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Veteran Advisor

From the floor May 11

At the close:

The July corn futures settled down the 30 cent daily limit at $6.77 1/4, a 4% drop vs. yesterday. The July soybean contract closed 6 1/2 cents lower at $13.31 1/2. The July wheat futures closed 39 3/4 cents lower at $7.59. The July soybean meal futures closed $2.70 per short ton lower at $347.60. The July soyoil futures ended $0.50 lower at $56.30.

 

In the outside markets, the NYMEX crude oil is $5.65 per barrel lower, the dollar is sharply higher and the Dow Jones Industrials are down 145 points.

 

Mike

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At 12:50pm:

July corn remains limit down. Everything else on the floor is sharply lower.

 

Mike

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At 11:05:

Corn returns to 'limit' down, after bouncing off a few times.

 

Mike

----

At mid-session:

The July corn futures are 27 1/4 cents lower at $6.80. The July soybean contract is 12 1/2 cents lower at $13.25 1/4. The July wheat futures 23 1/4 cents lower at $7.75 1/2. The July soybean meal futures are $3.80 per short ton lower at $346.50. The July soyoil futures are $0.50 lower at $56.30.

 

In the outside markets, the NYMEX crude oil is $3.52 per barrel lower, the dollar is higher and the Dow Jones Industrials are down 90 points.

 

Mike

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At 10:20am:

Old-crop corn is 'limit' down at $6.77 1/4. It's trading at $6.69 synthetically. New-crop contracts are 25 cents lower.

One corn trader says, "Though the USDA says the old-crop ending stocks are bigger than expected and that demand appears slowing, we won't have our answers until at least late June.
Whether you agree with today's USDA Report or not, there isn't much you can do about old-crop data, he says. "Because it's all we have to go on, we have to believe the USDA numbers. it looks like farmers had more corn in storage, or somewhere, than first thought. So, it looks like old-crop prices don't have much upside potential."
New-crop futures contracts, on the other hand, still have plenty of weather and planting delays to deal with. "But, there will still be a big negative influence of old-crop on new-crop contracts. Dec. corn could be pulled to that $6.20 per bushel area, maybe even $6.00. At that point, we'll see if any buyers step in."

 


 


 

Mike

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At 9:45am:

Looks like July corn could hit limit down at $6.77 1/4. It already touched limit down and bounced off.

 

Speaking of prices, Goldman Sachs is estimating corn prices averaging $8.60 in the next 3-months, $7.80 in 6-months and $7.00 in 12-month period. For soybeans, GS sees a 3-month price at $15.00.

 

Mike

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At the open:

The July corn futures opened 27 1/4 cents lower at $6.81. The July soybean contract opened 17 cents lower at $13.21. The July wheat futures opened 20 cents lower at $7.80. The July soybean meal futures opened $4.30 per short ton lower at $346.00. The July soyoil futures are $0.92 lower at $55.88.

 

In the outside markets, the NYMEX crude oil is $2.81 per barrel lower, the dollar is higher and the Dow Jones Industrials are down 60 points.

 

Mike

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At 7:35am:

USDA Report Results:

Traders call the report very bearish corn, soybeans. Early calls: Corn down 20 cents, soybeans 20-30 cents lower, and wheat 10-20 cents lower.

--2010-11 U.S. corn carryout at 730 million bushels vs. the trade expectation of 665 million bushels and its April estimate of 675million bushels.
Because this number is at a 15-year low, the market is monitoring the government's estimate closely.
--For soybeans, the U.S. 2010-11 carryout is estimated at 170 million bushels, compared to the average trade estimate of 153 million and the USDA's April estimate of 140 million bushels.
--U.S. 2010-11 wheat carryout at 839 million bushels, vs. the average analyst estimate of 844 million and the
government's April estimate of 839 million.

 

U.S. Yields
The USDA pegged the U.S. 2011 corn yield at 158.7 bushels per acre, compared to its first estimate in February of 161.7 bushels per acre.
For soybeans, the USDA sees the U.S. yield at 43.4 bushels per acre vs. its February estimate of 43.4.

For wheat, the USDA sees the U.S. 2011 winter wheat yield at 44.5., vs. 43.8 previous.

 

REACTION:

One analyst says, "The carryover, or inventory numbers, all came in over pre-report trade guesses for 2011 and 2012. They lowered exports for corn and beans. The surprise was they left ethanol unchanged at 5 billion bushels. While world carryover was fractionaly lower on corn and wheat, it wad up for beans on a jump in Brazil's production. The markets open lower initially, but in the big picture next year's corn and bean carry is very bullish and rain is increasing for the 6 to 10 day forecast. Traders will be back to trading weather Thursday and Friday."


One floor trader says, "Over-the-counter has traded corn down 3 to 4 cents... and beans down 12 cents...the USDA acknowledged slowing exports in both corn and beans...they used a low corn yield but still printed a 900 carryout for new crop... if you subtract any corn acres on final numbers in June... you are still too tight to seriously break the corn market. I will most likely end up owning corn on lower move.

The beans, however, there is growing concern that China is not that active. Crops are larger in SA and increased carryin and potential for more bean acres on final acreage report will push new crop carryouts above 200. So, look for beans to trend lower."

 

Another analyst says: "Bearish across the board. not one friendly number according to estimates. Now, here is what I see. They slashed exports for next year to 1.8 billion bushels so in my view the assumption is prices will stay HIGH for this number to be attained. Otherwise, that number is likely too low. Feed usage was also lowered by 50 million bushels, but that was offset by an increase in corn used for ethanol by the same amount.

