New crop corn up 34 cents in two days. I don't think anyone saw that one coming. It appears as though the buying initially this week started out as technical as traders couldn't press it any lower and then once it started moving higher short covering ensued. Traders also appear fearful of the current forecast of a ridge of warm air setting over the center of the country. Nobody has the ridge sticking around very long and the heat is welcome everywhere and moisture is still in the picture for much of the main cornbelt the next 5 days but the fear is traders remember last year and how quickly the rain shut off once the warm temps showed up. Dec corn got within 2 cent of the high put in two weeks ago. While some charts may now bullish I'm not sure the fundamental warrent it at this time. Judge your own crop and potential but I continue to maintain that rallies are meant to be sold. Beans were quiet much of the day but eventually they worked higher also with Nov new crop leading the way there as well. Informa acreage forecasts were neutral to bearish with corn acres at 95.262 and beans at 77.756. In fact they are using a 160.9 national corn yield vs USDA at 156.5. The market shrugged it off today. We are seeing pretty large selling in new crop and old crop corn today.
Some volatile trade today. Overnight, corn traded 3 higher to 2 lower and was on the lows this morning. We saw renewed buying when the day session opened up, enough to test and eventually fill the gap left on the chart back on the stocks report day of March 28th. Buying dried up quickly and the market retreated 14 cents in about 15 minutes only to slowly work higher the rest of the session. The weakness in the nearby was blamed on profit-taking on the recetn move but also weakness in the cash markets. The farmer is selling corn at the upper end of our recent trading range here and some bids are weakening either outright or as they roll from the July contract to the September for their cash bids. meanwhile, the new crop found a bid as well as traders sold the July and bought the Dec. new crop corn at 5 bucks tonight is worth a pretty good look, especailly if you're lightly sold on new crop right now. I can still make a strong case that we could see 4 to 4.25 by fall with decent weather the rest of the growing season. July and aug beans saw good strength early but when the corn spreads broke, so did the bean spreads. I'm hearing some Iowa bean processors were up another 5-10 cents on the day. Farmer movement of soybeans remains very slow. it looks like we could see another test of 15 bucks for cash beans coming sooner rather than later and maybe a run to 15.20 or higher is possible.
Corn remains rangebound on the old crop, testing resistance, failing, testing support, failing.... Basis is stagnant across much of the country but still holding well above historical values. We saw some decent farmer selling today as we approach the upper end of the trading range. Part of teh trade today was buying corn, selling beans as the weather gives farmers in even the wettest areas a decent chance to get more beans planted. Granted it's the 17th of June but most farmers will double-crop soybeans after winter wheat up to the 4th of July in most areas and last year those yielded as good or better than some full-season soybeans. We do need pretty good weather the balance of the growing season to accomplish that again. The soybean crush came out for May at 122.6 million bushel; a full 5 million bushel higher than expected. Beans managed to trade from down 10 on the news to unchanged but meal faded a bit into the close as traders bought oil and sold the meal on some profit-taking. The crush pave now has to average about 105 million bushel per month the next 3 months to meet USDA projections. While there has been talk of meal imports there is still no boats in any lineup in SA destined for the U.S. Beans and meal may still have one significant push left in them. Basis continues to firm and processors continue to have decent margin to continue running.
News was very scarce today as volumes seemed light throughout the morning. The story of the day again was the spreads in both corn and beans. CIF values on corn have started to pick up the last couple days and today we seen the corn market react. All morning long July corn traded about a 2 cent range, up 3 to up 5. Then about noon we started seeing a steady incline. July corn at one point was up 14 cents. It did manage to pull Dec corn out of the red numbers, but that didn't last long as the new crop closed lower.
Beans on the other hand traded lower almost the entire morning until corn started to rally. They managed to close up 8 on the cash. Meal has been the story now for quite some time (with great export numbers again yesterday), still couldn't managed to close higher. Meal is down 10 bucks in the last 2 days. Weather over the weekend looks very WET in NE Iowa where they definately do not need the rain. Does that effect us come Sunday night? I think it should if they get the 2 inches they are calling for. On Monday only 60% of IA soybeans were in the ground, with the majority of the missing acres in that same area I just mentioned 2 inches of rain. Estimates for the nations planted acres Monday are 85-90%. Reminder that the June 28th stock and planted acres report is getting close. This could be a BIG one!!!! Keep an eye on things as I expect it to stay volitile for a while. Have a good weekend!
Export sales pretty much set the tone corn today as they were lousy once again. 3.2 mil bushel for old crop and 2.7 new crop. Also there were a few rumor flying that one of the big brokerage firms issued sell recommendations on both corn and beans for new crop. Corn actually managed to hang in there pretty considering what beans did today. Export numbers on baens were 1.2 mil bushel of old crop and 16.4 million new crop. Soybean meal export were great once again thought 97.7 tmt. Can we keep this pace going without running into trouble? I don't think so, but if you look at the meal market today we were down about 9 bucks on the July meal board. CRAZY! Aparently the funds were sellers today as nothing seems to add up otherwise. Other news in the grain world was very quiet today. I would look for a little bounce tomorrow as things were a little over done on the beans today. Maybe it had something to do with reversing the July/Nov bean spread as it has been really volitile as of late. The spec cannot make money with the market sitting still and the USDA didn't give anything friendly yesterday so down we go. Lets see if we can get some of this back tomorrow.
