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Senior Contributor

From the floor October 11

After the close:

Wheat Options Talk: One trader says, "Locals were mostly reacting to scattered selling with quick adjustments.  Volume was again on light side, and most feel that wheat implied and flat price will continue to behave with pliable uncertainly to anything developing with a corn market that was sharply higher all day but closed on its session lows. Wheat can be pushed in either direction going out from here, with our straddle market clearly reflecting skittish tendencies, trading down  and back some all day long before closing around the 74 cent area in the ATM line."

 

Mike

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At the close:

The Dec corn futures closed 27 1/2 cents higher at $5.55 3/4. The Nov. soybean contract closed 17 1/2 cents higher at $11.52 1/2. The Dec. wheat futures settled 10 cents lower at $7.09 1/4.  The Dec. soyoil futures closed 27 points lower at $46.35. The Dec. soymeal futures contract closed 10.90 higher at $327.10 per short ton.

 

In the outside markets, the NYMEX crude oil is $0.38 per barrel lower, the dollar is higher, and the Dow Jones Industrials are up 11 points.

 

Mike

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At mid-session:

The Dec corn futures are 33 3/4 cents higher at $5.62. The Nov. soybean contract is 33 3/4 cents higher at $11.68 3/4. The Dec. wheat futures are 11 1/4 cents lower at $7.08.  The Dec. soyoil futures are 15 points lower at $46.47. The Dec. soymeal futures contract is $14.60 higher at $330.80 per short ton.

 

In the outside markets, the NYMEX crude oil is $0.24 per barrel lower, the dollar is higher, and the Dow Jones Industrials are up 6 points.

 

Mike

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At 10am:

One trader says, "The corn market needs to ration corn and given ethanol at $2.14 per gallon that requires futures above $5.60. The market needs 5 million more corn acres next year. That suggests a price ratio of 2 to 1 or lower for beans to corn. So, $6 corn implies $12 beans. Unless EPA waves ethanol mandate, corn is left to trade firm at least Until March 31 of next year. And corn most likely won’t break until weather market is over next fall. Meanwhile, the soybean prices are a function of South America's weather. As of Monday, 2% of soybeans have been planted in Mato Grosso versus 12% on average…too dry for moment though forecasts have rain in them."

 

Yet another trader says, "We are seeing follow-through buying from Friday. But, I am also seeing some profit-taking and some peple coming in to 'short' the market. I had targets in corn up near $5.75, and the limit up move last night might be enough for the moment. No doubt we are short corn, but we have left some big gaps that the market might try to fill first.  My guys have been interested in taking profits on longs or selling, not buying up here," he says.

He adds, "My talks with corn users indicate that rationing is going to start now with these prices. They (end-users) will look for other feed ingredients, this includes Latin America as well as the U.S. So, maybe today we blow off at least for the short term."
 


And yet another analyst says, "Today's rally, on the open, priced in Friday's crop report as markets opened limit up Friday not allowing traders to buy the bullish report. This left Sunday night and Monday with expanded limits to allow anyone caught short or wanting to buy long their chance to trade. It appears that failure to lock limit up on corn or beans early today may suggest we have exhausted the rally, as this rally began last Monday with short covering and buying into Thursday prior the report's release. A close limit up today for corn  would set up higher prices Tuesday. But, funds are fat with profits on new contract highs and they took profits twice in September, mid and late month, off new contract highs each time. A early week high could be faded by the funds," he says.

 

Mike

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At the open:

The Dec corn futures are 42 cents higher at $5.70 1/4. The Nov. soybean contract opened 43 cents higher at $11.78. The Dec. wheat futures opened 5 3/4 cents higher at $7.25.  The Dec. soymeal futures contract opened $14.50 higher at $330.70 per short ton. The Dec. soyoil futures contract opened $0.82 higher at $44.74.

 

In the outside markets, the NYMEX crude oil is $0.13 per barrel lower, the dollar is higher, and the Dow Jones Industrials are up 20 points.

 

Mike

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At 8:55am:

I'm being told that it's going to be more important to see how the markets close vs. how they open. Regardless, these markets seem to be running wild! Give me your perspective on what your fears are, your sell or not sell anxieties, uncertainties of store or not store, etc.


Thanks,


Mike

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At 8:45am:

Early calls: Corn up 40-45 cents, soybeans up 40-45 cents, and wheat up 8-10 cents.

 

 

Trackers:

Overnight grain=Traded sharply higher.

Crude oil=Trading $0.57 per barrel lower.

Dollar=Trading higher.

Wall Street=Trading 14 points higher off of optimism the Fed is going to enact moves to help economy.

