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marketeye
Veteran Advisor

From the floor July 1

After the close:

Wheat Options Talk: One trader says, "Wheat options traders got an answer to their burning question going home on Thursday, which was...is there really enough open shorts out there looking to clean up a little more?  The answer appears to be yes.  Sept. 530 and Aug. 500 call buyers covered vs. futures got the day rolling on Thursday, with an underlying futures market that was also making tracks higher, even after Wednesday's impressive showing."

 

Mike

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At the close:

The Dec corn futures closed 11 cents higher at $3.84 1/2. The Nov. soybean contract settled 3 cents higher at $9.05 1/2. The Sep. wheat futures ended 19 1/2 cents higher at $4.99 3/4. Dec. soybean meal futures settled $1.80 higher at $261.20 per short ton. The Dec. soyoil futures closed 45 points lower at $36.72.

 

In the outside markets, the NYMEX crude oil is $2.98 lower per barrel, the dollar is sharply lower, and the Dow Jones Industrials are down 51 points.

 

One analyst says the wheat market has a lot of short positions in it. So, there was a lot of short-covering in the wheat market. There was a lot of follow-through from yesterday's trade and liquidation of short positions. The 'bear' spread liquidation, in the wheat market, to catch the 'carry' was supportive. There was a lot of unwinding of long-corn, short-wheat positions to help push up prices. The dollar was sharply lower, a bullish factor. The market is still trading the bullish USDA report from Wednesday. Plus, there are some wheat production problems around the world, specifically in Europe and Russia."

 

He adds, "Looking ahead, wheat has the best potential to put on even higher prices. The corn market is up against resistance levels. Another, weather scare is needed to give the corn market a higher leg on the market."

 

Mike

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At 12:55pm:

The Dec corn futures are up 12 1/2 cents at $3.86. The Nov. soybean contract is 1 1/2 cents higher at $9.04. The Sep. wheat futures are 19 1/4 cents higher at $4.99 1/2. Aug. soybean meal futures are $2.70 higher at $281.60 per short ton. The Dec. soyoil futures are 39 points lower at $36.06.

 

In the outside markets, the NYMEX crude oil is $2.98 lower per barrel, the dollar is lower, and the Dow Jones Industrials are down 51 points.

 

One analyst says, "Crude oil was down $3.00 pressuring corn-based ethanol and bio-fuels pulling down soyoil and beans with stocks pushing down as well. But, then short-covering pulled all the grains up on the day again as Wednesday's big acreage report left a mindset in the market to not be short.  We should expect short covering on alldips in prices ahead of next Fridays July 9 USDA crop report as the fear will be they will lower ending stocks as a result of lower quarterly stocks and much lower corn acres planted than expected. Trend-following and index funds will run soft wares off Wednesday's corn numbers and probably get a signal to reduce the size of their short held positions on spreads and add to their outright longs. Traders may not want to add too much on positions ahead of the three day holiday closing but return next Tuesday very aggressively."

 

Mike

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At 10am, the Dec corn futures are up 3 3/4 cents at $3.77 1/4. The Nov. soybean contract is 1 cent lower at $9.01 1/2. The July wheat futures are 6 3/4 cents higher at $4.87. Dec. soybean meal futures are $0.20 higher at $259.30 per short ton. The Dec. soyoil futures are 32 points lower at $36.83.

 

In the outside markets, the NYMEX crude oil is $3.00 lower per barrel, the dollar is lower, and the Dow Jones Industrials are down 114 points.

 

Mike

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At 8:40am:

USDA announced Thursday that 40,000 metric tons of U.S. soyoil was sold to China for 2010-11 delivery. Also, here are the USDA Weekly Export Sales announced this morning: Corn=726,000 metric tons, soybeans=715,000, and wheat 424,400 metric tons.

 

Interesting to note that China is not buying soyoil from Argentina. The demand just keeps coming from all corners of the world.

 

Mike

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At 7:25am:

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

 

Trackers:

Overnight grain=Trading higher.

Crude oil=$1.06 per barrel lower.

Dollar=Trading lower.

Wall Street= Seen opening lower after a tough ending to the second quarter. Plus, China's manufacturing data came in lower than expected signaling a slowing of that country's economy. And, Spain's government was downgraded.

 

More in a minute,

 

Mike

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12 Replies
jrsiajdranch
Veteran Advisor

Re: From the floor July 1

Hey Mike Whats up with a 1a.m post this morning? Hope your back isn't bothering you. 

Hey do you think or does anybody on the floor think we have divested ourselves of the outside markets? Have a good one.  JR

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hardnox604008
Advisor

Re: From the floor July 1

Hi JR,

 

That is the question du jour and for the moment it doesn't look real supportive.

 

Lower dollar should be a bit but not with crude down $2+. Dow making new lows- and continuing a majot tech breakdown as I type.

 

I do think the corn numbers are compelling enough that corn will outperform a lot of other commods, just not sure how well it does in this this environment.

 

Tough time on the calendar for corn unless some sort of threat emerges.

 

best, h

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zman343
Contributor

Re: From the floor July 1

Dollar down, stock market down and even gold can't find any buyers.  Feels like deflation is starting to set in.  Can't buy anything right now in this environment.  Index funds still big longs in grain.  Will they continue to hold if the world crumbles around them?  Billion $ question.

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dekus
Contributor

Re: From the floor July 1

when or will the shorts get out? near as i could tell, most were short coming into  the report the last few weeks.

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zman343
Contributor

Re: From the floor July 1

Trading funds are estimated to be net long corn, beans and net short wheat.  Index funds are big net longs in all three.  Open interest was down yesterday in corn, so there was alot of short covering possibly coming from the commercials and small traders.  Probably some more of that going on today I guess.

 

The strength in wheat is surprising to me because it has the worst fundamentals.

 

Macro environment looks to be deflationary.  That cannot be ignored for long.

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too close for comfort
Senior Contributor

Re: From the floor July 1

What are you guys doing, if anything, for 11 corn?

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dekus
Contributor

Re: From the floor July 1

if the funds are all long, and likely most small are short, then commercials must be carrying most of the shorts.

as everyone believes it best to be even or short going to July 4, i think there needs to be a lot of short covering

to get even .  China likely owns a few contracts.  i think i would cover my shorts here.

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jec22
Veteran Advisor

Re: From the floor July 1

Read this on Zero Hedge.

 

 

http://www.zerohedge.com/article/going-back-ags

 

Who says the funds won't come back?  Not commenting on his knowledge of the subject...some of the facts are a little off. 

 

Now if I see it on the Business Insider it is a done deal. 

 

Hope everyone has a fun 4th.  America is still an awesome place to live.   And rough times is what made the 'greatest generation", I don't know why our government can't see that pain is part of the growing process and we should not be sheltered from it all.  My early distresses in farming made me a much better farmer today. 

 

 

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Palouser
Senior Advisor

Wheat may have had the worst fundamentals but, ........

..... there is more hard news about the crop prospects than can be determined for corn or beans. And I believe that the negatives on wheat have been much oversold. A huge record crop for wheat is out of the question and production figures are definitely headed the other way. That and there are quality concerns in various areas.