Day 3 of the Index fund roll but it had little or no impact today as bull-spreaders were back out in force. Farmer movement has been quiet for the last week or two and firm cash markets, especially for soybeans, has funds and specs buying the front contracts once again. I'm hearing more corn acres are being planted today around the country and even parts of ND are planting wheat, beans and canola today. Sunshine and 80 degrees helps a lot. meal appeared to be the main driver of the bean complex today as a new high was scored today for the move in July meal and we had a new high close. Meal exports must be raised in tomorrow's report. I'm guessing USDA may drop the bean exports ever so slightly so I'm not sure what adjustments they will make to keep carryout at 125 million bu or maybe they finally lower it some. Old cropcorn could see exports drop slightly but ethanal grind up slightly; not much for changes overall. It may be a bit too early to make any changes to new crop balance sheets as we wills ee an acreage estimate at the end of June but even that will likely have to be reviewed or re-surveyed based on the late spring. USDA also cut yield in their May report already based on the late spring. Report at 11 am tomorrow. new crop beans are back above 12.50 tonight. I continue to view these prices as a great selling opportunity and producers should get a little more aggressive. If you don't have much for new crop corn on the books I would also get something sold above 5 bucks. A decent forecast that covers the 4th of July may find corn in a steeper downtrend.
Rain over the weekend was not as much as expected across some of the water areas and the forecast has finally added some heat which gives the trade hope that the final acres can get planted in the next 10 days or so. Corn is expected to be 93 to 95% planted tonight, up from 91%. Bean plantings are expected to be up around 70%, up from 57% last week. The index roll continues to provide some selling on the front-month contracts which didn't help the cause. An attempt to rally at noon was quickly met by some additional selling. I've heard whispers that some producers in the Eastern corn belt are thinking that record yields are possible. If the corn was planted on a timely basis it's hard to argue against them at this point. Still, the pencil-pushers are trying to assess yield potential in MN, WI, and Iowa and see what impact that may have on the national average yield. I'm also hearing that the balance of WI acres to get planted are mostly dairy acres and were meant for silage from the beginning and therefore a yield reductin is likely, NOT in order for Wisconsin at this time. While mother nature has been cruel to some it gives us something to talk about the rest of the summer other than just warning about $3.50 corn this fall. At this point I still can't rule out sub 4.00 cash corn this fall for at least a while. Beans were weak on the front end but basis is firming up a touch. Finally.
The slightly wetter forecast played right into the hands of traders trying to front-run the index fund roll - selling the front month, buying the new crop. December corn was up a dime on the day but still 15 cents from the highs earlier in the week. The trade is looking for corn to be 95% planted and thinking the rain is maybe more bearish than bullish going forward. Hearing about semi loads of seed corn moving from ND to WI, MN and IA so at least some farmers are looking at still planting corn instead of PP. Beans should be about 70% planted but traders are still a bit worried about the rest of them getting planted with November beans making a new high for the move. With possibility of 12.50 to 13.00 beans I'm sure we will see the acres get planted. Temperatures are supposed to warm up and that should allow the topsoil to dry faster than with the cool, cloudy condition we've been seeing. We continue to suggest the use of sell-orders as volatility is high and we continue to see some pretty wild swings in the market.
Overall a pretty quiet day today as the spreads try to find where they want to be. Some traders might have taken some profits off of yesterdays moves on both corn and beans. Exports this morning on corn were poor on both old and new crop. Old crop coming in at 4.2 mil bu and new crop at only 2 mil bu. Nothing new there lately as they continue to struggle. Corn managed to rally in the last couple minutes to close new crop up 6 and cash up 3, which was the highs of the day. That gets us back to just below the 5.50 mark on the Dec futures. Lets see if we can get through that tomorrow.
Bean exports were on the small side for old crop at 1.8 mil bu, but new crop was big as 21.7 mil bu. Meal exports were the story through once again at 134,200 mt old and 137,100 new. Those are pretty solid and it still feels like meal should continue to lead the way. Is there still problems to resolve on the meal board.....Maybe? The crushers still search for beans and we might have seen the first sign of the basis hitting a bottom for now anyway. Some processors jumped bids a touch today. It is hard for me to believe that basis could be "over" on June 6th. I am looking for another run in basis as beans are still tough to find and also tough to line up enough trucks to get them to where they need to be on time. Time will tell......
Funds were big sellers of the new crop contracts in both corn and soybeans today. They are seeing a little better planting window opening up and plenty of moisture on what is in the ground and are optimistic on production ideas. I'm not going to argue with them today. Rain makes grain. We also had big bullspreading take place in both markets - buying the front month and selling the new crop month - as traders try and take advantage of snug old crop stocks. Physical grain traders are nervous to see how the spreads play out and what impact that will have on basis levels over the next 30 days. Since May 15th, the July/Nov bean spread has gone from an iverse of $1.90 to a high of 2.98, then saw a quick collapse back to 2.00 and now has rebounded and traded at 2.45 today. In the meantime, also since May 15th, August bean futures hve rallied $1.30 per bushel low to high and yet the cash is only up about 50 cents. Yes, bais has weakened or lost 80 cents or more in that timespan. That's big-time volatility and no commercial or feeder wants to get caught owning any oldcrop bushels when prices collapse to new crop values. I would think December corn may try and find a bottom here for the next week or two, at least until we see planters roll in Iowa again. November beans could easily continue to leak lower, however, as they are still a buck higher than they were just two weeks ago and there's a chance we plant more acres as well.
