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Veteran Advisor

From the floor May 24

At the close:

The July corn futures settled 20 3/4 cents lower at $7.33 1/2. The July soybean contract closed 1 1/2 cents lower at $13.72 1/4. The July wheat futures ended 23 1/4 cents lower at $7.79 3/4. The July soybean meal futures closed $0.40 per short ton higher at $359.20. July soyoil closed $0.26 higher at $57.48.

 

In the outside markets, the NYMEX crude oil is $1.84 per barrel higher, the dollar is lower and the Dow Jones Industrials are up 12 points.

 

A drier 6-10 weather forecast weighed on corn and pulled up soybeans, as the trade expects more corn to get planted now and less soybeans. Wheat was hurt by rain that fell in Europe's dry regions. Plus, the funds are rolling positions from July to December, ahead of next week's Goldman Roll.

 

One analyst says, NewEdge, a trading firm, released increased corn acreage estimates Tuesday. The firm says western Corn Belt acreage went 1.5 million acres over intentions.
"That higher acreage estimate pressured corn prices. Plus, a drier Midwest 6-10 day weather outlook caught the market's eye. And we had some handsome gains in planting last week," one analyst says.
He adds, "Without any new planting delay information, the market is looking for more definitive information on how the June 30 Acreage and Stocks Report is going to unfold."
Also, with the farmers that could plant corn and are now coming out of the field, along with that new-crop coming out of the ground, the market could start seeing old-crop being priced, he says.
"That may be why the spreads are giving way," he says. Plus, I think the markets are still concerned about capital flight out of the commodities ahead of month-end next week."


Last week, we had basis climbing steadily, this week it's more stabilized. I think in the planting delayed areas, farmers are holding off from selling. But, in Iowa, southern Minnesota, Nebraska, and Missouri, and Kansas, where the corn crop did go in on a timely basis, we are likely to see some of that corn starting to shake loose in the next few weeks, he says.

 

Yet another analyst sums up the past few days like this: "Today's action was similar to Sunday night and Monday of selling rallies. We traded higher Monday night after the Monday crop progress report was viewed as friendly but then corn and wheat broke to lower with lower trade on Tuesday  day session. Traders also took profits on spreads where they sold July corn and bought December. Last week, they did the opposite as further flooding stopped the barge traffic and grain movement. Also, they reverse their long corn and wheat short bean spreads bought last week on thinking planting delays will have farmers plant less corn and spring wheat and more beans. Sunday night, Monday and Tuesday, all took profits by selling rallies and unwinding profitable spreads, as funds close trades before month-end. That being said, next goal is to find a near-term low to buy long again, before the trade prices in and up acreage not planted due to the delays and flooding. .

 

Mike

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At mid-session:

The July corn futures are 7 1/2 cents lower at $7.46 1/2. The July soybean contract is 6 1/4 cents higher at $13.80. The July wheat futures are 1 1/2 cents lower at $8.01 1/2. The July soybean meal futures are $1.20 per short ton higher at $360.00. July soyoil is trading $0.48 higher at $57.70.

 

In the outside markets, the NYMEX crude oil is $1.75 per barrel higher, the dollar is lower and the Dow Jones Industrials are down 13 points.

 

Mike

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At the open:

The July corn futures opened 1/2 of a cent lower at $7.53 1/4, while the Dec. corn contract opened 5 1/2 cents higher at $6.76.. The July soybean contract opened 9 1/2 cents higher at $13.83 1/4. The July wheat futures opened 1 cents lower at $8.01 3/4. The July soybean meal futures opened $2.60 per short ton higher at $361.40. July soyoil opened $0.45 higher at $57.69.

 

In the outside markets, the NYMEX crude oil is $2.15 per barrel higher, the dollar is lower and the Dow Jones Industrials are up 6 points.

 

Mike

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At 7:30am:

Here's your 'market noise' list:

 

--A private analyst firm drops the U.S. 2011 corn production 400 mill. bushels below USDA's projection.

--Bull spreads are weakening due to funds rolling long positions from July, this week and next.

--3.6 million acres of farmland in Mississippi River valley affected by flooding, the Farm Bureau estimates. Arkansas was hit the hardest with 1.0 million.

--Ohio State crop experts say don't get mesmerized by the poor planting conditions, when trying to figure out that state's ultimate corn production. They say watch July, August weather more.

--It's being reported that Russia may lift its grain export ban on July 1, according to the Russian news agency Interfax. At the same time, Russia reports May 1 grain stocks were down 18% vs. a year ago. Hmmm....

