Markets hot news--Feb 14

[John_Walter]

Filling in for Marketeye on the domestic front, as he continues his Brazil tour.

* Corn futures fell on profit-taking and new baseline projections from USDA, which projected corn acreage at 92 million, a jump of almost four million and more than some traders expected. Off the wire: "Some analysts credited this for the slump, though Shawn McCambridge, senior grains analyst for Prudential Bache, downplayed the impact from fundamentals. We just got overbought," he said. Long-term, anxiety about supplies remains high, analysts said. March corn closed down 10 3/4c, or 1.5%, to $6.95 3/4 per bushel.

* Soybean futures closed at 2-week lows. Analysts cited the fact that traders are reducing risk on less supportive fundamentals. CBOT March fell 0.9% to $14.02 3/4 a bushel.  "The market was viewed as overbought after rallying to 2 1/2-year highs last week," Dow Jones said.S oy-product futures ended lower with soybeans, with soyoil backpedaling to 2-week lows.

* Wheat did end higher on the day, with analysts citing solid demand and continuing crop worries. An Iraq purchase helped on the demand front. Melting snow in the plains could leave the crop vulnerable to winterkill later. Chicago wheat ended up 5 cents at $8.72/bushel, KCBT rose 0.4% to $9.77 and MGEX wheat fell 4 3/4 cents to $10.13.

* Cotton dropped, too, with prices sharply off of Friday's all-time highs.  "[The] technical action in cotton was a nightmare for the bulls today," cotton analyst Mike Stevens, told Dow Jones.  Despite the decline today, cotton prices are up by more than 28% this year.

* Natural-gas futures have fallen to their lowest level since November on mild weather forecasts.

Around the globe:

* Corn producers in the northwestern Mexico estimate that freezing weather has caused a loss of 4.2 million tons of their crop.

* Wheat futures in China hit a new high Monday, climbing 2.5% on strong overseas markets and continuing concerns about drought.

In terms of weather:

The main stories are dryness in the southern U.S. plains,  dry, cold conditions for China wheat , mild weather in Argentina, and variable precip for Brazil's soybeans.

[clayton58]

when is the corn in NW Mexico planted, and what growth stage would it be at now??  I guess I'm questioning if it is big enough(growing point vabove ground) to really sustain that much damage.  Or maybe I'm just showing my ignorance? 

[John_Walter]

Clayton: Thanks, good point. Isn't corn in far south Texas planted in late January, early February? So, yes, I wonder how much growth that corn would have yet in northern Mexico. This story is from a credible newswire. Will watch to see if anything more surfaces. -- John

[jec22]

Still not selling 2010 crops.  Though it is a battle.  I even think I am crazy.  But the trends are still up.  Gasoline futures up 8 cents, copper over 460.  Though don't think it is greed, I am so old fashion, I usually hold the crop until the next crop is up and growing.  To break that habit is very hard for me to do.  But, boy, could this be an expensive habit this year.  There is so much pressure to end ethanol.  I hope those people know what they are wishing for.  Just add forty cents to the price of road diesel, and that would be the first impact.  We would immediately go back to the times of gasoline costing more than diesel. 

Thanks to marketeye.  He is the only source that is really reporting on the rains affect on harvest in Brazil.  It is my understand that La Nina's usually produce good yields in Brazil....but they can produce too much rain..that is the wild card.

So glad the groundhog was right....goodbye snow...for now.

[Jim Meade / Iowa City]

I wouldn't worry about ethanol for this year.  There are two parts to the ethanol equation.  First is the mandate that we use such and such an amount.  Second is the blenders credit and tariff.  The latter is good for this year.  I don't think it will kill us if it is dropped.  Maybe a quarter or even half a dollar for a bit, but most likely not that long.  The madate would have to have some kind of replacement.  What is that to be?  The ethanol haters makes lots of noise and are indeed rabid, but they don't have an alternative oxygenate that is in enough supply to subsititute.

[sonoma72]

Jim

I agree with your view, I really don't think there is a lot to worry about in ethanol.  Certainly the new syngenta hybrid will only make the entire industry "more" efficient, what that means about gallons per bushel of corn, I would assume means a better ratio.  Add this in with the politics(aka the u.s. senate), and I don't see it going anywhere.  As for the "vitriol" aimed at ethanol, what can you say?  I think there is a lot of misinformation floating around, some may be true, but if I were a CAFO, I would be less concerned about ethanol and more concerned about the animal groups who are more upset about animal welfare then they are about corn ethanol, IMO.

[Jim Meade / Iowa City]

Sonoma,

I agree with you that the animal rights activists are more worrisome than the ethanol haters, because some of the animal rights activists remind me of the Baader Meinhoff Gang when I was in Germany.  These people will kill you.

I think the efficiency talked about with Enogen is that it is easier to break down and takes less natural gas, so by efficiency them mean cheaper.  I didn't get the impression that you got more gallons per bushel.

[Pat in CMO]

 Was at a Syngenta event about three years ago where they were really excited about hte amalyse enzyme trait.  It was my understanding that if using this corn the plant would be able to either skip adding the enzyme (a key step in fermentation) or would save money by not having to use as much.  Patrick

[kraft-t]

In the Rio Grande Valley we usually see corn 3 or 4 inches tall by the 1st of march. In fact it makes a winter texan think he ought to be home getting ready to plant. This year they have shared some of the cold weather with us. My cousin is down there now and he says they need a coat most days.

[k-289]

Usally go to San Antonio--Austin area about now for a couple weeks and get "free room and board" with the relatives that left here in 60's and 70's---told them when it warmed up we might head that way--when it was 17f a few days back ---changed my mind