From the floor January 13

[marketeye]

At the close:

The March corn futures settled 13 3/4 cents higher at $6.44 3/4. The March soybean contract closed 6 3/4 cents higher at $14.21 1/2. The March wheat futures ended 13 cents higher at $7.83 1/2. The March soybean meal futures closed $2.10 higher per short ton at $383.60. The March soyoil futures closed $0.05 lower at $57.82.

Mike

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At 12:20pm:

$8 corn talk is underway. One analyst says, "Traders continue to price in a more bullish-than-expected crop
report.There's talk of eventual 8 dollar-plus corn but recent weekly export sales reports show corn sales slowing .We have a three-day holiday ahead and some rain forecasted for Argentina that could trigger a pull back near term. But, there always seems to be something friendly as well. Argentine farmers go on a one week strike Monday and the dollar is down sharply again and trend-following and index funds love to buy grains when the dollar is weak."

Mike

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At mid-session:

The March corn futures are 14 cents higher at $6.45. The March soybean contract is 11 cents higher at $14.26. The March wheat futures 11 1/4 cents higher at $7.81 3/4. The March soybean meal futures are $3.10 higher per short ton at $384.60. The March soyoil futures are $0.60 higher at $57.93.

In the outside markets, the NYMEX crude oil is unchanged, the dollar is lower, and the Dow Jones Industrials are down 23 points.

One analyst says, "It has been a quiet week here in Lake Woebegone, at least for me.  Mostly a spec affair with specs on both sides of the market.  A good bit of profit taking.  Farm selling reported yesterday but the country is reported quiet today with weaker basis now.  The Dollar is sharply lower adding to support generated from the USDA reports yesterday.  Everyone expects higher prices in response to the reports.  Also lots of talk about heat for Argentina in the coming days, although there will be a couple of chances for showers, too.  But it was very busy here yesterday and dead today, so there are other specs besides me doing the trading today."

Mike

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At the open:

The March corn futures are 7 3/4 cents higher at $6.38 3/4. The March soybean contract opened 2 3/4 cents higher at $14.17. The March wheat futures opened 1/4 of a cent higher at $7.70. The March soybean meal futures opened $1.50 higher per short ton at $383.00. The March soyoil futures opened $0.13 lower at $57.73.

In the outside markets, the NYMEX crude oil is $0.48 per barrel lower, the dollar is lower, and the Dow Jones Industrials are down 25 points.

Mike

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At 8am:

Fresh sales Thursday. USDA announced that 116,000 metric tons of U.S. corn was sold to an 'unknown' buyer for 2010-11 delivery.

Mike

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At 7:35am:

USDA Weekly Export Sales:

Corn=507,500 metric tons

Soybeans=675,000

Wheat=175,200 sharply less than the past four weeks.

Soymeal=26,200

Soyoil=7,500 metric tons.

Overall, a weak set of numbers. But, the trade expects a weak export sales report, the week of a big USDA report.

Mike

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At 7:20am:

--Argentine crop-weather for today, tonight, and tomorrow is expected to be mainly dry and hot.

--Japan bought 119,480 metric tons of U.S. food wheat Thursday.

--China 2010-11 soy imports were estimated at 54.0 mln tons vs. 50.4 the previous crop year, China Grain Center says.

Mike

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At 6:55am:

Early calls: Corn up 6-8 cents, soybeans up 3-5 cents, and wheat 4-6 cents higher. USDA's Weekly Export Sales Report will be out at 7:30am CST, this morning. After yesterday's wild day, I need a strong cup of coffee this morning.

Trackers:

Overnight grain markets=Trading higher.

Crude Oil=$0.13 lower.

Dollar=Lower.

Wall Street=Seen opening mixed as investors digest possible bad news for the U.S. credit rating, South Korea raising interest rates, yet Spain held a successful bond auction.

World Markets=Mostly higher.

More in a minute,

Mike

[jec22]

  Read a good comment today.  If the price of beans in 1973($13)  was adjusted for inflation, they would be $64 today.  $14 beans are a bargin!!!!!!!!!!!!!!!!!  I think that figure for corn would be around $20.

The real reason prices are high and going higher is because farmers sold too low.  If they would have held off sales with a $3 in front of the corn price, we would have done a better job of rationing prices.  I would love to have the facts on the average price of grain being delivered in the next few months.  Now for all those farmers out there that raised great crops this year, maybe that three dollar corn was just fine.  But if you had fields like mine that struggled to make a hundred....that six dollar corn is saving my balance sheet.  So if I keep holding my grain..don't worry....if you don't produce it..there isn't much to hold.