I think the yield that they started with on both corn/soybeans is reasonable. 158.7 is corn, 43.4 on soybeans.

Both old crop carryovers of corn and soybeans swelled which also cushions the blow a little. This report is fine, it gives us a little cushion for yield adversity and the likelihood is that corn acres come down in the June report. The odds of us planting 92.2 million corn acres is low. So that gives you some cushion to lower those acres.

Just trying to keep all the end users alive bud."

Yet another analyst says:
Looks like a mostly negative report, and looks like a bear spread report.  We should be lower across the board, with old crop leading the way.  Less demand showed up, which was against my expectations anyway.  New crop estimates a little high but not drastically so so I think old crop will show the most weakness.  Wheat production higher than expectations, but only in Soft Red and this can work lower depending on how much has been lost if any in the rains and floods.  So the production needs to be taken with a grain of salt.  Old crop stocks unchanged but who cares anymore.  I thought new crop stocks were neutral, above expectations maybe but still moving lower.  Rice bearish for old crop, new crop less so."

 

 

Mike

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At 7:10am:

S. Korea bought 108,000 metric tons of corn Wednesday. At least one cargo was from the U.S.

 

Mike

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At 6:30am:

Early calls: Are subject to this morning's USDA May Supply/Demand and Stocks Reports. Watch for the numbers and reaction right here, at 7:30am CST. Overnight, corn traded 2 1/4 cents higher, soybeans 2 cents lower and wheat 1 3/4 cents higher.


Trackers:

Overnight grain, soybean markets=Trading mixed.

Crude Oil=$1.00 lower.

Dollar=Higher.

Wall Street=Seen trading higher awaiting the latest report on the U.S. trade balance.

World Markets=Higher

 

News nuggets:

--Russia may not lift its grain export ban until after fall.

--Goldman Sachs has raised its wheat price projection to $8.00 per bushel.

--Japan is in the market for 250,000 mt of feed wheat and feed barley from U.S., France, Canada.

--Brazil's 2011 grain harvest is seen as a new record at 158.7 million metric tons. Brazilian Institute of Geography and Statistics conducted a survey and found this: Brazil’s grain harvest area will reach 48.6 million hectares in 2011, indicating a 4.3 percent increase from the harvested area in 2010. The cultivation of rice, corn and soybeans - which together represent 90.8 percent of the volume of grain production - accounts for 82.5% of that total area to be harvested. In comparison with the previous year, the expected increase in harvested areas of these cultures is 2.1% (rice), 4.1% (corn) and 2.8% (soybeans) in 2011. The resulting year-on-year increase in production of these crops should reach 18.4%, 3.0% and 6.3%, respectively.

 

More in a minute,

 

Mike

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17 Replies
Senior Contributor

Re: From the floor May 11

So does the USDA want us to run out of corn?  Where did the extra bushels come from?  Our nearest ethanol plant hasn't stop producing at all even at $7 corn.   Now  at $6 they are just adding fuel to the fire.  

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Veteran Advisor

Re: From the floor May 11

Synthetically, the July corn market is trading $6.71, an extra 6 cents lower than the 30 cent limit down move on the futures market. One corn trader says this limit down will stick for most of the day.

 

Mike

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Veteran Advisor

Re: From the floor May 11

Where is all the reaction from this report? Are you all planting? I know it's a bearish day. Are all the longs spooked by this negative report? According to the government, you all are holding on to more corn than first thought. Is this true?

 

Mike

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Senior Contributor

Re: From the floor May 11

Just came in for lunch. Everyone else must be working too.  This is the first time I've had to glance at the report data. Reminds me of last summer's bearish report, just a month earlier this time. Doe that mean they will correct their numbers a month earlier than they did last year? ie: August instead of September?

 

With little early crop planted it may take until August for someone to realize they will get little help from early harvests for this marketing year's carryout.

 

I will definitely be switching to cheaper beer if the corn market stays limit down all day.

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Senior Contributor

Re: From the floor May 11

USDA #'s are what they are...... Next month they will be different ..... Let the price go down and see what happens to demand..... Buy the way..... Last I knew the USDA does not have any corn in there back pocket to make up any posable shortages this late summer......This report is IMO not a big deal when it is all said and done with........ p-oed

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Senior Contributor

Re: From the floor May 11

     The report is a joke!  Are they planting in Ohio or Indiana, N.Dak or Minn or Mich. this week?  The report is smoke and mirrors.

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Senior Contributor

Re: From the floor May 11

I always get a little uneasy when Goldman Sachs puts out price estimates.  I remember in 2008 when they made a bold statement about oil rebounding to a certain price.  On that particular day, oil rallied around five to six bucks a barrel.  Goldman then sold the heck out of it.  It's as if they make those price estimates to get the market moving in their direction so they can get out. 

 

As far as today's report, I think we all knew the day was coming when supplies would start to creep back up.  We haven't had a bearish report for nearly a year.  I didn't know if they'd do much with the old crop supplies in this report.  I thought they might wait until July.  I'd venture to guess we won't trade this report very long before we're back to trading weather.  This report might just be the shot in the arm the July vs. Dec. spread needed in order to get carry in the market.  With the late planting, I still don't get why Sept. is trading at a discount to July. 

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Veteran Advisor

Re: From the floor May 11

SouthWestOhio,

 

Corn is off its limit down move. You can move up to Miller Lite.

 

Mike

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Veteran Advisor

Re: From the floor May 11

GoredHusker,

 

Funny you should mention that about Goldman Sachs. A trader walked by a little while ago and said the exact same thing.

 

Mike

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