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Senior Contributor

From the floor November 22

After the close:

Thanksgiving Holiday Hours: For Wednesday, the CME Group grain markets will maintain normal hours. The grain floor will be closed Thursday. On Friday, the grain trading will close at 12:02pm.

 

While we saw some on Monday, one grain analyst says, "Watch out for more short covering, or buying, prior to the Thanksgiving holiday closings on Thursday.

 

Mike

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At the close:

The March corn futures settled 5 1/2 cents lower at $5.29 1/4. The Jan. soybean contract ended 20 cents higher at $12.21 1/2. The March wheat futures settled 1/2 of a cent higher at $6.84 1/2.  The Dec. soymeal futures contract closed $7.80 higher at $333.60 per short ton. The Jan. soyoil futures contract closed $0.21 higher at $49.51.

 

In the outside markets, the NYMEX crude oil is $0.24 per barrel lower, the dollar is higher, and the Dow Jones Industrials are down 60 points.

 

One analyst says, "Demand will return in the future as drawdowns of stored Chinese corn and bean reserves, to dump on the domestic market to curb spiraling inflation, only leads to even greater imports into China to fill their mandate to increase grain reserves. Funds continue to cut their massive long held positions on grains, as we said they would do after the November 9 USDA crop report, that brought an end to the supply-side production bullish news. They have reduced their position three consecutive weeks, but further reductions should be expected."

 

On Monday, the funds sold 15,000 corn contracts, according to the CFTC.


Mike

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At mid-session:

The March corn futures are 3 1/4 cents lower at $5.31 1/2. The Jan. soybean contract is 12 cents higher at $12.13 1/2. The March wheat futures are 7 cents higher at $6.91.  The Dec. soymeal futures contract is $5.20 higher at $331.00 per short ton. The Jan. soyoil futures contract is $0.10 lower at $49.20.

 

In the outside markets, the NYMEX crude oil is $0.99 per barrel lower, the dollar is higher, and the Dow Jones Industrials are down 94 points.

 

One trader says, "The Dollar has strengthened, weakening the corn market. Argentina and southern Brazil missed weekend rains, pushing up the soybean market. Wheat is higher on global crop problems."

 

In addition, he says, "The market is buying into the China 'lip service' on slowing its economy. Plus, traders are saying there is paranoia regarding the ethanol tax credit. The question is whether anything will get done on the tax credit during the lame-duck Congressional session. I remain bullish though, due to the sub-1.0 billion bushel carryout on corn, and talk of sub-150 million bushels for soybean carryout. There's no room for error on soybean production. On the investment side, after holding record position length in these markets, we saw the largest liquidation, last week."

 

Mike

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At 10:35am:

Reminder: Due to the observance of the Thanksgiving holiday, the USDA's Weekly Export Sales Report will be delayed from Thursday to Friday.

 

Mike

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At 10:15am;

Mixed Markets: Soybeans have jumped to 8 cents higher, corn has reversed due to a strengthening dollar, now down 5 cents, and wheat is up 2 cents.

 

Here on the floor, the options pits are fairly loud, but the futures pits are dead-silent.

 

Mike

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At the open:

The Dec corn futures opened 1 cent higher at $5.21 1/2. The Jan. soybean contract opened 4 cents higher at $12.05 1/4. The Dec. wheat futures opened 1 1/2 cents lower at $6.43 1/4.  The Jan. soymeal futures contract opened $2.50 higher at $330.30 per short ton. The Jan. soyoil futures contract opened $0.28 lower at $49.02.

 

In the outside markets, the NYMEX crude oil is $0.33 per barrel lower, the dollar is higher, and the Dow Jones Industrials are down 46 points.

 

Mike

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At 7:50am:

Did you see that? Last week, while on vacation, I saw tv talkshow host Glen Beck covering the prices of commodities, corn in particular. After telling the audience that because food prices could get way out of hand and folks should start 'canning', which isn't that bad of an idea, Beck said, "Some experts say the price of one ear of corn, one ear, could go to $11.00!"

 

I nearly fell off the couch. He was serious and he didn't correct himself. He really meant that one ear of corn could go to $11. What? I'm dumbfounded that the general public is getting so misinformed on commodity prices.


That same day off, I was comforted by an interview that CNBC did with USDA Secretary Tom Vilsack. CNBC tried to pin Vilsack into saying the consumer is really going to get hit with sharply higher food prices. He fought back, supporting the U.S. farmer, stating that the portion of the money any farmer gets from rising food prices is very minimal. He went on to say that a recent 'Debt Commission's' claim that farm subsidies should be drastically cut is the wrong position. Vilsack says the USDA has already cut back its funding for farmers by making changes in the crop insurance program. 

 

Mike

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At 7:20am:

Demand pops up Monday:

--Japan is seeking 68,599 metric tons of food wheat for Dec. delivery.

--South Korea bought 151,000 metric tons of U.S. corn for April delivery.

--Egypt buys 120,000 metric tons of U.S. wheat.