For those that think ethanol is just going to have the rug pulled out if prices continue to rise.  Think again.  Take out ethanol and the oil companies will use it as a PR tool and quickly raise gasoline fifty cents or more a gallon.  Read that jeans are going up five bucks because of the rise in cotton prices, yet the cost of cotton to make those jeans has only gone up 1.70.  Never let a good crisis go to waste. 

Talk about inflation...figure production cost per acre.  The livestock guys are questioning the future.  Just remember there are plenty of grain farmers that will not make money off the 2010 crop.

Now if you want to talk about crisis.  Look at the person that worked all his life and and paid his bills and saved for retirement.  Has his money in a money market account, and at the end of the year he owes mores in fees that he earned in interest.  All the time the money is depreciating in value.  Biggest bank robbery of all time.

In spite of it all, still a lot of people in this world that make the merry go round a lot of fun and worth while. 

[jec22]

Does anyone have a handle on the area's of Brazil getting too much rain?  Is that affecting any crop areas?

[Red Steele]

good thoughtful post.

What price are you holding for, or are you going to use a staggered by time method of selling....ie so much by certain dates?

you should have a plan, because at some point the highs are in, the market goes lower, and there will almost certainly be a huge inverse between summer 2011 and fall 2011 cash corn and soybean prices.

we might gret a chance at $7 fall corn, and $16 fall beans, but if that happens, cash summer prices will be at $8.50 and $20 first, respectively.

I don't think anyone knows what the highs will be, nor how fast and far the markets will eventually fall to lows once a fall supply is assured.

I know I would not want to short this market and face margin calls.

[vrbuck]

What sort of yield are you getting now compaired to 73?  I bet that would be the difference.

[ag678]

I'm more worried that the only way to ration demand is to force someone to quit, and it seems like nobody quits before bankruptcy anymore.    So unless I feel pretty comfortable with the people I do business with or if  I would rather make the margin calls myself vs crossing my fingers that someone will have the money to pay in the future.  Maybe I have a big chip on my shoulder but I know where grain contracts stand in bankrupcy court, and I also know how easy it is to make big bets with unsecured creditors without risking ones personal networth.

[Whitesand_Farms]

Hi Mike

Just a thought I was throwing around in my head with the sudden anonymous wheat sales. What are the chances they are from high producing countries like Canada or Australia that are trying to secure quality grain that they don't have and are not disclosing. 

[jec22]

Red, I think I am looking at the markets based on facts, not some pie in the sky 'hope' marketing plan.  Crude and Copper should lead the move down.

I really don't think most farmers are all that bullish.  They are taking these prices and cashing in.  Even those that are holding, many are in the same boat as I am.  We are holding many less bushels than we would have been on a normal year.  Now, maybe the endusers have a plan to shut down most of July-Aug, and hope for a early harvest.  In the mean time...the weather is not helping their hand, Australia, Argentina...and next the America's?  The trend is your friend, does that apply to weather also? Margin money lines of credit will hold down this market at some point in the future.   I have acres that can go to corn, I will only plant them if I can lock in a cash delivery price for Oct. of 6.00.  Otherwise, they go to beans.  If there was a poll taken, I would bet a high percent of farmers expect this market to crash sometime this summer.  In 08, farmers didn't think that way.  Go against the herd.

One lesson learned well in these parts, buy more insurance coverage.  Farmers are very fortunate to have access to crop insurance.  Given the risks, paying more for a higher rate of insurance, might bring better returns than upping the populations and fertility.  For those with debt, I would think it would be a no brainer. 

Now, I think the odds are that we have a very good crop in 11.  Most predicted negative weather events never occur.  But, I have enough healthy fear of God, to assume nothing.

[marketeye]

My sources say the major production states; Mato Grosso and Parana, are not too wet right now. But, if it keeps raining, the harvest season would be too wet and that is not good. So, right now, 'too wet' is not an issue.

Luana Gomes, a Brazilian reporter with Gazeta do Povo writes Thursday, "With more rain expected, the yield of soybean and corn in summer should be higher than estimated at  planting in Parana. However, despite the appearance of good crops in most of the state, the result of the harvest is not yet guaranteed. 

See a glance of the Brazil corn/soybean crops. You can see chest-high soybeans at this link.

Chest-high soybeans

I'll get an update on that for you, so check back, jec22

Mike

[GoredHusker]

It's always great to get more insurance coverage.  Especially when the taxpayer is picking up 50-60% of the tab.