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marketeye
Veteran Advisor

From the floor March 4

At the close:

The May corn futures settled 8 3/4 cents lower at $7.28. The May soybean contract closed 2 cents higher at $14.14. The May wheat futures settled 8 3/4 cents higher at $8.32 1/4. The May soymeal futures settled $2.80 lower per short ton at $369.70. The May soyoil futures ended $0.71 higher at $58.48.


In the outside markets, the NYMEX crude oil is $2.58 per barrel higher, the dollar is lower, and the Dow Jones Industrials are down 159 points.

 

Whoa! What a roller coaster of a ride, today.

 

Mike

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

At 12-Noon:

Informa, the private analyst firm, released new world crop estimates Friday. They are seen as mildly friendly for the corn market.

 

--Mexico's corn production was cut to 23.3 million tons.

--Brazil soybean production estimated at 71.4 million metric tons.

--Argentina's soy production at 52.0 million metric tons.

 

Mike

--------

At the mid-session:

The May corn futures are 6 cents lower at $7.30 3/4. The May soybean contract is 4 1/2 cents lower at $14.07 1/2. The May wheat futures are 3 1/2 cents lower at $8.20. The May soymeal futures are $3.50 lower per short ton at $369.00. The May soyoil futures are $0.21 higher at $58.98.


In the outside markets, the NYMEX crude oil is $1.61 per barrel higher, the dollar is lower, and the Dow Jones Industrials are down 97 points.


One analyst says, "Informa's numbers, released Friday, were moderately supportive for corn. But, this reversal in price will be watched at the close. Keep in mind, we have had three key, bearish reversals in the last three weeks. For the corn market, while it has a lot of fundamentals driving it, technically it's showing signs that we should be cautious. I call these warning shots across the bow.

He adds, "This lower reversal involves profit-taking, traders that are long the market realize that this time of the year, if you are long you are at the edge of the 'cliff' and could quickly fall off. The uncertainties are becoming less uncertain, with crop insurance levels being set, early corn planting is underway. So, if we don't push through new-highs and see funds come in buy, traders are quick to reverse their positions."


He goes on to say, "I think you'll continue to see light deliveries, as people want to hold onto the 'physical'. The fundamental support for corn is that we are pretty tight on inventory. In my opinion, there is a lot of on-farm storage built in the last five years that enables the good income flow-farmer that doesn't have to sell those last bushels sitting in the bins. Because those farmers have 10-20% of their 'gambling' stocks for hedging against summer weather or hedging against forward-contracted corn for re-ownership, I just don't see many deliveries. The supply is tight.

Next week
The same analyst says, "Corn scored a gain a number of victories coming back many times from negative territory, this week. But, if we end up with a reversal down today, it will leave a question mark of doubt for next week. I think the market will focus on outside factors next week. Going forward, the market will watch crude oil, and weather. If the market senses unfavorable weather it will run higher in an attempt to ration supply.

Be cautious though, big soybean numbers coming out of South America. This has the potential to cap rallies in corn, beans and wheat.
"


Mike

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

At 10am:

USDA announced Friday that private exporters were reporting optional origin sales of 120,000 metric tons of soybeans for delivery to China during the 2010/2011 marketing year. An optional origin contract provides that the origin of the commodity may be the United States or one or more other countries.


Mike

-------

At the open:

The May corn futures opened 4 cents higher at $7.40 3/4. The May soybean contract opened 11 3/4 cents higher at $14.24.  The May wheat futures opened 10 1/2 cents higher at $8.34. The May soymeal futures opened $0.50 higher per short ton at $373.20. The May soyoil futures opened $0.70 higher at $59.47.


In the outside markets, the NYMEX crude oil is $1.99 per barrel higher, the dollar is lower, and the Dow Jones Industrials are down 68 points.


Mike

--------


At 5:45am:


Early calls: Corn 3-4 cents higher, soybeans 5-7 cents higher and wheat 7-9 cents higher.