The July corn contract was one of the few positive signs in the overall market today. July gained over a dime on December today. The trade is feeling comfortable thinking only a couple million acres of corn may not get planted and that rain falling on what is in the ground is bearish. In 2009 we had a similar year with plantings running a late but catching up and we ended up with 164 bpa national yield. I think it is way too premature to think our crop is anything less than the 158 bpa that USDA projected in their May report. Extended weather maps seem to be drying out and if that's the case then sunshine and warmer temps will be bearish. In the good old days, it seemed like once we got into mid to late June and saw a good growing forecast out to the 4th of July the market started to tank and traders priced in a big crop. We may have similar action this year especially after we added the recent risk of premium into the market. Beans saw general weakness much of the day on profit-taking but came off the early morning lows. New crop beans moved over 1.30 higher in the last 3 weeks. I'm a firm believer in getting aggressiveon new crop bean sales here. I was reminded this morning that in their early estimates, USDA dropped total planted acreage a little over 3 million from a year ago. We also had sizeable CRP acres come out. Makes me wonder if corn acres will be down at all when we get the final total.
A lot of people are asking why soybeans are leading the current rally and the answer is long and confusing. COrn acres are most threatened today and yet corn continues to get turned away at resistance levels on both the old and new crop contracts. Corn tested those resistance levels again this morning and the 9:30 crowd had nothing on their mind other than selling against resistance. Corn rather quickly traded 25 cents lower before finding a bid and working it's way back thoughout the balance of the day but it still closed 7 lower. We said all along that we didn't need the 97 million acres and a big yield and that's why many analaysts were suggesting corn prices would be well under 4 bucks next fall. Now we're trying to determine how many acres will go unplanted but the trade still looks at a good moisture situation on 80% of the crop that was planted pretty timely. The battle continues. Still hearing about some short-covering in November soybeans. Old new spread liquidation and intermarket spreading has also provided support to the November contract. Bottom line is we will face stiff competition from SA for world market share even during and after our harvest this fall and farmers will continue to plant 12.50 to 13.00 beans for a LONG time yet. I think traders forget that beans haven't been under 8 bucks for a long time. Forecasts seem to lighten rain totals today for the next two systems.
Corn trading was pretty quiet most of the night but found a bid when we reopened at 8:30 this morning. Initially July corn lead the move hi gher but eventually Dec found a bid as well. Resistance in Dec corn was tested at 5.70, taded up to 5.73, but closed back at 5.67. We'll see what the weather maps show Sunday / Monday and planting progress Monday n ight. there was some planting done this week and we should be up to about 91% planted. I still think resistance will be tough every nickel above 5.70 unless we believe we're taking yield under 158 bpa and I don't think we're anywhere close to that yet. Farmer selling today was heavy for both new crop corn and soybeans. November beans lead the way higher today and that was alittle harder to understand. Technical shortcovering and spread unwinding has been the feature to move Novembe beans from12 back to 13 but today felt like there was something else behind it. There was some talk that China may have been pricing some of the recent new crop purchases. Possible. We did close a dime off the highs so maybe today was just the final shorts blowing out as well. As stated yesterday, I like selling beans up here and would actually be aggressive as a trde back under 10 bucks for new crop is still possible.
After a nearly 60 cent run un December corn the last week and a half longs are taking profits and some consolidation is occuring. I think we sit here a few days and come back next week and assess weather and planting status. I continue to maintain that strength in corn is meant to be sold, old and new crop. I am not willing to reduce yield under 158 bpa at this time with so much of the crop in the ground with pleanty of water. Others have reduced yield even more but are still showing a very bearish carryout. One firm has planted acreage reduced by 1.7 million acres and reduced their yield estimate from 156 down to 151.5 and they still project carryout at 2.04 billion bushel. Trend yield is closer to 164 bpa and USDA already accounted for a late spring in dropping their yield estimate to 158.5 in their May report. Continue to sell rallies. New crop beans continue to get support from short-covering and spread unwinding. This is likely to be short-lived unless you think we'll stay wet for another month and don't plant any more bean acres. The New crop bean picture is bearish. USDA was more than generous on their demand for U.S. beans and meal for next year and new crop beans can certainly trade under 10 bucks with a decent crop. Front-running of the index roll has weakend old/new spreads and this likely continues next week further weakening old crop corn and bean bids.
More fain fell over the weekend than expected and more is forecast for this week putting into question the total number of corn acres that will get planted. We've talked about affording to lose a million or two corn acres and possibly a couple more bpa on yield and we would still keep a carryout close to 2 bil bushel. Losing 4-5 million acres and the possibility of 4-5 bpa off the yield and now things become a little more interesting and that's what we're trading. Famrer sales in our area picked up today for both new crop corn and beans. Trading will get tougher in December corn every nickel above 5.50 futures but for now, especially those producers that are heavily UNDERsold, it's still a good idea to use the rally to catch up on sales.
It was somewhat surprising that New crop november beans lead the rally today but the funds have built up a sizeable short in the Nov bean contract and recent action is forcing them out. I really like selling new crop beans right here and getting up to 40 to 50% sold would not be out of the question. Less corn acres means more beans will get planted and don't forget that Brazil and Argentina will have plenty of beans available come this fall and will continue to compete with the U.S. for world marketshare into November / December. i think the trade wakes up once the current sh ort is blown out and will be more than willing to sell November beans for another run lower.
