From the floor September 23

[marketeye]

New Crop Estimates:

Informa Economics released new crop estimates Thursday.

For U.S. corn production=12.88 billion bushels, below its early September estimate 13 billion.

For 2011 crop plantings=90.4 million acres, up from 87.9 million acres in 2010.

For  2010 soybean output= 3.412 billion bushels, compared with an earlier projection of 3.437 billion.
For 2011 soybean plantings= 77.4 million acres.

For 2011 all-wheat plantings=57 million acres.

For 2011 cotton=11.05 million acres.

Mike

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At the close:

The Dec corn futures settled 5 3/4 cents lower at $4.99 1/4. The Nov. soybean contract finished 5 cents higher at $10.93 1/2. The Dec. wheat futures settled 22 1/2 cents lower at $6.99.  The Dec. soyoil futures closed 64 points higher at $43.90. The Dec. soymeal futures settled $0.90 lower at $309.50 per short ton.

In the outside markets, the NYMEX crude oil is $0.33 per barrel higher, the dollar is higher, and the Dow Jones Industrials are down 26 points.

Mike

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At 12-Noon:

As you have lunch, here are a few market thoughts from two seperate analysts/traders, in their own words:

"Yes, there is a bull market in grains, and the corn yield and the wheat situation remain major issues.  For Corn, the yield reports remain generally poor and we are hearing from many analysts, JP Morgan, Informa, AgResource to name three, calling for sub 160 bushel per acre yields and potential for ending stocks estimates to run well below 1.0 billion bushels.  This represents a very tight supply to use ratio and implies that the market must use price to limit demand.  Russia is still a major issue in Wheat with planting progress poor there although some rains are finally appearing.  But, we are also looking at potential problems in Argentina and Australia from dry conditions in parts of both countries that could affect production and the La Nina effect that could reduce production in these countries and others as the year moves along.  Finally, there are not many problems with yields for Soybeans here yet, but la Nina has been known to have a pretty  dramatic effect on yields in South America and we all know it.  So selling pressure has been less.
 
Beans have been as strong as Corn or stronger in recent days in part due to the need to maintain a ratio of Soybeans to Corn of at least 2 to 1 and on South American weather, especially the weather in Center West and North.
 
Finally, it used to be normal to see our markets move lower during harvest, but this has not been true the last few years.  We have instead tended to make lows early in the season, say July, and rally from there.  I thought this year would be different, but so far it seems to be following the pattern of the last few years instead of the historical pattern.  That could change at any time, and might be changing now as the market could have been a lot stronger than it was today, but for now it is trending higher at harvest just like the last few years."

Separately, another analyst agrees on the supply-driven market and says, "I think it is a supply driven bull market. The demand is record, not record exports and not record feed usage, but with the ethanol factor and you combine Total Usage demand is RECORD and now with yields coming in less than expected carryouts are falling. USDA’s carryout is currently 1.116 billion bushels, which is the tightest stocks/use ratio since 1995/1996.
 
We are tighter stocks/use today than we were in the summer of 2008 when corn hit $7.00/bushel. That tells you we were artificially inflated in 2008 in my view.
 
Now, to the wheat. It changed the feed usage equation. It took feed wheat out of the ration and put corn in. it also changed the acreage picture for 2011. more customers will plant wheat and then double crop soybeans behind it rather than corn/corn, which will ultimately pull corn acreage down next year.
 
The cotton market is also an acreage factor as that will ultimately demand more acres next year, i.e. less corn.
 
So, in my mind, it is a supply driven bull market. The corn market needs to bid for acreage next year and all we are missing now is a weather problem in South America to push soybeans higher to pull more acres from corn."

Mike

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At mid-session:

The Dec corn futures are 4 1/2 cents lower at $5.00 1/4. The Nov. soybean contract is 4 3/4 cents highern at $10.93 1/4. The Dec. wheat futures are 16 1/2 cents lower at $7.03 3/4.  The Dec. soyoil futures are 69 points higher at $43.95. The Dec. soymeal futures are $0.20 lower at $308.40 per short ton.

In the outside markets, the NYMEX crude oil is $0.29 per barrel higher, the dollar is higher, and the Dow Jones Industrials are down 7 points.

Mike

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At 10:18am:

Regarding this morning's trade, one analyst says, "It's pretty much as expected. After hitting those highs Sunday and Monday, we saw month-end profit-taking into the middle of the week by large trading funds, fat with profits. But lows could be in for the day, with buying late in the session. Traders anticipate another higher close Friday, in anticipation of weekend harvesting unveiling poor corn and bean yields. Monday's crop condition report showed harvest underway in the lowest crop condition states in the eastern Corn Belt and southern Delta."

Mike

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At 9:50am:

Aside from today's weekly export sales, USDA announced this morning even more demand.

--110,000 metric tons of U.S. wheat to Egypt for 2010-11 delivery.

--120,000 metric tons of U.S. soybeans to an unknown buyer for 2010-11 delivery.

--120,000 metric tons of U.S. soybeans to China for 2010-11 delivery.

Also the International Grains Council cut its world grain output estimate slightly to 1.741 billion metric tons.

Mike

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At the open:

The Dec corn futures are 7 1/4 cents lower at $4.97 3/4. The Nov. soybean contract opened 2 1/2 cents lower at $10.86. The Dec. wheat futures opened 13 3/4 cents lower at $7.06.  The Dec. soyoil futures opened 14 points higher at $43.40. The Dec. soymeal futures opened $2.90 lower at $307.50 per short ton.

In the outside markets, the NYMEX crude oil is $0.65 per barrel lower, the dollar is higher, and the Dow Jones Industrials are down 20 points.

Mike

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At 7:35am:

USDA released mostly friendly Weekly Export Sales Thursday.

Corn: USDA estimates 561,800 sales, compared to the trade estimate of 550-800,000mt.

Soybeans: USDA estimates sales at 1.08 million metric tons vs. trade at 450,650,000mt.

Wheat: USDA estimates sales at 459,800, within the trade estimates of 400-700,000mt.

Soymeal: USDA pegged sales at 131,600 metric tons  vs. the trade at 75-125,000mt.

Soyoil: USDA says 103,600 weekly sales.

So, overall the export sales recovered from last week's weak report.

Mike

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At 6:45am:

Early calls: Corn down 4-6 cents, soybeans down 1-2 cents, and wheat down 8-10 cents. These are the early calls. USDA's Weekly Export Sales will be released at 7:30am CST. That report could change the calls. 

Trackers:

Overnight grain=Trading lower.

Crude oil=Trading $0.78 per barrel lower.

Dollar=Trading higher.

Wall Street= Seen opening lower with pressure from Europe's weaker manufacturing report. Also, investors await the U.S. jobless claims and existing home sales reports.

World Markets=Lower.

More in a minute,

Mike

[JohnQ]

Did the export sales numbers change the opening calls much Mike?

[p-oed Farmer]

I thought that the corn # was a little light from my expectations....... p-oed

[marketeye]

Sorry for the late response. And I know this doesn't mean anything now. But, the export sales numbers may help the grains from dropping lower than they already have today.

Mike