Trackers:

Overnight grain markets=Trading higher.

Crude Oil=$0.58 higher.

Dollar=Higher.

Wall Street=Seen higher as all eyes are on today's U.S. non-farm payroll figures.

World Markets=Higher.



More in a minute,


Mike

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12 Replies
nwobcw
Advisor

Re: From the floor March 4

Is this the beginning of another leg up period?

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marketeye
Veteran Advisor

Re: From the floor March 4

There seems to be some surprise that China has switched to buying old-crop soybeans. That is underpinning the bean market, along with harvest delays in Brazil and port problems in Argentina. Plus, the market may be thinking the corn acres were bought but not the bean acres. Frankly, I'm so amazed at how high this thing is now and how high the traders tell me we could go that I wouldn't be surprised if we are on another leg upward. Corn is trying to break that $7.44 level, traders say.

 

Mike

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Palouser
Senior Advisor

Re: From the floor March 4

I prefer to think of it as a resumption of the realization of the impact of low ending stocks, global consumption and the risk N America won't have an exceptional crop, after a brief correction. PHysical fundamentals reassert themselves.

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marketeye
Veteran Advisor

Re: From the floor March 4

The fighting in Libya intensifies, as that sick leader fires on peaceful demonstrators. The crude oil market is surging above $104, the highest since 2008. What do you think? Will the market trade this activity in the biodiesel-related bean market and ethanol-related corn market?

 

 

Mike

 

 

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Palouser
Senior Advisor

Re: From the floor March 4

The issue with Libya and oil, and the affect on ethanol and biodiesel, is a matter of perception, IMO, not fundamentals. Libya's production is only 2% of global supplies. It underlines the wider issues but doesn't determine them from a physical point of view. Here is where paper can influence prices by over reacting. It's the nature of speculation. Traders are worried about how other traders will react and try to pre-emptively act to protect their margins. So it's self reinforcing. Medium to long term I see the current events as unimportant to prices.

 

Unless there were deeper and wider events triggered by the Libyan situation Libya is unimportant to the economics. They aren't well integrated to the global economy. There are serious humanitarian issues, but in terms of supplies most of the globe only cares that l the oil flows. I think the issues that promote or discourage biofuels are still mainly the same as they were.

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marketeye
Veteran Advisor

Re: From the floor March 4

When asked about today's gyrating market, this analyst seemed like he just wanted to throw his arms up in dismay. He says, "At this point prices are so high it doesn't seem to be explainable in day to day fluctutations.  However, Informa forecast updates today seem to be providing some pressure, especially to soybeans.  yet soybeans were strong with wheat, while corn was weak."

 

Mike

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Palouser
Senior Advisor

Re: From the floor March 4

Tell the trader if he wants a reality check to go back to historical prices in the last two decades and put them in the Gov CPI calculator. Then tell him to enter some current fertilizer prices - or better yet - what the prices are in the spring. Then run a chart with ending stocks relationships.

 

There's no mystery here.

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jrsiajdranch
Veteran Advisor

Re: From the floor March 4

MY take is that Thurs. the FED pushed a lot of moneyout the door with it's POMO policy (fancy acronym for QE2) on FRi. they only put out a billion dollars. Last fri. they pushed out over 7 billion. Stock market girattions can be traced almost exclusively to the rate of QE2.  We have two more weeks of it. Should be intereting to watch if it ends with a big bang or just a whimper.

Bomber Ben will keep feeding the addicts is my bet.  But only after he gets them into the very early symptoms of withdrawl. Then they will determine the addiction is better than the cure.

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4wd
Senior Contributor

Re: From the floor March 4

QE-3 is in the basement right now ready to by pulled out just as soon as #2 runs out. They cannot afford to let interest rates take off right now with the price of fuel&food zooming. I don't know how long it will last, I think the politicians believe QE-XX  will take them thru the next election cycle and that is all they really care about. What happens after that is probably a new form of currency exchange in conjunction with debt discharge.

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