It felt like recent longs were taking some money off the table today in the corn. We had one early-moring attempt to move higher but it was quickly turned back. Technical resistance on July corn was just above yesterdays high at 6.69 and then up to gap resistance at 6.76. Corn moved on the rally yesterday and going into a long weekend the longs were nervous. The action in beans yesterday spurred some additional liquidation, mostly in the front month contracts with additional selling as traders liquidate positions in the old/new crop spreads. Cash markets rolled to the August bean contract earlier in the week to avoid some of the volatility associated with the July contract. And how.....the July/Nov beans spread traded a 78 cent range on the week and a 48 cent range just yesterday, ultimately firming about 8 cents for the week. There was plenty of opinion going around that yesterdays action in the soybeans signifies a blow-off top in the market. It sounds like a lot of yesterday had to do with Chinese pricing for whatever reason but we also continue to sell beans and meal for export and it's only May, not August. I look for more volatility ahead. Let the bean processor grind the beans they just bought for a week or two and we'll see how fast their basis recovers, especially if the board doesn't help them out like it did this week. Stay tuned...... Have a great holiday weekend.
A pretty wild ride today in soybeans with the board moving substantialy higher but then selling off nearly as faast. Processors were quick to move their bids lower early in the morning as soon as they saw the strength in the board. They have a few weeks worth of coverage on soybeans and until they can sell the meal against the bean ownership they are going to remain very defensive on basis. There were rumors of Chinese pricing in the July soybeans. This m ay be pricing of old crop contracts to execute or they could be rolling old crop purchases to new crop but eithe way they would have to buy the July. this was on top of export sales announced this morning of 131,000 mt of soybean meal and 183,500 mt of old crop soybeans. We continue to sell beans and meal that we don't have and USDA remains steadfast at 125 mil bu carryout. We will continue to see more fireworks in the board and basis on old crop beans; likely for a couple of months to come. Corn followed beans higher and made a new high for the move in the old crop but also pared gains into the close when beans sold off. Cash corn got up to 6.77 before setting back. We continue to recommend the use of sell-orders on old crop corn and beans as volatiltiy continues and just like today, when you see it or hear it, it already may be too late to sell it.
Corn was able to rebound today. Dec was firm on a little shortcovering based on technicals. July was higher on firm cash markets and also on technicals as the 6.32 area of support held yesterday and recently added shorts to head for cover. We're within about 9 cents of the recent high on July corn and to fill the gap left from March 28th we would need another 18 cents. I would say today there's maybe a 35% chance to fill the gap which would put cash corn close to 6.85. After the stocks report came out I've been on record thinking cash corn at 6.75 would be near the upper limit of what we can expect the balance of the year. We may have a slim chance at 7 bucks but have the order working. If the farmer start to haul corn once things dry out then old crop values may roll over for a while. Beans spent much of day with July about unchanged and new crop up a dime as the old/new spread saw some profit taking. As the day wore on it almost seems like funds were buyers in the July only because corn was up 15 cents. As much as basis had dropped on soybeans (as much as 70 cents per bushel or more at the processor for spot delivery) it would appear that the futures should see a correction soon. If you have old crop beans left on the farm pricing them with a HTA may work out well as futures approach highs not seen since last October 1st. Basis should have at least one more good run.
For those of you who have been watching bean basis slide.... please don't kill the messanger. Processor basis in southern MN has dropped 65 cents per bushel.... yes 65 cents..... In just the last 10 days. We have bought beans in the last week and yet 90% of them are already in town which means fresh origination off the farm has been hard to come by and that is what we're going to need to see before I can call the old crop bean market truely over. Until that happensit's likely we'll see at least one more run in old crop basis but it may be a couple weeks before we see it again. Overall, beans have moved and the processors are scared to death of adding a lot to ownership at these types of levels, especially when July futures are trading at a $2.57 premium to November. Meal buyers have been reluctant to buy more than a couple weeks of coverage at a time and yet they need to step up sooner rather than later to guarentee themselves the meal supply for summer or they may not get any at all. It's a good ol Mexican standoff. Corn saw major liquidation after the planting progress was pegged at 71%, only 8 points less than the 5 year average. The Dec contract held the 5.11 support area and was able to bounce back to unchanged while the nearby closed down a dime on liquidation.
Waiting for the crop report showing the percentage of corn planted..... should be 60 to 65% but guesses range from 55 to 70. The actual number at either end could be slightly bearish or slightly bullish depending on where it come out at. Heavy enough rains in ND and more on the way could result in some prevented plantings but we could lose 2 million without major damage. Trade feels that recent rains and subsoil recharging more than offsets a few lost ND acres as they still think yield potential is 158.5 or higher and that still results in 2 billion carryout. If we get a 20 or 30 cent rally in new crop corn it needs to be sold aggressively. Beans continued their strong performance making new highs for the move and making cash the highest price since the early days of harvest. Basis at the bean processors has backed off up to 20 cents in recent days as a result as beans are getting priced and moved to the processor as soon as trucks can get them. As the processor gets ownership into June they are getting very skittish on how to continue to buy against the July futures and huge inverses as meal buyers are reluctant to lock in anything more than a week or two at a time. If they can't sell the meal further out they don't want to pay up for the beans. Soybean basis could be very volatile for the remainder of the old crop season.
