From the floor January 3

[marketeye]

At the close:

The March corn futures settled 8 1/2 cents lower at $6.20 1/2. The March soybean contract closed 24 cents lower at $13.79. The March wheat futures settled 11 1/4 cents higher at $8.05 1/2. The March soybean meal futures closed $4.90 lower per short ton at $369.00. The March soyoil futures settled $0.67 lower at $57.70.

In the outside markets, the NYMEX crude oil is $0.14 per barrel higher, the dollar is higher, and the Dow Jones Industrials closed up 93 points.

Funds sold roughly 8,000 corn contracts today, lowering prices. Is that money going to energy, like some had told me? I wonder. Also, it's interesting to note that an afternoon wire story states that it's Argentina's corn crop that is getting hurt the worst, not the soybeans. Isn't that what Santiago, the Argentine farmer, told us last week, in this talk forum? Hmm..

Mike

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At mid-session:

The March corn futures are 1 3/4 cents lower at $6.27 1/4. The March soybean contract is 9 3/4 cents lower at $13.93. The March wheat futures are 22 3/4 cents higher at $8.17. The March soybean meal futures are $3.90 lower per short ton at $370.00. The March soyoil futures are $0.21 higher at $58.58.

In the outside markets, the NYMEX crude oil is $0.76 per barrel higher, the dollar is higher, and the Dow Jones Industrials are up 125 points, reaching a 2-year high on better European economic data.

One analyst says, "Corn and beans are taking a step back in early trade, as the first threat of rain in six weeks is on tap for this coming weekend in Argentina. Argentina is the world's second largest corn producer exporter and has been in the grips of a LA-NINA inspired drought. It's not a lock. The GFS weather model brings rain into the driest areas of Argentina and most of Brazil. But, the European weather model suggests a drier period. It may take until Wednesday before we know the true extent and coverage of the rain. Wheat is up over 20 cents on its own news, with key world producer Australia saying recent rains not only will leave up to 50% of their crop suitable only for feed, but large acreage may go unharvested, due to record flooding," he says.

Argentine Special: A daily newsletter that I receive from Brazil is reporting fires in some Argentine fields, due to the drought. Argentina's Ag Minister is pledging help for the farmers. Because of the lack of rains, the corn crop is facing a 20% drop in ear size with tipped back ears. Around Buenos Aires, pollinating corn is in more trouble, the newsletter states. In that area, 7-9 inches of rain, per day, is necessary for pollination. Also, soybean plants are reportedly smaller than normal. Severe drought is how the conditions are being described in the center-south of Santa Fe and Cordoba, according to the Center for Economic Studies and Information eda Stock Exchange of Rosario. There are places reporting a 100-200mm rainfall shortage, while 80 mm is required for crop development.

My question is, has the trade built-in much of this news?

Mike

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At 10am:

The March corn futures are 3 cents lower at $6.26. The March soybean contract is 12 1/4 cents lower at $13.90 1/2. The March wheat futures are 23 1/2 cents higher at $8.17 3/4. The March soybean meal futures are $2.80 lower per short ton at $371.10. The March soyoil futures are $0.34 higher at $58.71.

In the outside markets, the NYMEX crude oil is $0.81 per barrel higher, the dollar is higher, and the Dow Jones Industrials are up 116 points on better European economic data.

Wheat weather concerns helping that commodity. But, that bullish news hasn't carried over into the soybean complex or the corn market.

Mike

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At 9am:

Here are the latest crop progress numbers from Argentina, as of Thursday. The Argentine government pegged soybean planting at 83 percent complete as of Thursday, up six points on the week but still 4% behind last season’s pace. Corn planting hit 87% done, just two points better on the week but still even with last year, while wheat harvest was 75% done as of December 30, up 13% on the week and 3% ahead of last year.

Early calls: With the Australian downpours, watch for the wheat market to react strongly this morning.

