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Senior Contributor

From the floor January 11

At the close:

The March corn futures settled unchanged at $6.07. The March soybean contract closed 23 1/2 cents lower at $13.57. The March wheat futures settled 7 3/4 cents lower at $7.59 1/2. The March soybean meal futures ended $7.70 lower per short ton at $362.90. The March soyoil futures closed $0.52 lower at $56.61.
In the outside markets, the NYMEX crude oil is $2.00 per barrel higher, the dollar is lower, and the Dow Jones Industrials are up 32 points.

 

Mike

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At mid-session:

The March corn futures are 8 cents higher at $6.15. The March soybean contract is 5 1/4 cents lower at $13.75. The March wheat futures are 4 cents higher at $7.71 1/4. The March soybean meal futures are $4.10 lower per short ton at $366.50. The March soyoil futures are $0.21 higher at $57.34.

 

In the outside markets, the NYMEX crude oil is $1.74 per barrel higher, the dollar is lower, and the Dow Jones Industrials are up 51 points.

 

One analyst says, "Corn is higher on two fronts. "One, we had two export sales this morning totaling 241,000 metric tons. Two, pre- crop report positioning, on thinking the report again will lower ending stocks, friendly for the corn market. Soybean pricers started out higher, on news China was in buying 116,000 metric tons of soybeans. But, that market turned lower as pre-report estimates for Wednesday's USDA Crop Report were more neutral, he says. It's all about positioning and posturing ahead of the reports release and risk."

 

Mike

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At 10:15am:

Soybean prices have fallen, corn and wheat remain higher, this morning. One analyst says, "I am hearing some call selling in Soybeans, someone sold 1,000 Feb 1400 calls and 1,000 Mar 1400 calls.  Other than that not hearing much.  Everyone is anticipating a bullish report tomorrow and they will probably get it.  But whether it will be bullish enough to hold futures here or if we get a short term correction is the question and I don't know.  I can see it either way.  I think most people kind of feel the way I do and are taking some risk off the table on both sides today.  The normal day before a report type trade.  Good demand news overnight with mex and Unknown buying corn and unknown buying wheat and China buying soybeans is supportive, but it looks like call selling is hurting the beans right now."

 

Mike

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A poll in this talk forum shows that most people think USDA's U.S. ending stocks number in the Wednesday WASDE Report will be changed the most vs. other categories. In fact, 54% of those voting, say the U.S. ending stocks will provide the most drama, 24% say U.S. corn acreage, 14% soybean production, and 9% the winter wheat seedings. Interestingly, there is one CME Group floor trader that might agree with the poll's results.

 

Though the average trade estimate for the U.S. corn ending stocks is 779 million bushels, a 63 million decrease from USDA's Dec. estimate, one trader says he sees a number of 590-610.  How he gets there is by dropping the avg. yield at 153.5 vs. the current 154.3 bushels per acre. He says that takes 70 million off of the ending stocks number. Plus, he is only seeing feed usage falling by dropping feed usage only by 50-100 million bushels. And he agrees with the expected increase in corn use for ethanol. All in all, despite a drop in feed usage, he is very aggressive with his U.S. corn ending stocks number. We'll see. What say you?

 

Mike

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At the open:

The March corn futures are 6 1/4 cents higher at $6.13 1/4. The March soybean contract opened 1 1/2 cents higher at $13.82. The March wheat futures opened 6 3/4 cents higher at $7.74. The March soybean meal futures opened $0.10 lower per short ton at $370.50. The March soyoil futures opened $0.50 higher at $57.18.


In the outside markets, the NYMEX crude oil is $0.62 per barrel higher, the dollar is higher, and the Dow Jones Industrials are up 48 points.

 

As long as it stays dry in Argentina, the corn market has fuel for a rally.

 

Mike

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At 9am:

USDA announces fresh export sales Tuesday:

-Export sales of 155,600 metric tons of wheat for delivery to unknown destinations. Of the total, 82,650 tons is hard red winter for delivery during the 2010/2011 marketing year; 36,450 tons is hard red spring during the 2010/2011 marketing year; and 36,500 tons is soft white for delivery during the 2010/2011 marketing year; and
--Export sales of 125,000 metric tons of corn for delivery to Mexico during the 2011/2012 marketing year; and
--Export sales of 116,000 metric tons of corn for delivery to unknown destinations during the 2010/2011 marketing year; and
--Export sales of 116,000 metric tons of soybeans for delivery to China during the 2010/2011 marketing year.

 

 

Mike

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At 7am:

Japan is seeking 119,480 metric tons of U.S. food wheat Tuesday.