 

Question: Basis is firm in most areas. But the word is the farmer is not selling. Are you not selling right now? Are you too busy to sell? Do you plan to let the firm basis go by and wait for a rally after the June 30 report? What do you say?

 

Mike

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At 7:05am:

Early calls: Corn 1-2 cents lower, soybeans 4-6 cents higher, and wheat 4-6 cents lower.


Trackers:

Overnight grain, soybean markets=Trading mostly lower.

Crude Oil=$1.20 higher.

Dollar=Lower.

Wall Street=Seen trading higher, after yesterday's sell-off from European debt worries

World Markets=Higher.

 

More in a minute,

 

Mike

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18 Replies
Veteran Advisor

Re: From the floor May 24

Any chatter about Tim Pawlenty and his get rid of Ethol subsidies speech? 

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Contributor

Re: From the floor May 24

he did'nt win me over

 

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Veteran Advisor

Re: From the floor May 24

ME Neither!

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Senior Advisor

Re: From the floor May 24

Pretty much shows that a politican will say anything to get a news bite-----  

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Veteran Advisor

Re: From the floor May 24

Haven't heard much yet. There is an issue out there that few are talking about. Because these companies have found a new way to get shale from the ground, boosting natural gas prospects, plans for some large wind farms have been scratched. In fact, for those farmers that have agreements with wind energy companies for planned construction of windmills, you might want to do some research to find out if all systems are still a go. You might be surprised the company's expansion plans might have been scaled back, delayed, or scratched. Now, I will say, I did see some of those huge blades being trucked down I-80 this past weekend, headed towards Illinois maybe. So, someone is building windmills somewhere.

 

As far as ethanol, Pawlenty is hitting a 'hot-button' issue. But, when thought-out, even the critics can't produce a solution to getting rid of ethanol. You can agree that corn shouldn't be used to make a fuel. But, up to this point, no viable alternative has been offered. So, in the race to get rid of ethanol, it seems Pawlenty is on the outside track, grouped together with a bunch of other horses and none of them can find their way out of the pack.

 

Mike

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Veteran Contributor

Re: From the floor May 24

Mike,

To answer your question, I am not selling now, waiting for $8 corn. Local ethanol plant is paying $7.78 cash before today's market opens. I took someone's advice to wait for $8 corn or $4 corn whichever comes first. Do you think I will hit $8 before $4 ?

39% corn planted, 0% beans in central Ohio.

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Senior Contributor

Re: From the floor May 24

JR..... Do you think that anybody has told  "Aplenty" that the road to the press has to start in Iowa?.......p-oed

 

By the way...... We are still sitting at most nothing done.......:~(...... Lots of sad faces here in SCMI......

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Senior Advisor

Re: From the floor May 24

No! I can't agree that corn shouldn't be used for fuel. As long as we  justify  the use of grains for the production of recreational drugs and we allow acres to be used for the production of nonfood items, then I don't want to do anything to diminish corn growers' markets.

 

If ethanol makes food costs too high, then lets examine the production costs and the profit margins between the farm and the grocery shelf. I think in most cases you will find the cost of raw commodities are not the biggest factors in grocery store prices.

 

BTW if cellulosic ethanol is the answer, prime Iowa farm ground can produce those products as well. Converting crop acres to ethanal production is just as valid as crop acres used to produce cotton. Crop acres that could be used for food production.

 

First, I would start with banning alcohol production for recreational drugs.

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Veteran Advisor

Re: From the floor May 24

do charing,

 

I have put your question to a floor trader that is fairly well respected.

 

He says, "This is the largest index roll of the year, in that it goes from old to new contracts. Funds are pre-rolling, ahead of Goldman's Roll that starts next week. June 5-9 will complete the roll, as they sell July and buy Dec."

"Pigs get fed and hogs get slaughtered is the saying around here. If I owned old crop corn I would consider myself a lucky man.But, if they want to hold out for 8 dollars it can happen. We are doing nothing to help new crop acres. So, June 30th will be an important date. And most likely will keep markets buoyant until we get a better perspective on stocks and acreage," he says.

"The downside risk is really intangible. What if China has a financial slow down? What if energy markets break hard? That could cure some of the $7.00 prices. But, today, I have Chinese import margins for new crop below $6.80 and old-crop fuel equivalent around $7.15. So, expect July to be fairly well supported near $7.00," he says.

 

Mike

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