Mike

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At 8:30am:

Here's the Early Calls story:

CHICAGO, Illinois (Agriculture.com)--The pre-opening prices for the CME Group grain commodities for Monday, January 3, 2011 are mostly lower. Corn is seen opening 1-2 cents lower, soybeans 2-4 cents lower and wheat up 6-8 cents.
In overnight electronic trading, the March corn futures contract traded 1 1/4 cents lower at $6.27 3/4 per bushel. The March soybean futures contract traded 3 cents lower at $14.00 per bushel. The March wheat futures contract traded 10 cents higher at $8.04 1/4. For March soymeal futures, the contract traded $1.20 per short ton lower at $372.70, and March soyoil up $0.18 at $58.55.
The outside markets are not supportive for Monday's grain trade. The real factors driving the mostly lower early calls are the mostly lower overnight markets. Some analysts see the funds moving some money away from ag commodities, in January, and moving it into the energy sector. But, there are others saying the exact opposite. Also, though Argentina is expected to get some light rains this week, the market remains watchful of that country's corn and soybean growing season.

Mike

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At 7:25am:

The other day, someone asked what all the hub-bub was about Argentina. They thought that country was too small to worry about. It's interesting to note, Argentina produces about the same amount of corn as the state of Minnesota. However, they export all of it. And that is where they become a big competitor of the U.S., on the world market.

It is pollination time, for some of the Argentine corn crop, and that is what the concern is as the La-Nina-related dry period persists.

Mike

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At 6:55am:

Early calls: Corn 1-2 cents lower, soybeans 3-5 cents lower, and wheat 7-9 cents higher.

Trackers:

Overnight grain markets=Trading mostly lower.

Crude Oil=$0.78 higher.

Dollar=Higher.

Wall Street=Seen opening higher. Stocks in 2010 finished 11% higher, on the year.

World Markets=Higher.

Argentina is expected to receive a few one-inch rains by mid-week into next weekend, according to Dow Jones Newswire weather sources. Meanwhile, while I've heard funds will move some money out of ag commodities and into the energy sector, in the month of January, one analyst this morning is suggesting the opposite. So, who knows?

More in a minute,

Mike

[eurofarmer1755642]

Hi

Today wheat perform well and one of different stories is that Egypt is going to replace rice with wheat!!!

More to expect is that huge areas of France are under water or at least so much water thar wheat will be stressed and canola too.

[marketeye]

Egypt replaces rice with wheat. Asian countries that can't find enough corn could replace it with wheat. Australia users will need to find a replacement for wheat-shortened crops. What about other users that rely on wheat supplies. It seems the quote that the Dow Jones Newswire ran last night from Rich Feltes of RJ O'Brien may be accurate. Feltes says, "The prices of 2008 are going to be leveled."

Mike

[oncearound]

those opening calls are far different from most others i have seen this morn? some are calling wheat up 18-25 and c & s up also?

[marketeye]

oncearound,

You're right. Those early calls were set around 6:30am. Word of flooding in Australia and only light rains for Argentina, this week, have early calls even higher, closer to the open.

Thanks,

Mike

[oncearound]

had me kinda worried i was only getting part of the story?

thanks for promptly clearing that up!

[GoredHusker]

What I read about wheat was flooding, but it was in areas where the harvest is already complete.  They said it would disrupt transportation.  Wheat is still an interesting story.  The five year average of World wheat carryout is 5.6 billion bushels.  Currently, we're pegged to have 6.5 billion bushels of World wheat carryout.  Yet, look at the prices.  We're several months removed from wheat harvest, yet the basis is still as wide if not wider than it was during harvest.  I'd venture to guess that if something doesn't happen with regards to wheat prices that a lot of wheat locally will be destroyed this spring.  Have we ever in history in the U.S. had a larger wheat carryout than corn carryout? 

[rightone]

I tend to feel that it's protiens that ARE the True bandwagon so to speak, and will continue to be.

Protien grains, are wheat and soy btw.
Closer to the plate protiens, obviously meat, cheese etc..

Wheat is what actually got the whole grain complex current last year ( large amount of feed wheat in the usa, end of May thru June of 010 ).

Long term history will likely prevail with cash wheat priced at double per bu as compared to corn.

The last 5 years in the usa there was the "E" aberration which caused a short term pricing change.
Long term history is still long term, thus the short term deal will NOT prevail ( not from a true economic sense, nor from due to true global dietary needs ).

Guess we'll see....but if cash corn is worth say $5.50, that means wheat will move to and STAY in the $11 + / - range.
Also means soy moves to the $20 range ( granted $15 to 17 comes first ).