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Veteran Advisor

From the floor March 30

Attention: Watch a "live", streaming, video broadcast of the CME Group Press Briefing tomorrow at 8:15am, following the USDA Report, right here in Marketing Talk. Agriculture.com will put you on the floor to watch and listen to market analysts talking about what the USDA numbers mean for the markets. Grab a cup of coffee and join us at 8:15am, tomorrow morning.

 

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At the close:

The May corn futures settled 8 1/2 cents lower at $6.63 1/4. The May soybean contract closed 10 1/2 cents higher at $13.72. The May wheat futures ended 10 cents lower at $7.27 1/4. The May soybean meal futures settled $2.10 per short ton higher at $360.70. The May soyoil futures settled $0.30 higher at $57.32.


In the outside markets, the NYMEX crude oil is $0.50 per barrel lower, the dollar is lower, and the Dow Jones Industrials are up 83 points.

 

Bring on the report!

 

Mike

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At 12:30pm: 

A floor trader (bearish on tomorrow's report) offers up his perspective. He also talks about China corn-buying. In his own words:

"If China is scrambling for corn, they have to get with the rest of the world on this genetically modified corn issue. That's why you hear of China's trade delegation talking to Argentina's folks about allowing GMO corn into China. Everything seems to be leaning towards a more consistent Chinese bid for corn. The talk of China buying corn today stemmed from a corn purchase of 'optional origin' from an unknown.
Quite frankly, I have more fear of a bearish report tomorrow than a bullish report. We'll see. Tomorrow's Quarterly Stocks number will give us a sense of bean demand. I think we've rationed and you can see it with soymeal and a weak basis. Some of that is because corn-based DDG is being used as a feed replacement. At the same time, I don't know if the trade is doing a good job of reading how much corn is being used. When you grind corn, you still get 17 lbs of DDG back, that goes back into the feed sector. We have a fairly high-quality corn crop. On ethanol production, the USDA carries a conversion 2.75 gallons per bushel of corn, when the most efficient guy out there can make 2.90 gallons per bushel. So, maybe we haven't used as much corn as we thought, in the first and second quarters. I'm a little bit fearful. I believe that's one of the reasons the July/Dec corn spread has tempered its attitude today. We're seeing profit-taking in that spread, in the past week.

As far as China corn buying, I see the import margin being at $6.60. Anything under that is when I would expect to hear more about China corn buying. The next thing to consider is whether China will be price-responsive or will they buy at higher price than what they pay their domestic sellers? Since we first heard about China purchases, after a big price-break, I assume they will be more price-responsive," he says.


Mike

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At 12-Noon:

Soybeans are now only 3 cents higher, corn has dropped to 6 cents lower, and wheat 4 cents lower.


The futures pits remain quiet. But, the options pits are very loud.

 

It's interesting that Obama just told the world the U.S. should make more ethanol. Plus, there's rumor that China bought more corn. We have others saying tomorrow's report could be bullish corn. Yet, corn is 6 cents lower right now. So, the corn market is not reacting to this news.

 

One trader asked me what my average guess was for tomorrow's acreage report. I said I'm a reporter, what's your avg. estimate? He revealed that he has corn acres at 92.0 million and soybean acres at 75.0 million. .


Mike

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At mid-session:

The May corn futures are 3 1/4 cents lower at $6.68 1/2. The May soybean contract is 10 cents higher at $13.71 1/2. The May wheat futures are 7 3/4 cents lower at $7.29 1/2. The May soybean meal futures are $2.20 per short ton higher at $360.80. The May soyoil futures are $0.20 higher at $57.30.


In the outside markets, the NYMEX crude oil is $0.15 per barrel lower, the dollar is higher, and the Dow Jones Industrials are up 65 points.


One trader says the market selling the May corn and buying the May soybean futures is being misinterpreted. "If you look at what July/Nov bean spread has done, it gave up a lot of ground. It went from being $1.20 over to just $0.17 over. So, this is short-covering today and its helping the May prices stay higher. This is keeping soybeans supported, when there is no new news for beans," he says.


He adds, "Ultimately though, beans have a problem, price-wise, he says. Argentina is trying to expand its harvest this year. They have better crops than we earlier thought. Brazil is supposedly going to have a 72.7 million metric ton soybean crop, according to a newswire report. The basis is weak. There are rumors of Asian buyers asking to roll 'basis' forward. There's a negative crush margin in China right now. So, there is no big bid here for soybeans. With South America's harvest coming on, the timing of bearish bean news couldn't be worse."


Mike

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At the open:

The May corn futures opened 2 3/4 cents lower at $6.69. The May soybean contract opened 5 1/2 cents lower at $13.56, but quickly turned 4 1/2 cents higher. The May wheat futures opened 7 3/4 cents lower at $7.9 1/2. The May soybean meal futures opened $1.60 per short ton lower at $357.00. The May soyoil futures opened $0.30 higher at $57.05.


