cents at $12.98.  The March wheat futures closed 'limit down' 60 cents at $7.62 3/4. The March soymeal futures closed $16.40 per short ton lower at $345.60. The March soyoil futures ended $2.50 lower at $53.99.


In the outside markets, the NYMEX crude oil is $7.89 per barrel higher, the dollar is slightly higher, and the Dow Jones Industrials are down 170 points.


On today's market, one analyst says, "The market traded two hats tossed into the ring. The first hat took prices sharply higher in overnight trade with crude oil up over 8 dollars on Middle East strife, pulling corn based ethanol and bio-fuels from soyoil along.The second hat brought on selling and sharply lower overnight and day session prices, as China failed to pass a bill to lift soybean and soyoil tariffs that would make it easier to import the grain. China has slowed bean purchases recently as South American beans are hitting the market now."

 

You guys probably want me to go back to South America, if this is how the markets are going to react? Wow, what a day to return.

 

Mike

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At mid-session:

The March corn futures are down the 30-cent daily limit at $6.79 3/4. The March soybean contract is 69 cents lower at $12.99.  The March wheat futures are 55 1/4 cents lower at $7.67. The March soymeal futures are down $15.10 per short ton at $346.90. The March soyoil futures are $2.34 lower at $54.15.


In the outside markets, the NYMEX crude oil is $4.80 per barrel higher, the dollar is slightly higher, and the Dow Jones Industrials are down 116 points.

 

Mike

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At 10:45am:

The markets are tanking! Corn is down 27 cents, soybeans are down 30 cents, and wheat is 38 cents lower.

 

One trader says, "What a wild day! We were higher overnight with the Crude Oil, but it seems like late in the overnight session that attitudes changed and reduction of risk positions became more important, and down we went.  Some follow-through selling coming from specs and funds here today.  Except for Libya, there is not a lot of bearish news out there, and most analysts seem to think fundamentals remain bullish. But, South America is on-line now with lots of soybeans for the world and there is a lot of concern about what USDA might say with the Outlook Conference, later this week.  Overall, lots of spec liquidation it seems with almost no one brave enough to buy into it for now."

 

Mike


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At the open:

The March corn futures opened 12 cents  lower at $6.97 1/2. The March soybean contract opened 17 cents lower at $13.50 1/2.  The March wheat futures opened 23 cents lower at $7.99 1/4.


In the outside markets, the NYMEX crude oil is $5.17 per barrel higher, the dollar is lower, and the Dow Jones Industrials are down 56 points.


Mike

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At 8:15am:

USDA announced Tuesday morning that 120,000 metric tons of SRW wheat was sold to Egypt for 2010-11 delivery.


Mike

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At 6:30am:


Early calls: Corn 8-10 cents lower, soybeans 9-10 cents lower and wheat 11-13 cents lower.


Trackers:

Overnight grain markets=Trading sharply lower.

Crude Oil=$6.49 higher.

Dollar=Lower.

Wall Street=Seen opening lower as a result of the Mideast violence.

World Markets=Lower.


Wow, what a trip. It's always a learning experience visiting Brazil. Thanks to the folks at Gazeta do Povo newspaper for a great tour through the country. We traveled over 2,500 miles from south-to-north, visiting with all socioeconomic groups. From the Ag Minister, to Brazilian and U.S. farmers, to a lady trying to make a living selling watermelons, we learned something everyday. Of course, the major takeaways were continued rains, big crops, huge acreage potential, improving highways, increasing corn yields and corn use, and simply good food and people. I traveled for 12 days and 12-hours a day with a group of reporters and photographers that really helped me understand their country. 


We did have spotty internet service. Even so, I hope you were able to follow along with the coverage and learn something. I have answers to some of your questions that I didn't get to yet. I will go back and answer them. For instance, I have some information on Brazil's crop insurance, increased corn use, sugarcane industry, and their technological adoption.


Meanwhile, thanks to John that kept you informed. I was following along as well, John. Great action from your market offerings.


Moving ahead, I see heavy rain is falling in the southern states of Brazil. And, the northern states had enough rain over the weekend to delay harvest further. I can tell you that as I was leaving the country, an agronomist said there were a few cases in southern Brazil where excessive rains had caused the beans to begin to germinate inside the pods. This is not good, especially with rains continuing to fall.



More in a minute,


Mike

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Veteran Contributor

Re: From the floor February 22

Welcome home. Hope you are all rested up to face this potentially turbulent week. The Arab states unrest is already pushing oil up and equities down. Will the grains complex follow one or the other or march along to its own drummer? Hopefully we will not get too many surprises from this.

