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09-10-2010 06:49 AM - edited 09-10-2010 01:57 PM
At the close:
The Dec corn futures closed 7 1/2 cents higher at $4.78 1/4. The Nov. soybean contract settled 15 cents lower at $10.31. The Dec. wheat futures closed 12 cents lower at $7.36 3/4. The Dec. soyoil futures ended 17 points higher at $41.76. The Dec. soymeal futures closed $8.50 lower at $293.50 per short ton.
In the outside markets, the NYMEX crude oil is $2.19 per barrel higher, the dollar is lower, and the Dow Jones Industrials are up 52 points.
I've had two traders tell me that the funds have the consumer by the short-hairs. And, the funds will be buying this market on the close. Get this, one trader says he has people telling him the soybean market could trade in the $12 level. Why? Mainly due to the dryness in Brazil and the U.S. soybean test weights are low.
At mid-session, the Dec corn futures are 3 1/4 cents higher at $4.74. The Nov. soybean contract is 10 cents lower at $10.36. The Dec. wheat futures have traded two-sided this morning. The Dec. wheat futures are 10 cents lower at $7.28. The Dec. soyoil futures are 12 points higher at $41.71. The Dec. soymeal futures are $5.50 lower at $296.50 per short ton.
In the outside markets, the NYMEX crude oil is $1.82 per barrel higher, the dollar is lower, and the Dow Jones Industrials are up 27 points.
Corn is up 4¢, wheat down 10¢, and soybeans are down 10¢. So, since the market has had a chance to digest the USDA data, here is what one floor trader thinks about where the markets are going. In his own words:
"The corn number came in where the trade thought. We now will trade a 158, or 159 yield number. The market is doing what I thought, find buyers on the breaks and rally on up.
The soybeans are the surprise of the day, with the USDA’s higher yield than expected. The jury is still out for the soybean market. The upcoming planting season in Brazil will become the focus of the market. That country is going through a dry stage. So, regardless of what the U.S. crop is, this market will look ahead and see what is going to happen in Brazil. So, I don’t expect a big break in bean prices.
You can’t trade the ending stocks number because demand figures can be adjusted in the future. Once the yield comes in you can’t adjust that much, right? But, you can always adjust demand. If demand picks up, everyone will say, I told you that ending stock number should be 800 million bushels, not 1.1 billion.
Wheat numbers disappointed, but we still have crop problems in Russia for two years out.
All in all, if you had to put a label on this data as just one report, technically, it was negative."
Wheat is now back down 10 cents. What a yoyo trading morning for wheat.
Meanwhile, one analyst now says, "Traders didn’t get as bullish news as feared. So, this leaves room for weekend profit-taking. But, this report does set up a much more bullishly anticipated October report. Though the government cut corn ending stocks and production to these levels, and though good cut, it's considered conservative by the government. It means we're probably going to come in under 1 b.b. carry over on the next report. Keep in mind, the fields to be harvested thru September's end will be the eastern Corn Belt and southern Delta, the worst of the yields. The better western Corn Belt yield won't come until October," he says.
Wheat has turned higher. Egypt bought about 110,000 mt of U.S. wheat. That has underpinned this market.
At the open:
At the open, the Dec corn futures are 4 1/4 cents higher at $4.75. The Nov. soybean contract opened 12 cents lower at $10.35. The Dec. wheat futures are 9 cents lower at $7.29. The Dec. soyoil futures are 1 point higher at $41.60. The Dec. soymeal futures opened $4.00 lower at $298.00 per short ton.
The floor is very active. The noise level has maintained itself longer than normal, off the bell. In general though, I think this report disappointed the traders.
In general, the corn market received a yield estimate the trade was looking for. The question, going forward, is whether the U.S. continues to see strong corn exports. Also, Friday's USDA report indicated the second tightest corn stocks-to-use ratio since 1973, a factor that is supporting the market.