Corn got kicked today as traders continue to sell and short corn on decent planting progress. Looking at the precip maps for the next 5-7 days it's a bit of a hedge scratcher. The trade anticipates corn to be about 60% planted as of Sunday night nationwide. That would still put 40% of the crop planted after optimal dates and many of those acres are in Iowa and Illinois where it really matters. On the flip side, as we have explained, we don't need 158 bpa to have a very burdensome carryout. USDA was very generous in the usage on next years balance sheet and I maintain that even a 153 bpa national yield would get us a carryout around 1.8 billion bushel, maybe more. Even if weather would happen to turn warm and dry, after the rainfall this weekend, I would argue that the first 3 weeks of it would be traded from the bearish side with adequate subsoil moisture across much of the corn-belt. Cash beans got up to the 14.50 cash level for about the 5th time since harvest and we did buy some beans today. Each time we've been around 14.50 we have quickly sold off 50 cents or more. We'll soon find out whether or not we can move higher from here. If not, then it may be time to liquidate any old crop beans you have. Keep in mind that the inverse between old and new beans today is OVER 3 bucks a bushel. It would be pretty hard to hang onto any old crop when they're worth that much more than the new crop.
Basis values on corn have eased back a bit after a decent run. A fair amount of trains have traded the last couple days even though the producer has been fairly quiet. With such large inverses between old and new crop corn the commercial elevator does not want to get caught long on old crop basis and the fact that planting is winding up in some areas it is encouraging merchandisers to start selling corn. That may signal a short-term top in the market but it utlimately comes down to whether or not farmers start moving corn to town. New crop was lower on thoughts that planting progress is extremely strong across most of the nation. The biggest week ever for corn has been 43%. Add that to the 28% from last week and I suppose we could be at 71% but the wettest parts of IL and IA are just starting and it's doubtful they are going at full speed. If the number is 60% or less come Monday night then we may see a stronger market reaction to the upside. Beans almost got back to unchanged on the day after a bearish crush report. Although we needed to average 112 mil bu/month for the next 5, April crush was 120.1 mil bu when the avg trade guess was 125 mil. Now we need to average roughly 110 million bushel over the next 4 months. If imports of soybeans pick up steam then maybe the tightness in carryover will be seen more in shortage of physical meal stocks vs a big board rally. Stay tuned.....
A somewhat subdued trading session. Overnight saw light volumes and slightly higher market but sellers came in around 7 this morning. Eventually the selling dried and both corn and beans rebounded from early losses that saw corn down 8 and beans down as much as 14 cents. The May contracts finally went off the board today. May/July corn settled around 55 cents and the beans settled about 1.10. (Inverses) Now we'll see if the July contracts have enough positive momentum to try and trade to the levels that May expired. I won't rule it out in soybeans, but I think corn finds too many willing sellers on the move higher preventing the full move. For not it appears July may at least have a chance at filling the gap on the chart which is up at 6.76 but even that appears a bit lofty today. Producer selling picked up yesterday on old crop corn and even a few old crop beans. It feels like we'd but quite a bit of corn if we get around 6.75 for cash. Watch it closely as the next week or so may be one of our final opportunities. Soybean crush will come out tomorrow. Even though we need a significant reduction to the bean crush last month when the number showed a reduced crush pace from Feb to March the trade reacted bearishly. More rumors of additional bean imports into the U.S. will keep the trade nervous as well.
May contracts are about to go off the board and the longs have been unwilling to give up their position, thus the shorts have really felt the pinch of a losing position. May/July corn is trading a 63 cent inverse while May/July beans are trading 1.03/bu. Going into 1st notice day, the corn spread traded at 25 cents and beans at 63 cents. Cash markets remain firm and BNSF rail values have finally firmed up in the last week or so. The game of chicken that the farmer and end-user were playing was clearly won by the farmer this time. The end-users felt they could sit back and wait for the farmer to get out of the field before they had to chase corn values higher but the late spring spoiled those plans. Now they need to buy it and the farmer is busy for a couple weeks yet. This is an opportunity to price any July HTA's you have and it may be one of our last rallies for old crop corn in general. Once planting gets wrapped up I think the farmer opens up the bin doors and starts hauling to town and that should be enough to weaken our cash markets and thus flat price. For soybeans, I'm still not sure what's left on the farm. It feels awefully tight and thus we could see beans be a bit more explosive. Locally, the 14.50 area for cash has turned the market back several times and those closer to the processors are closer to 15 bucks. Maybe that's high enough this time around as well. Wish I knew. Stay tuned.....
Old crop corn carryout was up 2 million bushel at 759 million carryout. New crop was pegged at 2.004 billion bushel. We knew that was coming, that's why they trade has been that bearish on new crop corn in particular. They're still using the 97.3 million planted acres and they are using a uield of 158 bpa. Exports are projected at 1.3 billion bushel, ethanol at 4.85 billion and feed use at 5.325 billion bushel. I agree on the exports. Even though we were at 1.5 billion a year ago and over 2 billion 2 year ago it's going to be tough to regain world market share when Brazil and Argentina are having another record corn crop, India has tons of feed wheat to sell, literally, and weather is looking good in Russia/Ukraine thus their prospects look good. Ethanol use is too high considering 4.6 to 4.7 is the current blend wall. Cars are getting more efficient and we're driving less. We would need a higher blend than 10% to get to 4.85. Is that coming? Feed use looks pretty large at 5.325 billion bushel when even 2 years ago we were at 4.55. Look for corn to continue to leak lower. Beans were interesting. Once again carryout is unchanged. Meal exports were raised 550,000 ton while domestic use was CUT 500,000 ton and total crush was unchanged as were exports. Even with huge S.A. supplies world buyers are still buying meal from us, meanwhile our animals are going on a diet this summer? I'm sorry but something has to give.....Stay tuned.
