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marketeye
Veteran Advisor

From the floor June 15

After the close:

Wheat Option Talk: One trader says, "Though ethanol got gov't reassurance yesterday, that certainly doesn't mean that things are stable, as traders head home following an ugly Wednesday.  Just because they shot down the vote yesterday on the ethanol ban, there's hardly a soul who feels confident and/or sure  there aren't changes headed our way.  And that's why the corn spent another day groping for some sort of bottom to this free fall, as margin calls and sell stops combined to provide another near limit down performance in the corn and a break in the wheat that left us staring over the edge at $7.00 in the front month July, with a full and unobstructed view of the $6.00's."

 

Mike

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At the close:

The July corn futures closed 29 3/4 cents lower at $7.25 3/4. The July soybean contract ended unchanged at $13.68. The July wheat futures settled 22 3/4 cents lower at $7.08 1/2. The soybean meal futures settled $1.30 per short ton higher at $360.00 and soyoil futures settled $0.20 higher at $57.05

 

In the outside markets, the NYMEX crude oil is $4.42 per barrel lower, the dollar is higher and the Dow Jones Industrials are down 199 points.

 

Mike

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At 12-Noon:

Corn falls its daily limit of 30¢. It now has dropped to a four-week low!!

 

Mike

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At mid-session:

The July corn futures are trading 29 1/2 cents lower at $7.26. The July soybean contract is 6 cents lower at $13.62. The July wheat futures are trading 15 3/4 cents lower at $7.15. The soybean meal futures are trading $2.90 per short ton lower at $355.80 and soyoil futures are $0.27 higher at $57.12

 

In the outside markets, the NYMEX crude oil is $0.82 per barrel lower, the dollar is higher and the Dow Jones Industrials are down 141 points.

 

The grains are not getting help from the outside market as the dollar rises against the Euro. The greek protestors are turning violent in Greece, with austerity measures upon them.

 

One analyst says, "The market is working through profit-taking. "You have more profit taking off the historic highs of corn last week. Since we're still 11 days away from the big June 30 report, funds are not piling into the market yet. So, with crude down and the dollar up today, investors are taking more profits. It's part of the market's daily function."

 

Mike

------------

 

In the outside markets, the NYMEX crude oil is $0.43 per barrel lower, the dollar is higher and the Dow Jones Industrials are down 85 points.

At the open:

The July corn futures opened 1 cent lower at $7.49 1/2. The July soybean contract opened 1 1/2 cents higher at $13.69 1/4. The July wheat futures opened 4 1/2 cents lower at $7.27. The soybean meal futures opened $0.30 per short ton at $358.50 and soyoil futures opened $0.29 higher at $57.14.

 

In the outside markets, the NYMEX crude oil is $0.43 per barrel lower, the dollar is higher and the Dow Jones Industrials are down 85 points.

 

Mike

-----------

 

At 8am:

Market noise list off the Dow Jones Newswire:

--Japan is in the market for 250,000 metric tons of feed grain.

--S. Korea is buying 600,000 metric tons of feed wheat for Oct.-Dec. arrival. This buy is replacing corn.

--China will keep price caps on cooking oil until August to fight inflation.

--China 2011 cotton acres are seen up 5%.

--Russia sees a bigger grain harvest coming on.

--China's groundwater is being depleted, ag output seen falling 30% in five years.

 

Mike

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At 7:20am:

Early calls: Corn 4-6 cents lower, soybeans 1-2 cents higher and wheat 1-2 cents higher.


Trackers:

Overnight grain, soybean markets=Trading mostly higher.

Crude Oil=$0.58 lower.

Dollar=Higher.

Wall Street=Seen trading lower on ideas that yesterday's market was oversold. Plus, consumer price, manufacturing and industrial reports are coming out today.

World Markets=Asia/Pacific stocks are mixed, while Europe stocks are lower. Moody's has placed France's banks on review, due to their exposure to Greek debt.

 

More in a minute,

 

Mike

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14 Replies
SouthWestOhio
Senior Contributor

Re: From the floor June 15

"It's part of the markets daily function," analyst says.

 

Is it also the function of the markets to deflate price when stocks are so low that it might stop rationing enough to cause actual shortages?

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marketeye
Veteran Advisor

Re: From the floor June 15

SouthWestOhio,

 

I'm a little dumbfounded too. It seems like the over 60¢ sell-off is quite a  bit with perhaps less corn acreage out there. I know the profit-taking is geared up, but we're not even to July yet. It looks like once we hit that 'record' price, folks wanted to reward the market. Can't blame them for that.

 

Mike

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SouthWestOhio
Senior Contributor

Re: From the floor June 15

If this is setting the stage for new highs then where are the buyers?

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GoredHusker
Senior Contributor

Re: From the floor June 15

Are there any rumblings about hedge fund liquidation?  Yesterday, I read an article that said some of the large banks are bracing themselves in case the debt ceiling isn't raised.  In order to prepare themselves, they're converting more assets to cash.  Considering the sizeable commodity assets they hold via futures contracts, I'm wondering if they're liquidating some if not a lot of their commodity exposure in the event the debt ceiling isn't raised and they need more cash on hand for leverage?   

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rightone
Senior Contributor

Re: Corn is an indirect conversion input to equities,

equities everywhere have corrected in the 8 to 15% range.

 

Looks like we are at the base of that correction now.

Earnings are great, matter of fact corp earnings as a % of total income in the usa have only been this high two times in the past 85 years. 

Now earnings over time will drop some in favor of increased labor rates, thus econ demand picks up for more of more etc., etc.. )

 

Things like corn are a non direct conversion process for econ use.

 

Perhaps a 10 to 30% correction started in that market now to thus mirror the recent equity correction.

 

Whole deal is good for the meats ( they are a direct food /econ conversion process for econ use ).

I expect exports from the usa to double in the next 2 weeks to 30 days.

( btw, we are exporting 50% more volume now vs 010 and at new record high export volume levels for 011. Double out the current rate and we be exporting in the 30 to 40% range of all possible meat production, usa ).

 

Should be good for a 22 to $45 cwt up in cattle yet in 011.  We'll see.

 

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NCcorntrader
Senior Contributor

Re: From the floor June 15

Lets not over-analyze this people- the price of corn is TOO HIGH. Relatively speaking, It is far more expensive than other grains. At $8 the end user demand of corn is probably down 50%.

 

And please nobody start in with "dollar cost averaging" corn down to $5-$6. The cost of corn NOW is too high.

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NABFarmer
Veteran Contributor

Re: From the floor June 15

As opposed to what,  a $500,000 combine, $700 or $1000 a ton fertilizer, is anything other than below cost of production to high?  As long as people will pay the price it is not to high it is the same as any product, the price is what the market will bear.

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NCcorntrader
Senior Contributor

Re: From the floor June 15

NAB-

 

"the price is what the market will bear."

 

i agree 100%. the ethanol market will not bear this price because it is not profitable. the feed market will not bear this price because they can use wheat and soy. theres 80% of your market right there.

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Palouser
Senior Advisor

Re: From the floor June 15

Watch tomorrow and the rest of the week. Snap tender by Egypt very likely IMO.

 

Remember - this is paper led, not physical. Buyers of physical better think hard. Everything else on physical will be betting on the come. They had better be right.

 

 

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