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Veteran Advisor

From the floor May 4

The July corn futures are 1/4 of a cent higher at $7.24. The July soybean contract is 10 1/4 cents lower at $13.53 1/2. The July wheat futures are 21 1/4 cents lower at $7.72. The July soybean meal futures $0.90 per short ton lower at $354.00. The July soyoil futures are $0.61 lower at $57.10.


In the outside markets, the NYMEX crude oil is $1.71 per barrel lower, the dollar is lower and the Dow Jones Industrials are down 104 points.

At the close:

The July corn futures settled 5 3/4 cents higher at $7.29 1/2. The July soybean contract settled 11 3/4 cents lower at $13.52. The July wheat futures closed 21 1/4 cents lower at $7.72. The July soybean meal futures settled $2.40 per short ton lower at $352.60. The July soyoil futures closed $0.54 lower at $57.17.


In the outside markets, the NYMEX crude oil is $1.84 per barrel lower, the dollar is lower and the Dow Jones Industrials are down 79 points.

 

Mike

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At 10:18am:

Corn has jumped to a nickle higher, soybeans and wheat are still lower. Why are the markets mostly lower? Well, it depends upon whom you talk to. Some say it's a result of pure liquidation. The stock market has had a 78% retracement from it's all-time high. The govt's stimulus programs have faded. Fed Chairman Ben Bernanke told reporters in his news conference that Quantitative Easing-2 will end in June. Separately, world government's continue to tighten easy credit requirements. And people are just pulling money out of the market. As a result, the grain and soybean markets feel that ripple affect. This lower, weaker market has nothing to do with fundamentals, it's all about the macroeconomic factors, one floor trader says.

 

At the same time, another trader says the corn market is finding strength from a delayed planting season.

 

Take your pick, I guess.

 

Mike

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At the open:

The July corn futures opened 1/2 of a cent lower at $7.23 1/4. The July soybean contract opened 8 3/4 cents lower at $13.55. The July wheat futures opened 6 3/4 cents lower at $7.86 1/2. The July soybean meal futures opened $1.40 per short ton lower at $353.50. The July soyoil futures are $0.41 lower at $57.30.


In the outside markets, the NYMEX crude oil is $1.53 per barrel lower, the dollar is lower and the Dow Jones Industrials are down 84 points.

 

The floor is fairly quiet. Most of the noise is coming out of the options pits, not futures.

 

Mike

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At 8am:

Here are some early estimates, from PFGBest, for next Wednesday's USDA May Crop Report:

U.S. ENDING STOCKS
Corn 2011= 670 million bushels. For 2012, 875 million.
Soybeans 2011=145 million bushels. For 2012, 170 million.
Wheat  2011=839 million bushels. For 2012, 750 million.

WORLD ENDING STOCKS
Corn 2011=120.0 million metric tons. For 2012, 125.0 mmt.
Soybeans 2011=61.0 million metric tons. For 2012, 64.0 mmt.
Wheat 2011=181.9 mmt. For 2012, 178.0 mmt.

U.S.WINTER WHEAT PRODUCTION….
All winter wheat=1.460 billion bushels.
Hard Red Winter=.960 million bushels
Soft Red Winter=.240 million bushels
White Winter=.260 million bushels

 

What do you think? Wheat production number too high? Is the soybean ending stock number for old-crop too ambitious?

 

What say you?

 

Mike

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At 7:20am:

Ag business news:

--Cargill gets approval to buy AWB, an Aussie commodity mgmt business, to become the largest wheat exporter in Australia.

--ConAgra looks to buy Ralcorp for $4.9 billion. This would make the two company merger the third largest meat packaging company. Can anybody say consolidation? I know it's been happening for years. Pick your industry, it seems like it happens everywhere.

 

Mike

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At 6:05am:

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


Trackers:

Overnight grain, soybean markets=Trading mostly lower.

Crude Oil=$0.30 lower.

Dollar=Lower.

Wall Street=Seen trading lower as investors await a report showing April payroll numbers.

World Markets=Lower.

 

Note: I do hope you can join us tomorrow morning for a 'livestreaming' event to discuss the issues of this delayed planting season. As of this coming Sunday, the early trade estimates for corn planting range between 20%-22%. Way behind 5-year averages. The video program will start at 7:45am right here in Marketing Talk. Feel free to post questions and we'll have the panelist answer them.

 

More in a minute,

 

Mike

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6 Replies
Veteran Advisor

Re: From the floor May 4

Mike I will probably be planting corn but IF not I will join in. Here's my question: " what do they see as being the biggest risk goin forward?  Pricing to soon or missing pricing oportunities?" 

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Veteran Advisor

Re: From the floor May 4

I'm looking forward to hearing what the meteorologist, on tomorrow's panel, has to say about the rain prospects for the U.S. Hard Red Winter wheat crop. It sounds like rain is needed drastically, before that crop's harvest next month. Anybody in that wheat belt that can post a photo of the crop?

 

Mike 

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Senior Contributor

Re: From the floor May 4

So the funds are pulling out and pressuring prices down. Is that what you are saying?

Then what is going to happen with basis?

Will the actual users of the commodities have to bid higher with basis to get what they need or will there be enough at a lower price available to supply the users?

Will fundamentals keep the actual cash price up to the farmer even if Chicago goes lower?

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Veteran Advisor

Re: From the floor May 4

It's a broad commodity sell-off. From silver to wheat, you can almost hear the air coming out of this thing. Cash markets should stay supported, with old-crop ending stocks remaining tight. With seven states worried about some level of flooding, prospects fading a bit for that huge corn crop needed, and a continued falling dollar making U.S. ag products cheaper on the export market, it seems that if the market ever traded the fundamentals, higher prices would be ahead. What say you?

 

Mike

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Contributor

Re: From the floor May 4

Mike - I totally agree with your analogy that we can almost hear the air coming out of the tires. This risk-on, all-in-one, one-for-all market language is an indication that the fundamentals, and much of the technicals have been ignored. The herd mentality is ruling these grain markets. With dubious planting weather in many areas, & further declining stocks, we should be challenging the prior April 11th high in July corn at 788-3/4. I think that high will hold as a short-term high for the moment, and this little rally will fail at 740-ish July --- JRW.

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Frequent Contributor

Re: From the floor May 4

Central KS HRW Report

 

Our wheat here in central KS had held on really well considering the lack of moisture the last few weeks but the honeymoon is over.  I think the only thing that has saved us up to this point is the fact we have stayed relatively cool but that has changed now.  We were windy and in the low 80's today.  We are losing bushels everyday now as the wheat has started to turn a blue tint and some has already started to turn brown.  All this as we are in the critical stage of attempting to push out a head.  The wheat tour wraps up tomorrow here in KS.  I fear if they had waited another 5-7 days with the warmer and dry weather forecasted they would take another 5 - 10% more off there numbers.  I think I need to leave for a week or two as I can't bear to see the crop deteriorate so quickly.  We knew we were living on borrowed time. I think everyone will be in for a big surprise when the combines roll here in KS and it's not to the up side.  We are supposed to be in the lower 90's sunday and monday.  A large percentage of farm ponds are nearly dry and many cattle owners are hesitant to go to grass with their herds as the slow grass growth will soon start to go backwards also as it warms up in combination with no moisture in the forseeable future. I'm sure all the guys back east would be happy to send some rain our way.

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