After a one day reprieve, corn got punished again today as traders point to a warmer, drier forecast and want to be bearish, period. When liquidation and new shorting hits the market they take the old crop months down with it. I do find it interesting that the trde is using a May 20th date to talk about yield reductions when May 10th has been the standard for years. I guess they are stretching the date to fit their position. Regadless, we've talked at length that we do not need 97 million planted acres and 160 bushel yield and that even a national yield of 152 bpa may give us a carryout very close to 2 billion bushel. We have hurt demand and Argentina and Brazil are having a 2nd record corn crop in a row, India has several million ton of feed wheat available to market and Ukraine/Russia look to rebound their production with good weather after last years drought. Japan, South Korea and many other world buyers have got a tast of n on-U.S. corna nd find it to their liking, especially when it's cheaper.
Price action on the beans continue to gyrate between those bearish long-term based on large world supplies and those that are bullish based on extremely tight U.s. supplies. nearby bean spreads are the largest in history. nearby bsis is higher than ever before for this time of year. Not one, but 15 crush plants need to close immediately for USDA to be correct on crush. And last time I looked, USDA already has 20 millioin bushel of soybeans on the balance sheet as Imports so news of one vessel on the way is hardly bearish today. The bearish news would be if somehow, some way, USDA was able to find more beans for the report Friday. Never say never.......
Corn gapped lower overnight by about a dime and never looked back. It took another leg lower about 4 am and after trying to rebound a bit in the early-morning trade, it took a major dive about 10:00 and dropped another dime. It was at that time that the old crop July contract lost about 13 cents of premium to the December. I would imagine that the majority of length is in the July contract and that's where we saw the liquidation today. Beans traded both sides overnight and were actually up 8 cents briefly but eventually the selling in corn and wheat appeared to drag down beans as well. Old crop beans also lost ground to the new crop due to the liquidation selling. Bean basis is firm. There was a wire story today that said "board spreads and basis are doing the job of rationing demand". The story was about a crush plant in Indiana closing closing in a couple weeks. The headline is misleading and wrong. The reason that the plant is shutting down is because they can not source soybeans. Crush margins are still decent. Whether or not the beans are out there is questionable today. The USDA may not have done any favors telling everybody for months now that bean carryout will stay at 125 million with a lot of evidence to the contrary. Tonight's planting progress for corn expected to be 11-18 percent. A pretty good range. It's all about weather right now and traders think the crop gets planted soon enough.
Beans have lagged corn significantly this week as mentioned yesterday and those spreads corrected a bit today. Beans were up near the 14.00 mark on July futures but couldn't bust thru it and ultimately sold off 12 cents into the close. Corn could not hold gains either after testing the highs from earlier in the week but not finding additional buying "up there". Mixed forecasts continue. I see a rain event mid to late next week which would spell trouble for Iowa and Illionois again but the extended maps after that are warmer/drier. I'm not sure why the trade continues to believe the long-range forecasts but they remain bearish and are looking for reasons to sell new crop corn. After the bearish stocks report we felt if old crop corn got back to 6.75 or so it would be a gift and that's why we've been recommending scale-up selling back above 6.50. We topped out at 6.65 this week. I hate to even say this again but Sunday nights forecast will once again provide direction for the next week and possibly much longer. We need a window to plant aggressively, especially in IA and IL. Stay tuned.....
Corn and wheat higher, beans lower. Beans were higher most of the overnite and into the morning but when the big boys started buying corn they sold beans against it. Not sure I understand their logic. From Monday's close corn is up 3 cents but beans are DOWN 35 cents. Beans are tighter than ever with zero bushels moving or getting priced. Meanwhile, corn is moving, both old and new crop. Go figure..... I'm seeing at least one MN bean processor willing to pay the strong nearby basis thru July. That's telling me that there is solid demand on the meal and it may be possible that they have to give in the bean/meal complex. With such strong demand how are we going to take the monthly crush from 130 million bushel per month to less than 100 million per month for May thru August to meet projections? Under that scenario are imports bearish? As stated, corn was moving today which it should. The front month gained the most as traders see the farmer busy the next 30 days and end-users are finding themselves a little light on corn supply with the planting season getting pushed back. Ethanol margins are good and moth-balled plants are coming back online. Could the USDA lower the corn carryout on May 10th after the April increase. It certainly could with a stronger ethanol grind and exports meeting/beating expectations.
A week ago today beans sold off hard on Thursday morning we found out China had cancelled some old crop soybeans. Anyone want to bet we may see the same thing tomorrow? The good news last week was that the meal sales were way bigger than expected (again) and the bean market started a 75 cent rally after the cancellations to China was annouced. Call me cynical but in the stcok market they call this type of thing "insider trading" and people go to jail for that. In the grain market? Not so much.... We'll see what the sales are tomorrow. The advertised reason for today's weakness was a slower manufacturing pace in China had funds selling everything and anything commodity related once again. We saw that happen last week too. Bottom line; we rally and we find sellers and when we get too cheap we're reminded that we keep using beans in this country at a pace that is unsustainable. Farmers did start selling beans again over 14.00 but new origination coming from the farm is very limited. Once again I question what's really left on the farm for soybeans. I wouldn't expect much more downside here but as we've been talking about, a move back to 14.25 or higher need to be sold. Corn held up fairly well overall. The ethanol grind was a touch higher and you have to back nearly a full year to match today's grind. Weather is still an issue and volatility will continue. Sell rallies.
