From the floor October 6

[marketeye]

At the close:

The Dec corn futures settled 2 1/4 cents lower at $4.88 1/2. The Nov. soybean contract closed 9 3/4 cents lower at $10.62. The Dec. wheat futures ended 5 1/4 cents lower at $6.58 1/4. The Dec. soymeal futures contract settled $3.50 lower at $295.80 per short ton. The Dec. soyoil futures closed $0.04 lower at $43.78.

In the outside markets, the NYMEX crude oil is $0.41 per barrel higher, the dollar is lower, and the Dow Jones Industrials are up 41 points.

Mike

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At 1pm:

One analyst says, "Pretty simple day.We saw short covering and speculative buying  Monday AND Tuesday with pre-report positioning ahead of Fridays big grain report but that’s over and today is choppy two sided with some of the longs that bought the weeks opening lows selling out. Thursday looks to see a higher corn trade and flat wheat and beans based on pre report trade guesses on the report."

Mike

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At mid-session:

The Dec corn futures are 2 cents lower at $4.89. The Nov. soybean contract is 5 1/2 cents lower at $10.66 1/4. The Dec. wheat futures are 2 1/2 cents lower at $6.61. The Dec. soymeal futures contract is $3.50 lower at $295.80 per short ton. The Dec. soyoil futures are $0.16 higher at $43.98.

In the outside markets, the NYMEX crude oil is $0.88 per barrel higher, the dollar is lower, and the Dow Jones Industrials are up 16 points.

Mike

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At the open:

The Dec corn futures are 1/4 of a cent lower at $4.90 3/4. The Nov. soybean contract opened 3/4 of a cent lower at $10.71. The Dec. wheat futures opened 3 cents lower at $6.66 1/2.  The Dec. soymeal futures contract opened $0.50 lower at $298.80 per short ton.

In the outside markets, the NYMEX crude oil is $0.08 per barrel lower, the dollar is lower, and the Dow Jones Industrials are up 4 points.

Mike

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At 8:15am:

USDA says 116,000 mt of U.S. corn for delivery at 2010-11.

Mike

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At 7:45am:

Overall, this dip in the markets has sparked Asian buyers to lock in prices on already-made purchases. In other words, not a lot of new buying, but early purchases are being priced. Now, here is a look at some new buying overnight:

--South Korea buys 110,000 metric tons of U.S. soymeal.

--South Korea seeks 550,000 metric tons of corn for Dec.-Jan delivery. Origin unknown. S. Korea already bought 385,000 metric tons of corn in the last 10 days.

--Iraq buys 50,000mt of U.S. wheat, though the tender was for 100,000 metric tons.

--Japan finalized prices for 465,000 metric tons of earlier purchased corn.

So again, any dip in prices and importers are jumping on the chance to lock in prices. What do you think this tells us if anything about world needs?

Mike

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At 6:45am:

Early calls: Corn up 1-2 to down 1-2, soybeans down 1-2 cents, and wheat up 1-2 cents.

Trackers:

Overnight grain=Trading mostly lower.

Crude oil=Trading $0.26 per barrel lower.

Dollar=Trading higher.

Wall Street= Seen opening higher, ahead of a private employer jobs report. Jobs are expected to have been added in September. The September report showed an August decline. 

World Markets=Higher. 

Personal note: It's a beautiful sunrise this morning, over Lake Michigan. My coffee is freshly brewed. And it's a reminder of the old Folgers coffee commercials. The jingle went, "The best part of waking up is Folgers in your cup."   Of course, back to markets, coffee is expected to go higher, coffee drinkers beware.

More in a minute

Mike,

[nwobcw]

Has corn bottomed out?  I need to buy some for feed.  Yes, I missed the low last summer.

