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Veteran Advisor

From the floor June 7

At the close:

The July corn futures settled 4 1/2 cents higher at $7.36 1/2. The July soybean contract closed 10 1/2 cents higher at $13.93 3/4. The July wheat futures ended 10 1/4 cents lower at $7.33 3/4. The July soybean meal futures ended $8.60 per short ton higher at $368.00. July soyoil closed $0.10 lower at $57.93.

 

In the outside markets, the NYMEX crude oil is $0.25 per barrel lower, the dollar is lower and the Dow Jones Industrials are up 70 points.

 

As far as the corn close, spreading was heavy and traders were hoping to take advantage of the Goldman Roll, but it went against them slightly, one trader says.

 

One trader says, "Wheat lower on Russian and Ukranian export ideas, and also the rains forecast and falling in Europe.  Probably coming too late to help a lot, but it might help a small amount.  Specs seemed to sell there and trends are down now, so we can see more selling this week.  Corn and beans still saw most of the buying in the new crop which is weather and planting pace, not much else.  The Mexican demand supported nearby corn for a while on spreads, but not for long.  In fact, carry spreads for corn and beans are weak and disappointing to the bulls, and could be implying some more down side now that the weather is a little better.  They are not bullish at the moment.  Rains are coming to the Midwest after tomorrow but farmers are really pushing to get planted as far as I can tell.  Lots of talk starting to develop about the Thursday reports.  USDA can drop yield for corn and beans but not area yet until they see the survey at the end of the month.  HRW crop should be horrid on Thursday, but SRW not bad.  SRW will have big time protein issues, though.  No real handle on what they will do with the spring."


 

Mike

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At 12:50pm:

Corn is selling off a bit, wheat has dropped to 11 cents lower. Minneapolis wheat is tanking as well. Why? U.S. wheat harvest is underway and better crop prospects in Europe are pressuring wheat prices.

 

Mike

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At mid-session:

The July corn futures are 3 3/4 cents higher at $7.35 3/4. The July soybean contract is 11 1/4 cents higher at $13.94 1/2. The July wheat futures are trading 6 1/2 cents lower at $7.37 1/2. The July soybean meal futures are trading $7.00 per short ton higher at $366.40. July soyoil is $1.20 higher at $58.15.

 

In the outside markets, the NYMEX crude oil is $0.77 per barrel lower, the dollar is lower and the Dow Jones Industrials are up 43 points.

 

Mike

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At 10:35am:

The floor is quiet, shhhhhh.....

 

Corn is up 3 cents, soybeans up 7 cents and wheat down 6 cents.

 

Mike

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At the open:

The July corn futures opened 1 cent higher at $7.32. The July soybean contract opened 3 1/4 cents higher at $13.86 1/2, while Nov. soy futures trade up at $13.76. The July wheat futures opened 1 cent lower at $7.43. The Aug. soybean meal futures opened $1.00 per short ton higher at $360.00. July soyoil opened $0.10 higher at $58.38.

 

In the outside markets, the NYMEX crude oil is $0.29 per barrel lower, the dollar is lower and the Dow Jones Industrials are up 70 points.

 

Mexico's purchase of U.S. corn Monday is pushing up corn prices. Favorable crop-weather is pressuring the markets. The Goldman Roll is underway. Plus, traders will begin positioning themselves ahead of Thursday's USDA Supply/Demand Report.

 

Mike

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At 7:55am:

*Warning: The following is bearish.