For soybeans, the report left analysts thinking the world still needs to see big crops. Though today's market is lower, it could be worse if the USDA had reported lower China soybean demand, analysts say.
For wheat, the market is pressured by the fact that the USDA left the world wheat supplies unchanged, despite a severe drought in Russia and other world crop problems.
I know, I know, the early calls are all over the place. Soybeans are called 9-10 cents lower, corn and wheat 2-4 cents higher.
Yet another analyst says, "I think the corn is a little bullish and should open a little higher. USDA at the low end of trade guesses for production and ending stocks. Wheat was mixed, with cuts here to ending stocks at the lower end as well, but increases in world numbers for some reason. The sale to Egypt this morning should be bullish and should push wheat higher, but calls are mixed right now. Beans a little negative, more production and higher than expected ending stocks. Could be about 5 lower. Horrible number for rice, should be sharply lower today," he says.
More Report react:
One analyst says, "Corn came out bullish with yields at 162.5 well under pre-report estimates of 163.1 and last month of 165.0 putting production at 13.160 versus last month at 13.365…….beans were alittle bearish with production over the average estimate by 77 m.b. at 3.483 b.b. wheat was a little neutral with ending stocks down only 50 m.b. from last month and they left all Russian wheat production estimates unchanged on the month. Tough call but though the overall numbers are bullish long term , heavy buying prior the report could be met with profit taking."
One analyst says, "Initial reaction is bearish beans and friendly corn.
The corn is friendly because the old crop stocks came down to 1.386
billion bushels. A lot of people will overlook this but it equates to
0.8 bushels/acre less corn so it's almost as if the yield is 161.7 bpa
instead of 162.5.
The yield and carryout for next year for corn are right on the trade
estimate so it's hard for me to call it there, but I'm thinking friendly
tone for corn.
Beans I didn't find anything real friendly. The yield increased to 44.7
bpa as the trade thought it would come down. Stocks at 350 million are
safe and it should take some premium out of the bean market.
Wheat came in at 902 million vs. an 877 million estimate so a little
negative there, but exports were huge for wheat this morning which will
offer some support.
My best guess on a call would be corn 2-3 higher with beans down 10-15
and wheat mixed.
European corn/wheat prices are higher right now which always has an
impact on our prices so that should be supportive today," he says.
09-10-2010 08:29 AM
I went to about two thirds sold on the new crop corn on yesterdays rally, and 80% sold on new crop soybeans. I fear that we are in the short crop...long tail type of scenario with the Russian wheat shortage, and as new crops come into play, the perceived shortage will disappear. If I am wrong, and prices explode, I will still have my most successful year ever, with great yield prospects here in southern MN, and will look forward to 2011. You never go broke taking profits.
09-10-2010 08:41 AM
We have all known the record amount of Acres planted and the yield on Soybeans at 44.7 is high. How much damage is there in the soybean market 5%, 10%, ....etc. , due to SDS? Do we really have a handle on that? I guess we will find out when the harvest is completed. Also, since the crop reports have really not shown any major deterioration then we should have some good numbers come harvest. My concern is the demand side of the equation. At higher prices what is the appetite for the buyers? .
09-10-2010 08:43 AM
FWIW, neutral is good. If it came in 155bu nat yield followed with 3 days limit up that would kill demand. Hacking higher over time, giving endusers time to cover is ideal.
09-10-2010 08:48 AM
Biggest item to me is the "no change" in Iowa corn yields at 179 bpa...states to west and north down 1bpa and Illinois down 6 bpa......tough to think nc/nw districts are good enough to carry the state to a steady yield number...after all they already have nw district at 195....leaving iowa untouched seems rather odd....
note the sharp increase in price range from aug to sep reports....from 3.50/4.10 to 4.00/4.80
09-10-2010 08:48 AM
The June 30th report pretty well gave everyone the feeling that the low was in for quite some time. The reaction thus far to the numbers in this report does not give the impression that the high is in. For myself, this fall's harvest will be more fun than last year's for me due to drier corn and more of it.