[marketeye]

nwobcw,

I'm sure you will get a better opinion on this from others. I can only refer to what I'm hearing. Friday's report will reflect the weaker corn yields harvested already. So, the report should be bullish corn. However, the November report will reflect the better yields that will be reported from Iowa, Minnesota, Nebraska, etc, and that report will send corn lower. After that, I'm hearing China is on track to be in the corn market in December, and you know what that means for corn prices. Just yesterday, the US Feed Grain Council estimated that China’s corn crop is 6 to 8 million metric tons (about 280 million bushels) less than the last USDA estimate.

Just my 2¢,

Mike

[nwobcw]

Your $.02 is better than my $.01.

[jrsiajdranch]

We are Screwed!  JR

[marketeye]

Why? Expand if you will.

Thanks,

Mike

[jrsiajdranch]

Mike we can not long term have a sustainable livestock sector at these prices given what consumers are willing to pay.  I really thought that corn prices wouldn't go this high from here on out we are not trading corn we are trading things that are hedges against inflation. Livestock is an inflationary item for some reason feed grains are not viewed that way to the funds.  So in the near term Corn is traded against the dollar and livestock is traded against the supply demand fundamentals. 

And livestock has supply and limited demand.

So we are screwed!  from here on out probably the best thing to do is lock in as little loss as possible. JR

[zman343]

Corn open interest down on Monday and and up only 603 contracts with yesterday's big rally, with more liquidation out of Dec and March contracts.  Looks like mostly a short covering rally so far.  20 day moving average is near the overnight highs and the first big resistance.  A push through there and Dec should head up towards $5.10.  40 day moving average support is at $4.65.  Could be in for some wide ranges.  Weekly chart shows a big key reversal and looks about as ominous as the all time top in June 2008.  After that high we rallied for two weeks and then it was goodnight.

[too close for comfort]

Hi Jr. I wouldn't wish the stress you're under to anyone. I was just wondering how the dairymen are coping. I sit on the local co-op board and we have written off some dairy debt but not as much as I had anticipated. No bankruptcies so far but a lot of refinancing. People are tying up equity that has been free and clear for a long time. I've seen some refinances that I wonder why they did it at their age. There are certainly other places they could have gotten a much bigger ROI than farming. But then very few of us would be farmers if we thought that way.

Jerry 

[jrsiajdranch]

Jerry well most of what I have heard this fall has been atecdotal. However this last week my family went to a harvest party which I wasn't able to go to.  They met two couples we know who also milk cows One is for sure done probably cows will be gone by months end the othere one is holding out till the first of the year and then selling. 

They told my wife of one new start up that had gone broke 12 months ago and the new owners were also about broke.  The one thing all these farms had in common.. THey all bought there feed  all of it!

I know of one other new start  up ion the past 2 years who is done just waiting for the auctioneer.

Really scary all these were good operators who didn't live high on the hog and in all fairness most got more milk than me. 

In 08 I decided there wasn't any money in buying my milk production so we quit with alot of the "exotic stuff " and went back to doing things the old fashioned way.  Base our ration off our home grown stuff and fill in the holes with boughten. concentrating on high quality forages has really paid off.  We are down on milk but higher in cash flow. 

YOu asked me before about putting Nitrogen on hay ground and I forgot to answer.

We added the N to the alfalfa as there were two large drowned out spots which we felt needed the nitrogen in the end it was just cheap insurance (ok maybe not cheap).

I really think this corn run up will spur more sales both forced and just sick of it type sales as guys just won't do it again.  We've all borrowed against equity and now we have more debt than we did in 08 plus the price of milk isn't the same.

09 caught a lot of lenders in crisis mode many thought they had to keep the dairy going if they were to recoup the investment they had made.  This time around they will not pour money down the rat hole.  We have just begun to see the big liquidation of cow herds.  That will make it especially rough on the beef guy cause these cows are still worth more in the meat case than in the dairy case.

Example one guy my wife talked to was just selling cows to a packer rather than take the beating at the sale barn on the old cows and tale enders.  He figures hw wil net out 50 bucks ahead per cow. JR