After trading as much as a dime higher overnight corn traded much more two-sided during the day session. Sellers were there at 8:30 and again at 9:30 today, especially in the old crop corn. It makes some sense in that the rally yesterday was lead by old crop corn and yet the weather is a new crop problem. We also saw a significant pick up in farmer sales yesterday and old crop doesn't need to achieve anything more than that. New crop sold off late making a new low at the close. After a very wet next 5 days, some weather guys are talking about the possibility of a ridge in the midwest. At this point we're going to need it because we'll need at least 5 days to dry out if the rain is as heavy as forecast across Iowa and Illinois. Still, a little bit of profit-taking isn't totally unexpected after a limit move yesterday. I think the time is close to sell every bushel of old crop corn remaining. On new crop, there will be increasing selling pressure as we get above the insurance level of 5.68 on the Dec contract and 6.00 or higher still looks like a bit of a hope and prayer. A small cut in acres and a 154 to 156 bpa yield still gives us close to 2 billion carryout. Beans traded higher overnight but also ran into selling. Farmers are moving some beans but the majority of them still seem to be in town already. I'm starting to wonder what the farmer really has left in his bins around the country.
Corn traded up 12 to 13 cents overnight but when the market re-opened at 8:30 additional buying showed up and it did again at 9:30. From there the maret continued moving higher right into the close. We are now in a weather market and recent shorts in the market got chased hard. The forecast did get a little wetter/cooler from what we were trading on Friday, but we should have been higher on Friday, not 5 to 7 lower. July corn achieved it's first target at 6.52 and it traded into the gap area left from the April 12th crop report. That gap runs from 6.57 to 6.76 and the close tonight was near 6.60. I continue to believe that this rally needs to be sold so if filling the gap is a possibility then we would have another 15 cents to go. Watch the market closely and if you don't want to use sell-orders then follow the trend higher and sell when the momentum stalls. Beans took a while to get going trading near unchanged for a while even as corn was moving higher. Eventually buying showed up there too and we may even hit some stops when beans and meal traded above the recent high. The way bean basis and meal basis continues to firm it certainly appears that we may still have export meal demand around as well as our domestic demand. A few beans started to move today and the processors did back off on basis slightly. Let's see if this was a one day event or if we have more to go.
Beans and meal higher. Corn and wheat lower. The forecast does give 5 days of sunshine but there are still two fronts to move thru after that. 5 days of mid-50's at best for us after 4 days of 70. Rainfall amounts in IA, IL, IN will be watched very closely as any further delays and the market "SHOULD" react accordingly. I'm surprised corn was not able to hold its own today but the trade remains very bearish longer term. PArt of that may be due to some mis-information floating around. I read one column today citing the potential for a 15.5 billion bushel corn crop. The last market estimate for planted acreage is for 97 million acres and even that is now suspect especially with acres in ND. Regardless, let's us the 97 million. Assuming a normal harvested acreage percentage, the U.S. national, average yield would need to be 177 bpa to get a 15.5 mil. bu. crop. That would beat the current record by 13 bushel. I'll go out on a limb and say that's just slightly unrealistic. Ok....it's downright idiotic. Needless to say, Sunday nights forecast is an important one. Beans and meal saw good follow-thru to yesterdays move and technicals have turned higher. Beans should be able to make an attempt to test the recent high at 14.00 on the July contract. We do have headline risk with China demand, bird flu, etc.....
Beans had a nice recovery today but it would look even better if we can follow thru tomorrow and get July futures to close above 14.78. Technically, that could signal a reversal of the recent action and lead to a retest of the recent highs. If that were to happen it would put cash beans in the 14 to 14.20 range. Soybean exports were actually negative last week as a fairly large Chinese cancellation more than offset a few purchases. I believe China still has 28 million bushel on the books with the U.S. that have not shipped. This could be a short term negative if more cancellations are seen. On the flip side, soybean meal exports remain very strong at 193,000 mt and we are now oversold according to the recent USDA projection. That may not slow down as much as expected either as large inverses remain in meal around the world and Argentina, the world's largest meal exporter, may have a hard time meeting existing commitments based on very slow farmer selling. Farmers there are holding back beans because of severe currency manipulation and as a hedge against inflation. Corn continued the rebound started yesterday. Ethanol grind rebounded yesterday and another Poet plant was scheduled to come back online with margins back in the black. Some talk of "possible" export business picking up as Brazil ports are plugged with beans and Argentina corn isn't available just yet. I won't hold my breath.
Corn was a bit highero n a small round of profit-taking after new lows for the year were made early this morning. Weather offers another 1-2 fronts thru the eastern cornbelt the next 10 days. Rainfall amounts look a lot lighter than the last two systems but any further delays will likely result in additional short-covering. Sunday nights forecast will once again likely have a big impact on the future direction of corn prices. beans were lower again today making it 4 days in a row. From the highs of last Thursday night, bens are down 55 cents which is extremely hard to believe based on what we've seen happening in the cash markets for soybeans and bean meal along with the spread activity. The May/July bean spread matched yesterdays high of a 69 cent inverse in early trade and it looked like profit-taking came in when it failed to move to new hi ghs. Short-term it looks like we're over doing things to the downside but l onger-term, if weather is a non-factor, prices willl likely be considerably lower 2 months from now. That goes for corn and beans; old and new. Rallies are meant to be sold.