 

We have been hearing a lot about the possibilities of the U.S. running out of corn in August or early September. The USDA has pegged a 15-year low corn ending stock. The end-users have been offering a firm basis for farmers that do have old-crop corn and want to let loose of it.
Because of this talk, floor traders and analysts have been calling the September futures contract an old-crop contract this year vs. its normal new-crop role.
Today, I'm asking the question of whether there really is a shortage of corn.
A bit of background first. Awhile back, I was told by the owner of a brokerage firm that we would start to trade grains in dollars not cents. That comment has stuck in my head, as the markets have traded with huge leaps and boundss since vs. the old days of 5, 10, and 15 cent moves. I mention that because I heard another comment recently that seems to be weighing on me similarly to the "dollars, not cents" statement.
What I'm hearing about corn supply makes you ponder just what is the status of the U.S. corn pile.
Here's the thought that I heard that is making me scratch my head.
"The reason the market thinks there is no corn out there is that the commercials already bought it up at $4-$5.00. There's plenty of corn, it's in the commercials hands."
Now, I have heard of some farmers that are not sold out. Some are holding onto a small percentage to play with. I know there are even some guys that haven't sold a bushel of old-crop. But, the consensus is that the majority of farmers are sold on most old-crop corn. Call an elevator or end-user and they can update you on that if you want.
Anyway, back to more from this cash market person. The person goes onto say, "September will get caught up in all of this when we see that the U.S. does have the corn on-hand. There is no shortage."
And this kind of talk is coming from someone in the cash-side of the business. A very large player.
So, I'm thinking if there is no shortage, a lot of sheep are being lead to the cliff. Those farmers that planted early to participate in that late August, early September market (and I watched them plant on April 6th) will be sorely disappointed. On top of that, if the commercials are sitting on their needs that will get them to harvest, this year's crop, no matter the size, will just be flooding the market, and the phrase "harvest lows" takes on a whole new meaning.
We're seeing hints of China's economy slowing. Does this mean the Asian demand for corn will fade? Exports haven't been that great either. So, maybe there is something to demand slowing.
Believe me, I know that demand is not the only factor that drives this market, with the funds carrying a big stick. But, this question of is there corn and if there is where is it, is worth studying.
I'm sharing this with you so you can start looking into this. Check your local sources, your local commercials. All of you can verify this much faster than I can. I'm not saying I'm buying the idea that all of the corn is sitting in the hands of the commercials and that there is no physical corn problem. I'm saying do your homework, dig-in and try to find out the answer to what, if realized, could turnout to be a significant market scenario.

 

Mike

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At 6:55am:

A few nuggets (mostly bullish) from the Dow Jones Newswire Tuesday:

--USDA announced Mexico bought 822,960 metric tons of U.S. corn Tuesday for 2011/12 & 2012/13 delivery.

--Taiwan bought 71,000 mt of high quality U.S. wheat Tuesday. And, they paid big bucks for it.

--Japan seeks 160,801 mt of U.S. wheat in a tender.

--China expects to import the same amount of wheat in 2011 as they did in 2010.

--South Africa is raising and exporting a bit more corn.

--U.S. Wheat Associates estimate U.S. corn production at 312 mt for 2011-12.

--USWA sees 2011-12 corn ending stocks at 11 million tons.

--USWA estimates global wheat production at 655 million tons.


 

 

Mike

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At 6:30am:

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


Trackers:

Overnight grain, soybean markets=Trading mixed.

Crude Oil=$0.46 lower.

Dollar=Lower.

Wall Street=Seen trading higher. There seems to be concerned the Fed may have to extend their quantitative easing plan. An economic slowdown is looming. There is even concern that India and China's economies are slowing. In China, a large company reported lower auto sales for the second month in a row. All signs that a pullback in the economy is occurring. European stocks are said to be headed lower due to economic troubles.

World Markets=Mostly higher.

 

More in a minute,

 

Mike

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43 Replies
Veteran Advisor

Re: From the floor June 7

That last paragraph is golden you list all those problems and then you say   "  

 

 

World Markets=Mostly higher.

 

 

That right there is a golden statement totally shows how little most know.

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Veteran Advisor

Re: From the floor June 7

That's funny you mention that. Because I had to look at that twice myself, as I typed it. I kept thinking, wait a minute, how are the world markets mostly higher when all of this other stuff is so negative? Hmmm...

 

Mike

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Senior Advisor

Wow.......that was a mouthful........

so all this supposed inventory.........were is it setting and how is it being counted in the stocks numbers.........does it not go on the books........