Mike

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At 7am:

So, China continued its tightening over the weekend. For instance, it ensured supplies of grain, edible oil and sugar. Its regulator has told banks to start lending more to ag producers and processors and less to non-ag related businesses. The Chinese government is asking banks to hold more money on reserve, meaning they can't lend as much, except for the aforementioned sector. All of these measures pushed down the Chinese grain market Monday. Meanwhile, China is reporting a record 2010 grain harvest Monday.

 

Separately, Tyson Foods officials are out this morning predicting cattle supply cuts in 2011. Also, the company's experts say hog exports will stay strong next year.

 

Mike

----

At 6:30am:


Early calls: Corn up 2-4 cents, soybeans 6-8 higher, and and wheat 3-5 higher.


Trackers:

Overnight grain markets=Trading higher.

Crude Oil=$0.19 higher.

Dollar=Higher.

Wall Street=Seen trading higher as the EU ministers reach a bailout deal with the financially-strapped Irish government. Some world economists say once the EU bails out the Ireland banks, that's not all, it will still have ultimately rescue a failing Irish government. This bank bailout could be window-dressing. Meanwhile, investors will have a flurry of economic reports to digest quickly on this short trading week, due to the Thanksgiving holiday. This week is seen as a short one but not a quiet one. Whip-sawing, volalitility, and positioning all are expected in stocks and grain trading.

World  Markets=Mosty higher.

 


More in a minute,

Mike

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19 Replies
Senior Contributor

Re: From the floor November 22

China and the dollar make it seem like a lower grain trading day, but one analyst says we're called a little higher on corn and a dime up on beans.  Not everyone sees the same tea leaves.

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Advisor

Re: From the floor November 22

I expected a lower opening.  Think I'm going to cash some profits in.  In this enviornment things could go hay wire quickly.

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Senior Contributor

Re: From the floor November 22

Yeah, it seems there is a chance this week's market could be all over the place. The Irish bailout has the outside markets calmed down. China's shuffle has the grain market, and for that matter the commodities sector nervous. A lot of profit-skimming has taken place in the past few weeks. So, what's left is this scenario: A few guys at the poker table, with the casino set to close soon, and not a lot expected to happen. Or at least, no real pattern is expected. Just a thought. Keep in mind, I'm coming back from vacation, trying to catch up with the 'goings-on'.

 

 

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Veteran Contributor

Re:Most reliable weekly market indicator

might be here.

 

Is it a Mike week, or a Jeff week?

 

Glad your back Mike....seems like we have stronger agri markets the weeks the A Team is reporting.

 

LOL.

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Senior Contributor

Re: Re:Most reliable weekly market indicator

I'm back. But, I don't know, it seemed like there, for awhile, when I was gone the markets were higher. We'll see what happens. This morning, my wife made me some eggs, for the first time. Plus, the streets of Chicago just got dumped on, with pouring down rain. So, there are some unusual things happening today, so far.

 

Mike

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Veteran Contributor

Re: From the floor November 22

Against my better judgement, I am going to bite on Glenn Beck.  First, let me say, many on the left and the right are using fear to gain position and control and make money.  I hear Beck says that he has a two year supply of food in his basement to prepare for the disaster that lays ahead.  While he could be right, unless he also has a massive supply of machine guns, if people are that hungry and know he has food, some would kill his family to get to it.  So did he protect his family or endanger them? 

 

As for Vilsack,  by his statements, the government is still playing games.  Everything has to be on the table, there are no exemptions.  This country is broke.  If our cabinet does not know that, send them packing.  End direct payments,  revise crop insurance even more--a farmer  that is continually getting higher than normal insurance payments..should have his rates go up accordingly.  End the debit card food stamp program, hand out rice and some milk and other basics.   Wean off ethanol subsidies in equal to the amounts that oil subsidies are pared down.  Our ag products can lead the way out of this countries debt problems.  It will soon be as valuable or more than oil.  Does the Saudi's want cheap oil so they can have cheaper gas at the pump...no way.  But that is what America does with its food policy. Of course if you cut programs and benefits, you end the need for many government jobs...so do those in the jobs really want to cut programs that would cut their job?

 

But to have higher grain prices, brings with all the problems that those prices will do to draw even more outside money into ag.  There is no free lunch. 

 

As I said, I probably should have skipped this post. If grain farmers, with these great prices, can't cut the cord to government money...who does and where does it start?

 

 

 

 

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Senior Contributor

Re: From the floor November 22

Just to be clear. I'm not making judgements on Beck, Fox, or trying to get us off the markets course. I'm just stating what I saw and heard, as it relates to commodity prices. The rest of the politics, I couldn't care less.

 

Mike

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Senior Advisor

Re: From the floor November 22

I would end subsidized crop insurance. If farmers cannot afford crop[ insurance without subsidies then they ought to appreciate what ordinary citizens are having to cope with obtaining health insurance. After all we farmers are mostly certain that government should not be involved in heath insurance. We should be equally certain that government should not be involved in crop insurance.

 

Man up guys and keep the vow to compete in a capitalist society without government involvement. Either you really believe that dogma or you do not.

 

I think it is at least as important to keep people's helath care inaured as it is to keep farmers farming in the desert.

 

 

 

 

 

 

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Senior Contributor

Re: From the floor November 22

There's been a good discussion on this in Farm Business for a week, in case anyone cares to compare notes.

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