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Veteran Advisor

Re: From the floor February 22

There's a general feeling that investors are pulling out of risk and into safer-havens. In other words, gold is a popular place for investors to run and hide. Crude oil is seen surging higher, pulling with it corn and ethanol prices.

 

Last weekend, the House voted to cut its support for increased ethanol blending and monies for changing ethanol pump labels. I haven't seen much reaction to this topic on the talk boards here. What is your perspective on this? Are you worried the U.S. government may be sending signals that ethanol support is fading?

 

Mike

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Veteran Advisor

Re: From the floor February 22

Mike welcome back!  Really enjoyed your updates from Bazil. Good info all around.  How did the gropeing go on the plane? HE HE

The ethol thing is kinda funny as Rep. Lathem says it will not get included in the conference bill as the senate is very pro ethol. His office staff also said that They do believe it willbe hard to get blenders credit renewed next year but that is a way off yet so may not be the front burner issue.  They also told me that most of Ag commodities will recieve deep cuts in next farm bill. There is no support in the urban areas for these "huge" pmts. to farmers. 

It does show that growth energy and poet had much better plans to use blenders credit moneis for infrastructure instead of the blend credit. That would have created jobs outside of the nmidwest along with pipelines to move product to population centers away from the Corn Belt.  

your comment about Gold is well taken. If this unrest in Wis. moves to other areas the WOrld will begin to wonder if we can hold it all together. That will push gold higher and the dollar lower. A low dollar should mean higher grain prices. but who knows from here on out it is a crap shoot!

As Joe diffy said "Welcome to Earth, third rock from the sun!" 

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Veteran Advisor

Re: From the floor February 22

MIke here is a editorial posting from the Des Moines register I thought you might find interesting.

Vilsack: Livestock, dairy sectors at risk  Comments

Although the farm economy is booming, the livestock and dairy sectors because of soaring price of feed and other input costs, Agriculture Secretary Tom Vilsack told lawmakers today. Vilsack did not offer those industries any relief although he said the department expects corn acreage to increase by 3 to 5 percent this year.

“These are good times for agriculture,” Vilsack told the Senate agriculture committee, but “the livestock and dairy industries could face financial pressures in 2011 and bear watching.”

Groups representing livestock producers are pressing Congress to roll back incentives for using corn to make fuel ethanol, but Vilsack, a former Iowa governor, is a staunch advocate for the biofuel industry. Both at the Senate hearing and during an earlier appearance in the House, Vislack warned against cutting off subsidies for ethanol, suggesting that industry might face a similar fate to the biodeisel sector, which collapsed in 2010 after its tax subsidy temporarily lapsed. Economists say the ethanol producers are far less dependent on federal subsidies than biodiesel makers are.

Republican Sen. Mike Johanns, whose state of Nebraska is one of the largest producers of cattle and beef as well as ethanol, expressed concern about the adequacy of U.S. grain reserves, which are at their lowest levels  since 1995. There is “virtually no carryover, probably not  enough to keep the pipeline going,” he told Vilsack. Johanns, who had Vilsack’s job during George W. Bush’s administration, asked Vilsack would happen if there are significant weather-related crop failures.

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Veteran Advisor

Re: From the floor February 22

I think we are gonna see some big orders coming from that part of the world for the next few months. THose in gov. know they need to have food for the masses. I do not think they care the price it is all about availability.

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Senior Contributor

Re: From the floor February 22

If the republicans succeed in killing ethanol watch gas and oil companies profits SOAR...... Life will be good then...... p-oed

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Veteran Advisor

Re: From the floor February 22

Hate to argue with a fellow michigander but they are not going to "kill" ethol. They are doing away with the ability for the EPA to use funding to label pumps for E15.  This is all they can do right now. Also if they do away with the blenders credit but keep the mandate usage will stay the same so they will not change anybodies ethol usage. And actually the oil companies will pay more in Taxes so the total profit will not change but thier tax will! Oil companies will be paying more taxes!

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Senior Contributor

Re: From the floor February 22

Good morning JR..... :~)

I was just trying to get people to think about cause and effect..... I look for the blending credits to go away here this year...... But things never work the ways that people want them to...... hence .... cause and effect...... p-oed

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Veteran Advisor

Re: From the floor February 22

SouthWestOhio,

 

Thanks for the message. It is good to be home, despite the heavy snowfall in Chicago today. The trip reminded me that you really have to get out amongst the farmers, the world, the people every once in awhile. Sometimes what you think is going on isn't. What you hear isn't always the exact truth. So, yes, the trip offered insight into the positives and negatives that Brazilian agriculture faces.

 

Mike

 

 

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