In the outside markets, the NYMEX crude oil is $0.99 per barrel lower, the dollar is higher, and the Dow Jones Industrials are up 49 points.


Mike

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At 9:20am:

Private exporters reported to the USDA export sales of 150,000 metric tons of hard red winter wheat for delivery to unknown destinations during the 2011/2012 marketing year.

 

Meanwhile, I just asked a floor trader if he expects the market's trade to be slow today. He says, "Last year, before this report, I stayed home thinking it would be slow and it was quite active. So, we'll see.


Mike

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At 6:35am:

Early calls: Corn 2-4 cents higher, soybeans 1-2 cents higher and wheat 3-5 cents lower.


Trackers:

Overnight grain, soybean markets=Trading mostly higher.

Crude Oil=$0.44 lower.

Dollar=Higher.

Wall Street=Seen trading slightly higher with data coming out on U.S. jobs, excluding government jobs for February. 200,000 jobs are expected to have been added.  

World Markets=Higher.

 

Note: Did you know that, if you wanted to, you could trade the USDA numbers as they are released at 7:30? I wrote this story to help those that didn't realize it. But, I'm also curious how many actually were aware of this.

 

Full story at http://tinyurl.com/4ajtsp9

.

 



More in a minute,


Mike

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10 Replies
Veteran Advisor

Re: From the floor March 30

News & Notes: 

--MIPA bought 300 tons of corn Wednesday.

--Russia's 2011 crop production is estimated, by USDA's Attache, at 84 million metric tons vs. 61 million metric tons last year. Russia's exports are estimated at 5.5 million metric tons.

--Japan can't say when a food shipment ban will be lifted.

--A comment sent to me this morning from a Brazilian farmer-contact. He farms in the state of Bahia, northeast Brazil. He says, "Harvest is getting started but has been wet so far.  We are excited about the yield potential on all of our crops."

 

Separately, what is your market advisor telling you to do, ahead of tomorrow's report? Just curious. If you could share what some of them have been saying about how to approach this 'big' number. Is there an opinion of just staying on the sideline and wait and see what shakes out?

 


Mike 

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Senior Contributor

Re: From the floor March 30

All of the "Market advisors" that I have heard for the last year + have done nothing but tell farmers to sell..... I think that some of them have sold 400% of most guys crops if they had sold every time they recommended selling...... FWIW..... p-oed

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Senior Contributor

Re: From the floor March 30

The advisor I have a subscription with claims they do not know what the markets will do at any time.

Their program is to sell at multiple times through the year.

They do not expect or claim to hit the high in the market.

They do aim and are usually sucessfull in selling above the average price recieved.

So since they have already been marketing all along their only advice ahead of the report was to raise NC corn sales a little to get to 33% sold from 20%.

Otherwise they are well positioned to take what ever comes.

Higher prices?? they have some to sell.

Lower prices they have lots sold and can wait out a downturn to sell later.

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Contributor

Re: From the floor March 30

 

 

                Doin't look good for tomorrow,   Big corn number, and now China headed south to talk about non gmo corn. 

 

       Better dump what corn is left.    More beans are starting to look good.    Just my two cents.  You heard it here first .   Stan

 

 

 

 

     Its never to late to follow your dream.................  Flordia from Now  1 to  March 31.................!!!!!!

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Senior Contributor

Re: From the floor March 30

Mike.... Where on the site will we be able to pick up the link for the live stream tomorrow?....... I am assuming the home page?....... p-oed

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Veteran Advisor

Re: From the floor March 30

The "livestream" from the CME Group trading floor will be seen right here in Marketing Talk, right at 8:15am. It will be embedded into a thread. We will make it very noticeable as to where the "livestream" is located.

 

Thanks for asking,

 

Mike

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Veteran Advisor

Re: From the floor March 30

Do the traders have an explaination for why new crop is holding up better in both corn and beans than old crop?  If they are really thinking we are getting more acres, the trades actions don't reflect their words.

 

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Veteran Advisor

Re: From the floor March 30

I read that the recent upswing in crude put over a trillion extra dollars in the hands of the oil cartels.  Today's speech from President Obama doesn't show any signs of backing off biofuels, but expanding them.  Now if we also expand US oil production, lower fuel prices might slow biofuel production

http://www.whitehouse.gov/the-press-office/2011/03/30/fact-sheet-americas-energy-security

 

Smithfield reports that pork consumption has not slowed at all with the upswing in prices.

 

Everytime I think I should sell this market....the facts get in the way.

 

After getting burnt with last years USDA production reports....how much money are they willing to trade tomorrow's report--either way?

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Veteran Advisor

Re: From the floor March 30

I'm told the corn/soybean spread has been beaten down so much, that traders think the report is now built-in. So, profit-taking is occurring on that spread. Traders are selling May corn and buying May soybeans. That is a reversal of what has been happening. And now, traders are covering their shorts, plus profit-taking.

 

Right now, old-crop soybeans are higher than new-crop. For corn, old-crop and new-crop prices are lower.

 

Mike

 

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