 

paper means nothing, especially when you are doing business with your self month after month..........I had this discussion a thread down with Ray J.............the float in grain is not constant, we don't know how many "PHYSICAL SHARES" if you will are out there because new crop goes in as old crop goes out..........its made and then comsumed, but its traded in whole units like it never disappears..........

 

so again I ask whomever, were is all this phantom grain............and again holding paper you bought from yourself and keep rolling without taking delievery means you own nothing but paper............and if it is true inventory, there were is it............

 

it sounds like the commercials might be the ones left holding the bag if they decide to take delievery on their paper as there might not be much left............or in even bigger trouble when the dump their load only to find out those that bought it want delivery............LMAO..........now THAT WOULD BE FUNNY............

 

as for inventory.........I can tell you right now there is still some unpriced grain left in the countryside...........yes I know were it is..........but its a lot smaller pile now than it was a few months ago...........and it was one of the few piles still around back then.......ALSO, local elevator with two off-site bunkers and flat storage building just pulled the last bulkhead and the last building should be empty today.........bunkers were emptied a few months ago........buildings were mostly emptied as well.......this facility usually scrambles to empty in August ahead of new crop and is usually never empty..........its JUNE.........these guys around here are sweeping the floors............that rarely happens...........so were is all this glut of grain coming from............because the last time I checked basis bids are even higher in OH and IN..............IA and IL are strong.........MO is strong...........that leaves out west or upper plains............ITS JUNE, we got a lot of time before new crop hits the pipeline.............

 

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Veteran Advisor

Re: From the floor June 7

Mike.....those comments you posted above sound like they come from someone who is really needing to buy corn.....seen it a hundred times before.....head fake

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Veteran Advisor

Re: From the floor June 7

Ray,

 

I was hoping you would chime in. Well, that's the first thought I had too. Unless the commercials are really good at keeping quiet, it seems all I've heard supports a shortage of corn. So, you're thoughts are much appreciated. It's in the farmers' interest that we get a better handle on this, I think.

 

Mike

 

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Contributor

Re: From the floor June 7

I have been bearish beans and slightly bullish corn..  My take on your post is that if the producer is for the most part sold---and at 4-5, which I believe,  then that is bullish.  Grain rallies when grain gets to strong hands. 

 

I am slowly becoming bullish.  But only to a point.. We are over 7 on corn and at ~14 on beans.  Those are good prices.

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Veteran Contributor

Re: From the floor June 7

I think there is a reason that the commercials are holding old crop, it is because we are short.  I don't know about the eastern cornbelt but in the western cornbelt some of your majors are pushing pretty hard for Aug-Sep corn, I would say that if the farmer is out and its in the commercials hands and they are bidding aggressively it probably tells you that they think it will be tight. 

 

Although I think the yield correlation with not planting early is debatable, one would think that the later you plant the later you will harvest which should put pressure on late summer supply.  With all of the new demand we have added in the last couple of years I think getting a handle on how large the pipeline is has been difficult.  If it becomes difficult to source corn late summer you will see some that have the ability to shut or slow down do so.  They can not compete with the user that does not have the ability to shut down.  In the long term price rations demand, but in the short term basis and inverses ration demand, which could be the case come late summer.

 

I think we are tight enough to still be pretty bullish basis, but then again I turned a most of my hedges into cash late May, but that decision was a combination of a lot of basis gain,  too much borrowed money for margin, need for cash flow, delivery constrains, and being too chicken to roll into a July-Sep inverse.

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Senior Advisor

Mike are these numbers right????

--U.S. Wheat Associates estimate U.S. corn production at 312 mt for 2011-12.

--USWA sees 2011-12 corn ending stocks at 11 million tons

 

in metric tons that a 12.2B corn crop and 432M carryout.............not that I disagree, but WOW, guess we better have more corn out there than we think and demand better wain some.............WOW

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Veteran Advisor

Re: Mike are these numbers right????

Yep, 312 corn production vs. USDA's 343 million metric tons. And the 11.0 million tons figure is what they released as well.  So, you think this is scary tight?

 

Mike

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