 

Mike


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14 Replies
Contributor

Re: From the floor October 11

If it gets to $6 cash,  I'll sell everything I have left.  If it doesn't,  I'll hold on to it.  I can't help but think that there will be a weather scare next spring / summer that will casue another up swing.

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Re: From the floor October 11

Does Friday's report mean that E-15 and the blenders credit are toast after the election?

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Frequent Contributor

Re: From the floor October 11

Two things I thought were interesting for corn:

 

1)  Open interest on Friday was down.  Even though volume was light due to locking limit up, there was more liquidation rather than new buying.

 

2)  CFTC Traders report had funds starting to liquidate their record net long position.  Does this continue or did Friday's report change things to make them become buyers again?

 

Feels like as close as we are getting that corn will try to test $6.  But we are making a big gap higher on the charts today and it will actually look somewhat bearish if we don't close limit up.  One thing I wonder is with the USDA's unprecedented drop in the corn yield from one month to the next with limited data to back it up (only 27 to 37 percent harvested at the time the data was compiled), what are the chance the yield could actually increases some on future reports?

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Senior Contributor

Re: From the floor October 11

Mike, I don't know that a month has gone by, but how about getting a statement from the floor trader who predicted a 'spectacular' finish to corn harvest in terms of great yields? I think there might be something to learn from his point of view now. Seriously.

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Senior Contributor

Re: From the floor October 11

I believe we will get one or the other.  The E-15 waiver will probably get granted while the blenders credit and import tariff are toast.  The big question is whether or not E-15 even matters once the blenders credit is taken away?  With demand pegged close to 13.5 billion, we have painted ourselves into a corner.  We've never even raised this big of corn crop.  Something breaks here, and I don't think the gov't can afford for the food sector to break.  I don't think a grain embargo will look attractive to anyone.   

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Re: From the floor October 11

I don't even like to go here but if we have a bad crop before stocks are rebuilt, a waiver of the mandate is almost a given.

 

This is more extreme than the reality but you could go from a negative carryout of 1 bb to a positive of 1 bb real quick, like in about 1 minute.

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Senior Contributor

Re: From the floor October 11

If things are really going to get tight, then I don't think it happens that way. No point in an E-15 waiver if it is not a mandate. If it isn't a mandate then it isn't important. The blenders credit makes little difference in the scheme of things except if it gets jerked during a crisis - which grain farmers would complain about as a lack of good faith by the government (yes they would!) - and the ethanol industry would get hit hard due to the lack of warning. If corn goes high then the blenders credit may not be the crucial issue determining how high.

 

If corn is going sky high one can bet that the ethanol won't shoot itself in the foot with unprotected future positions, that turned out to be on the wrong side, which shot them in both feet last time around. They'll maybe find another way to screw themselves.

 

The reliance on corn for 'alternative' energy was maybe too ambitious. It may need to be scaled back gradually. What it does scream for is more research into cellulosic, which is potentially more efficient and would have many sources outside of corn country. If accomplished, the investment would be justified in the sense that the military might not be draining such vast amounts of money protecting oil supplies - and the irony of the Chinese investing in Texas oil would become a bit easier to take.

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Veteran Contributor

Re: From the floor October 11

The ethanol companies probably won't make the same mistakes, but the mistake family has plenty of brothers, sisters, and cousins and although they probably won't  go long corn with out selling ethanol, who says they won't do something like selling ethanol without buying corn or something else.  The ethanol mandates are good when there is a surplus of grains but when there is a shortage how does the rationing process work when the government makes us use a little over 4 billion of corn for ethanol.  The fear I have is the government that gave us the mandates can take them away overnight.  The ambitious mandates might be the undoing of the ethanol market, if we have a short crop next year I doubt the government will do something temporary, they will come in and do something in panic mode and the good couple of years we have had will end the same way it started with government intervention.

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Veteran Contributor

Re: From the floor October 11

If it was only so simple as cutting back on ethanol.  First you cut back on ethanol you also lose DDG's.  Second, take out ethanol, and the price of gasoline goes up considerably for all consumers.  Raising the price of gasoline is much harder on the consumer than anything else.  The only sane answer is to let the market place do its job and every enduser cuts back some. 

But since we are a sound bite nation....why would sanity rule?

The WSJ wrote a story today that congressional staffers have used 'political' information to help their positions in the stock market, and since congress is exempt from insider trading, there is nothing that can be done about it.  Hope they don't need to pad their pockets with some grain profits (or cattle in Hillary's case).   Do you think anyone made some serious money because of the grain embargoes?  Ugly thoughts.

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