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Veteran Advisor

From the floor May 6


After the close:
The panic button was hit in the stock market today due to fear about the European sovereign debt. The Dow plunged 1,000 points. I'm in the grain trading room, here at the CME Group, but one grain trader told me he just returned from the financial room and those traders' faces were as white as a sheets over there. He said, this is scary, it's like 1987's "Black Monday". He then turned and walked off and said, "I hope we're all here tomorrow."
Because of electronic trading, people around the world just had to click a button and within minutes the equity markets were in a free-fall. Not only are we operating in a global world, economically, but you tie us all together electronically and we humans can cause a huge wave anymore. That is what happened today. Beginning today, e-trading just put the E in FEAR!
At the close:
The July corn futures settled 1 3/4 cents lower at $3.71 1/4.  The July soybean futures contract closed 24 cents lower at $9.54 per bushel. The July wheat futures ended 3 3/4 cents lower at $5.08 1/4. July soybean meal futures ended $4.50 per short ton lower at $278.40 per short ton. The July soyoil futures settled 81 points lower at $38.12.
In the outside markets, the NYMEX crude oil is $0.85 per barrel lower, the dollar is higher, and the Dow Jones Industrials are down 389 points, after dropping 900 points.
One trader says the grain markets sank due to a 3.5% decline in the Brazilian real vs. the dollar. “This dropped the Brazil/Argentine export prices by 20-30¢ per bushel. That completely reversed any strength in the soybean market. As a result, this pulled everything lower.
  Outside of that, the outsides were all going against the grains; a massive drop in crude oil prices, the dollar strengthened. This makes U.S. products more expensive on the world market. As a result, prices have to come down to compensate for that.
One bullish factor talked about on the floor is China possibly buying eight more cargoes of U.S. corn out of the U.S. Gulf for shipment in the next 30 days.
Overall, this is a major currency issue with the Real. It has very little to do with the fundamentals," the trader says.
Meanwhile, another trader says China will buy corn now from South America vs. U.S.



At 10:55am:


Corn is up about a nickel, soybeans unchanged, wheat down 4 cents.
The corn market may be responding to the issue of the Gulf oil slick nearing the Mississippi River port. Officially, the U.S. Coast Guard is reporting that ships are able to get in and out of the port freely, as of right now. However, because the oil slick is within a mile of the Mississippi River, one trader tells me corn spread trades are coming in like mad. If you want to understand this concept further, check out my video.
Here is the link:





At 7:40am:


Export Sales: Friendly for corn, unfriendly soybeans, neutral wheat!
USDA reported weekly corn export sales at 1.881 million metric tons, higher than the trade estimates of 800-1.250 (bullish). For soybeans, weekly export sales came in at 492,300 metric tons, just below the trade estimate of 500,000-1.150 million metric tons (bearish).  Wheat export sales were 284,000 metric tons, on the low end of trade estimates of 150,000-400,000mt (neutral). Soymeal weekly export sales were reported at 138,100mt, within trade estimates. Soyoil export sales were reported at 10,300mt.





At 6:51am:

The wheat market is staying above its 50-day average, despite a rising U.S. dollar. Also, there is a report that China has 13.0 million metric tons of corn in reserve. That would not be enough to cover their needs for the year. As a result, the report indicates China would need to be a corn importer sometime this year.




At 6:15am:
Early calls: Corn, soybeans down 2-4 cents, wheat down 3-5. 
Overnight grain=Trading lower.
Crude oil=Trading $0.11 higher.
U.S. Dollar=Trading higher.
World Markets=Mostly lower.
Wall Street=Seen opening higher, after two days of losses. Kraft is out with earnings today, expected to be unchanged. Jobless claims will also be released today.




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