From the floor July 13

[marketeye]

At the close:

The Dec. corn futures closed 21 3/4 cents higher at $6.79 3/4. The Nov. soybean contract settled 21 1/2 cents higher at $13.79 3/4. The Sep. wheat futures settled 42 1/4 cents higher at $7.14 1/4. The Dec. soybean meal futures contract ended $5.50 per short ton higher at $360.40 and Dec. soyoil futures settled $1.21 higher at $58.53.

In the outside markets, the NYMEX crude oil is $0.57 per barrel higher, the dollar is lower and the Dow Jones Industrials are up 54 points.

Funds bought 20,000 corn contracts, 7,000 soybeans, and 10,000 wheat.

Mike

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At 12:20pm:

The floor has quieted down. What a morning though! Wow! Corn is now 24 cents higher, soybeans are 23 cents higher, and wheat is up 45 cents.

Mike

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At 10:45am:

Corn is up 18 cents, soybeans are up 17, and wheat is up 33 cents.

One corn pit trader says, "Pretty good recovery since 575 1/2 low...... I told you I didn't trust USDA numbers and now demand has started. China is just getting started. The market has now filled all gaps which were left from the large move lower several weeks ago.  If we hold up today, we will begin working on a daily trend line break to the upside.  There is no bias for today; but if we hold the 652 area or above, we could try to test to the mid-line."

Mike

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At the open:

In early trading, the Dec. corn futures are trading 19 1/2 cents higher at $6.77 1/2. The Nov. soybean contract is trading 18 3/4 cents higher at $13.77. The Sep. wheat futures are trading 35 cents higher at $7.07. The Dec. soybean meal futures contract is $4.60 per short ton higher at $359.50 and Dec. soyoil futures are trading $0.83 higher at $58.15.

In the outside markets, the NYMEX crude oil is $0.79 per barrel higher, the dollar is lower and the Dow Jones Industrials are up 137 points.

China demand, extreme heat, wind-damaged Iowa corn, and tight stocks, and bullish outside markets are all driving this rally, traders say.

Mike

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At 6:25am:

Early calls: Corn 3-5 cents higher, soybeans 8-10 cents higher, and wheat 1-2 cents lower.

Trackers:

Overnight grain, soybean markets=Trading mostly higher.

Crude Oil=$0.03 lower.

Dollar=Lower.

Wall Street=Seen trading higher as China reports surprisingly strong second-quarter growth data. Also, Fed Chairman Ben Bernanke will be giving testimony to Congress today.

World Markets=Higher.

More in a minute,

Mike

[NCcorntrader]

Hey Mike-

Interested in your opinion on the volatility of the corn market right now. Are these price swings normal for this time of year? I am under the impression that the market is rather frenetic right now but some posts from people who have been watching for far longer than I have have said otherwise.

Not trying to prove a point here with other members I would just like your opinion.

Patrick

edit- on re-read i realize that the market could be frenetic AND that not be unusual. so, are the markets unusually frenetic for this time of year?

[NDf]

NC IMO To get a feel of the maket you need to measure the moves in percentages. Take yesterday July 12 we were .20 lower in corn and ended up .25 up witch were 3 percent moves each way. When corn was at 2.50  a .3 percent move was only 7.5 cents and you easily saw that with a change in the forcast during a weather market Now I'm only talking from a traders point of view here not from a farmer or end user in their point of view these moves are crazy.

[NCcorntrader]

NDf-

Ive been thinking about it some more this morning and I think my perception stems from the fact that on a per contract basis, the price swings are much larger. That is, if I have 2 contracts a year ago I stand to profit/loss maybe $1000 max per day- now $1000 swing would be common and larger swings possible.

Since most traders trade quantities relative to their available capital, they are always thinking in terms of number of contracts.

I guess simply put capital is leveraged more now which leads to the perception of bigger swings. 

[Canuck_2]

Remember talking to a grain buyer at a location in Ontario a couple years ago. He said something along the lines of ' We used to get excited if the market moved 3-4 cents, now it is a ho hum day unless or until it moves 20 cents or more.'

[NDf]

Nc you are right if a trader is trading the same amount of contracts, but wouldn't he being tradeing less. With 6.00 corn I would think he would being tradeing half the number then if corn was at 3.00.

[glenlivet18]

If you're a trend follower you gotta love days like today.  And grains aren't the only markets that are moving.

[marketeye]

So, the funds' strategy is normally to get in the market before the growing season starts and take profits once the summer weather rally hits. Because we dropped sharply awhile back, those big investors got out. Well, now that we have a real weather market starting to kick in, I'm being told there are signs these funds are gearing up to get back in. Their re-entry might be happening as we speak. 

In addition, we normally don't see huge demand from China, in corn anyway, at this time of the year. So, that factor is providing even further unusual volitility. And then you have very unusual world economic factors that are pushing the dollar downward. So, to answer your question whether this volitility is normal, no.

Mike

[NCcorntrader]

NDf-

The number of contracts traders are generally willing to trade is a function of 1) their capital 2) margin requirements.

I dont think the margin for corn has changed recently, so given the same amount of capital the same number of contracts are being traded

For example, if I have $10k in my account, I am willing to trade 3 or 4 contracts, irrespective of the corn price- i could be wrong but I suspect most traders trade this way.

[WNC_Trader]

Mike,  I think you hit the nail on the head..... THE FUNDS got out early, now they are buying all dips and news to get in before the big summer rally .  This assumes there will be one, the FUNDS don't want to leave any money on the table.  A trader must be nimble to get positions in and out before the big orders drive the market.   IMO ...I THINK THIS WILL BE A VERY INTERESTING GROWING SEASON.  I hope all the farmers survive with a profit,  we can't make it without you guys.