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Veteran Advisor

From the floor May 20

At the close:
The July corn futures closed 2 3/4 cents higher at $3.62.  The July soybean futures contract settled 5 1/2 cents higher at $9.44 per bushel. The July wheat futures ended 1/2 of a cent higher at $4.69 3/4. July soybean meal futures ended $2.80 higher at $276.20 per short ton. The July soyoil futures closed 11 points lower at $37.39.

In the outside markets, the NYMEX crude oil is $1.97 per barrel lower, the dollar is lower, and the Dow Jones Industrials are down 225 points.
Well, there was a lot going on, at the close. First, despite the world markets falling apart, the funds were still buying these grains. The kicker is, they were buying electronically, not on the open outcry floor, one trader says. The rumor originally was the funds were going to buy wheat and corn. They actually bought beans and corn. So, the funds drove these prices up above the day's highs. Once again, it's proof that if these funds want to buy they don't care what the outside markets are doing. They just can't stay away from commodities. Plus, around 1pm the euro started firming, the dollar weakening, and that supported the grains.
Yet another trader says pay attention to the fact that despite the world falling apart, the corn prices have held up in the past few days. He says that is a good indication this market has some upside to it. Plus, it's well-known that China is keying up to buy more U.S. corn. He says he really believes they are going to come into this market in a big way. Also today, USDA announced that in the first half of 2010, China has bought over $10 billion worth of U.S. ag products. At this point, China is the biggest U.S. customer.
Mike
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At 12-Noon:
"THIS IS A DISASTER!" Those are the words of a floor trader. He says it's only noon and these grain markets are following the outside markets. And how are the outsides doing? Well, crude is down $3.56 per barrel, the Dow is down 338 points, the dollar is surging higher. The VIX, the nervousness measuring stick of investors is now trading at the 40 level. Just a few days ago the VIX was at the 20 level. That is all you need to know. WOW!
Corn is now -4, soybeans -5, and wheat -7...all in the July contracts.
Mike
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At mid-session:
The July corn futures are 1/2 of a cent lower at $3.58 3/4, Dec. corn is 1 cent lower at $3.63.  The July soybean futures contract is 4 cents higher at $9.42 1/2 per bushel, Nov beans are 1 3/4 cents lower at $9.04. The July wheat futures are trading 6 1/4 cents lower at $4.63. July soybean meal futures are $1.80 higher at $275.20 per short ton. The July soyoil futures are 33 points lower at $37.17.

In the outside markets, the NYMEX crude oil is $2.34 per barrel lower, the dollar is higher, and the Dow Jones Industrials are down 246 points.
One trader says the nearby beans are higher vs. Nov due to tight cash markets. Apparently, U.S. and South America farmers are not selling many beans. Otherwise, the grains are at the mercy of the macro. Or call it Euro contagion. The outside markets are going way away from being supportive. The floor is fairly quiet, with some shouting in the soy options pit. The corn futures pit is nearly empty, it's quite something.
Mike
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At 10am:
One analyst says, "Grains are lower on the opening following weakness across the board in livestock, metals , stocks and energies. But, a floor is under the market limiting losses and this comes from a very strong weekly export sales report this morning showing China and other Asian countries are continuing to be big buyers of corn, with sales on the week up 65% from the week prior. Bean sales were 82% over the week prior with news China canceled previous purchases from Brazil and re-bought on U.S. ports .This is unheard of in the past as Brazil always sells beans under any U.S. posted prices to insure grain movement but U.S. prices are cheaper and China is desperate for feed grains."
Mike
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At the open:
The July corn futures opened 4 1/4 cents lower at $3.55, Dec. corn is 3 1/2 cents lower at $3.64.  The July soybean futures contract opened 2 1/2 cents lower at $9.36 per bushel, Nov beans are 4 1/2 cents lower at $9.01. The July wheat futures opened 3 3/4 cents lower at $4.65 1/2. July soybean meal futures opened unchanged at $273.40 per short ton. The July soyoil futures opened 50 points lower at $37.00.

In the outside markets, the NYMEX crude oil is $1.75 per barrel lower, the dollar is higher, and the Dow Jones Industrials are down 255 points.
The grain markets are getting pulled down by a sharply lower crude oil market, a strengthening dollar, and a plunging Dow, due to continued European financial worries. Wow! What a hit coming from the DJIA!
Mike
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At 8am:
You'll notice below that I have mostly lower early calls for today's markets. However, if the market decides that it wants to begin to price in demand, those calls will turn into higher numbers. We'll see. This morning's export sales were friendly. And traders have been saying that at some point, demand will be traded.
Mike
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At 7:30am:
USDA releases bullish weekly corn export sales, neutral-to-friendly soybean sales, bullish wheat sales.
For corn: USDA says 1.589 million metric tons, trade was looking for 950-1,250,000 metric tons (mt).
For soybeans: USDA says 564,500 metric tons, the trade estimated 500-650,000 mt.
For wheat: USDA says 455,700 metric tons, the trade expected 350-550,000 mt.
For soymeal: USDA says 55,600 metric tons and the trade expected 75-150,000 mt.
For soyoil: USDA says 3,500 metric tons.
NOTE: In the breakdown of the corn sales report, with 475,000mt, Japan was the biggest U.S. customer, for the week ending May 13. China was the second largest U.S. corn customer with purchases of 239,000mt.
Mike
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At 7:15am:
USDA announced Thursday that Japan bough 147,000 metric tons of food wheat from the U.S., Canada and Australia.
Mike
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At 6:30am:
Early calls: Corn up 1-2 cents, soybeans up 3-4 cents, and wheat down 1-2 cents.  USDA will release its weekly export sales this morning at 7:30am. This report could show sales of U.S. corn to China.
Trackers:
Overnight grain=Trading mostly lower.
Crude oil=Trading $1.37 per barrel lower.
U.S. Dollar=Trading higher.
World Markets=Lower.

Wall Street=Seen opening mixed with eyes on Allied Materials Co., the largest chipmaker. Also, the energy sector will be watched as the gov't considers forcing BP to shutdown its oil platform in the Gulf until people can figure out what has gone wrong and until it's deemed safe to pump again.

 

 

More in a minute,

 

Mike

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3 Replies
Senior Advisor

Re: From the floor May 20

Mike,

 

Haven't we been trading China demand for corn in fact or in rumor for a week or more?

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Senior Contributor

Re: From the floor May 20

Corn peaked on the china sale, dropped 30,  SFarming keeps having articles up suggesting expect more,

market is non-pulsed, is there more, or its a good byline that keeps hopes high.

 

How do we keep hopes vs. reality in line?

 

Another sale would be welcome

Artifice

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Veteran Advisor

Re: From the floor May 20

Jim,

 

Yes, I think we have. The markets haven't been able to shake the European contagion 'plow' to be able to take advantage of the strong demand. Outside markets keep trumping for now. But, some traders still believe that one day demand will be center stage.

 

Mike

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