Speaking of wheat, Australia's crops are in big trouble from flooding of 'biblical proportions'. Crop forecasts are being cut right and left. Wheat, sugar, cotton, and sorghum production estimates have fallen. Also, there is reportedly an ethanol shortage on the way. And I'm sure you're aware that Australia produces some of the highest quality of cotton in the world. Specifically for wheat, yes the production is being cut, but even the bigger issue is large amounts is losing quality.



Mike

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At 6:35am:


Early calls: Corn 2-4 cents higher, soybeans 2-4 cents higher, and wheat 3-5 cents higher.


Trackers:

Overnight grain markets=Trading higher.

Crude Oil=$0.56 higher.

Dollar=Lower.

Wall Street=Seen opening higher as worries of Europe's debt problems dissipate.

World Markets=Higher.


I've been told the CME Group grain trade will slow to a crawl today about noon, as traders will have their positions in place for Wednesday's USDA Report. Are you ready? Do you have your Report plan in place? Let's hear you.


More in a minute,


Mike

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5 Replies
Senior Contributor

Re: From the floor January 11

I am going "all in" on what I have left to sell....about 25% of 2010 production, and 100% of 2011 and on. I have all of 2011 expenses covered...most of 2012, and this market has put me in a bullish frame of mind ever since Sept 1 when I returned from overseas. If I am wrong, and sell what is left for $3 or $2, I will still be eating regularily, and what I intend to purchase will be a fraction of what it would cost today.

 

I think so many people "expect" this market to hit the $8 mark on corn, that the expectations will become reality, sometime between now and July 1st.  Oil Futures are flirting with the $100 per barrel mark, livestock futures are up, foreign demand is high, the value of the dollar is on a skid downwards...what will stop the price from going much higher?

 

Even a bearish report tomorrow will be dismissed, in my opinion.

 

I actually hope that corn retreats to $3, though, because that will mean that the fiscal conservatives in America are winning the war. I don't think that will happen, and I want to be prepared for runaway inflation by still owning some tangible products.

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Senior Contributor

Re: From the floor January 11

Red Steele,

 

You might just be the grain market leader. You should never feel bad about making a profit, analysts say. There does seem to be a lot of people talking about $7-$8 dollar corn, and $15 soybeans. Just like in last night's college football game, where the unexpected happened, your choice to use a less favorable move and sell now could win it for you. Last night, two of the fastest, high-powered offenses that are used to scoring a lot of points, didn't score much at all. On paper, it looked like these two teams would have put up the highest combined score for a NCAA Championship game. Likewise, with nothing but bullish fundamentals out there, on paper, these grain markets look like they could run to the moon. Last night, a kicker had to decide the game. I liken your willingness to sell now and use your 'kicker' in your risk management plan to win that profit for you, instead of relying on your main players to score a lot of touchdowns (i.e. waiting for $8 corn, $15 soybeans). 

 

Use all of your 'players', you never know when 'the franchise player' won't perform like all signs show he/she should. Good luck Red Steele. And enjoy buying your intended purchases at a much lower price, if you're wrong.

 

Mike

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Veteran Contributor

Re: Good post, Red Steele,

I would like to see a correction in the cash corn ( latter day pork bellies so to speak now ).

 

Tend to think correct ( 10 to 15% ) , then stabilize, then roll on into 011 likely back to current levels or higher would show some long term SIGNIFICANCE to this market.

 

If say a product like corn goes strait to say $8 cash, history will show that as a "flash in the pan " so to speak...and long term back to $3.

 

Thinking mildly bullish report and the market sells off, say 10 to 15% lower on corn.

 

Wheat and soy, actually a different planet so to speak vs a product like corn.

 

Granted wheat is relative per bu as comped to corn long term, thus should go back to being worth say Double whatever a bu of corn might be.

 

Soy....the  SKY is not the limit...but $22 per bu cash might be.

 

 

 

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Senior Contributor

Re: Good post, Red Steele,

It will be interesting to see what the USDA does with Argentine's corn and soybean production. An Argentine crop analyst said today that production in Argentina could reach only to 40 million tons vs. the 52 million tons estimate provided at the beginning of the harvest. For corn, the reduction can be from 25 to 18 million tonnes.

 

Mike


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Highlighted
Contributor

Re: Good post, Red Steele,

I would expect the USDA/WASDE to take a "measured approach" to reducing the size of Argentine crop.....they rarely make dramatic haircuts in one fell swoop...

 

X factor for me is the Dec 1 grain stocks number....take a look at average trade guesses for production, ending stocks, and then look at the Dec 1 corn inventory....

 

Ending stocks number has a range of about 100 myn either side of average trade guess

 

Dec 1 stocks number varies from 350 above to almost 930 myn below average trade guess....!!

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