Corn saw more selling pressure today from a forecast that should allow plenty of corn planters to roll starting early next week in IA and IL and maybe even in MN by the 2nd of May or so. Now we just have to see if the forecast verifies or not. It seems a bit suspect but we've also been in the cool / wet pattern for a while now as well. Funds are now building a SHORT position in corn. It seems a bit early to be doing that. It's rare for spring/summer corn prices to not surpass the January highs but this could be one of those years where it doesn't happen. Beans were choppy on the day, gaining some supports from the firming nearby spread lead by the May contract but eventually selling won there as well with July beans down 6 on the day. I feel like I've been beating a dead horse but we see big holes of uncovered cash positions in beans and meal and the market need to buy beans from the farmer and yet flat price continues to erode. Meal and soybean basis are both firmer again today and one processor even pulled offers on soybean hulls. Look for selling in corn to eventually dry up which may lead to a round of short-covering. If that happens, rallies will need to be sold aggressively.
Today felt like last Monday. Some risk-off type selling along with a warmer forecast that brought out some selling as well. Main problem is the maps are warm but also wet for east of the Miss river and Illinois and Indiana are approaching their optimum planting date in a hurry and not much will get done this week with another 1-2 inches of rain on the way and numerous counties still under flood warnings. I'm guessing we'll try and rebound a bit as the week progresses. Nearby spreads were very firm on the day with May/July corn firming 3 1/2 cents and May/July beans firming a whopping 8 cents on the day. The market is desperate for cash beans to move and yet cash bids have rolled to the July contract so strength in the spread means nothing other than it is offering some protection to those short the physical. Meanwhile May beans were still down 11 cent and July down 18 (and 36 cents off the high put in last Thursday night). Bean basis at the gulf is very firm as exporters maybe attempt to cover last weeks export sales. Big demand cuts are being forecast in China due to bird flu and yet now I can't help but wonder how exagerated they may be. As of April 13th, 190 deaths in MN have been blamed on the flu this flue season. Does 20 deaths in China result in a 20% cut in overall feed demand? Unlikely.
Looked like profit taking on the beans today after July failed to take out the magical 14.00 mark overnight. Similar to the corn action yesterday. For the week cash corn is down about 9 cents with new crop down 2. Also for the week, cash beans up 6 cents and new crop down 16 cents. The bean exporter and processor both need to buy beans and they continue to buy the calendar spreads to protect them against a higher basis but the flat price to the farmer is barely moving. Something needs to happen to get the farmer to price beans. Weather certainly isn't helping things and then the farmer gets busy with planting. Its still possible that old crop beans could break out to the upside rather quickly at some point but how we prevent managed money from selling the rally before the farmer is a big unknown. Cash corn basis remains weak with Texas feedlot values down 4 to 5 cents on the week along with weak basis in the east. The end-user there appears well covered and willing to wait out the farmer until he's done with planting.
Export sales: Old crop corn was 400,300 mt, old beans were 339,400 mt and soybean meal was a whopping 266,100 mt. Soybean meal basis jumped 20 bucks a ton earlier this week so that may have been in a response to low crush margins but also due to export business last week. Some are saying Argentina farmers are slow to sell and therefor Argentina may not be able to meet all of their meal commitments moving business back to the U.S. Also, non-China customers bought all but 60,000 mt of soybeans. WIth these sales we have already met the adjusted sales targets USDA made on April 10th. Beans and meal held onto gains but closed mid-range due to sell-off in corn. The corn sell-off was partially technical in nature. The highs made the morning of April 10th (report day) proved to be tough resistance and a failure to move thru those levels lead to selling. In addition, basis is weak in the east and that brought out some selling in the May / July corn spread. China feed usage is a very real concern today as well. Some trade guesses are that their feed usage could be off as much as 20% for the quarter because of bird flu and they still can't find how it's being transmitted. That would equate to 5% for the year which would affect up to 400 million bushel of corn and 100 million bushel of soybeans used for meal. Not good if it's anwhere close to coming true.
Dec corn gained on old crop today as spread unwinding was the main feature. Maps look pretty wet the next few days with 2 to 4 inches of rain falling across much of IA, MO, IL, and IN with more snow across NE, SD, and MN. Temps to remain below normal for the next 10 days with hints of 50 degree tamps a week out (that would still be below normal but welcome..) Yestarday after the close we saw meal basis jump as much as 20 bucks a ton across much of the midwest. Soybean crush margins have been falling for a while as basis has improved on the beans but meal basis was unchanged. The market is now telling feeders that if they need the meal they're going to have to pay for it. South American bean and meal basis is also firming and that eventually lead to some follow-thru to yesterdays rally. July beans closed up a nickel but in the noon hour we saw beans push from unchanged to up 13 cents in a matter of minutes only to lose 8 cents in the next hour of trading. Meal was solidly higher on the day, up 6 bucks a ton nearby. Technicals are turning friendly for the bean complex with solid closes above recent resistance levels. Corn is on the verge of the same. Use continued strength to sell old crop corn and beans. As one analsyst said today, when USDA publishes a new crop corn carryout over 2 billion bushel on May 12th the corn market is probably over...
Cash corn and soybeans rebounded today and got back most of yesterdays losses while the new crop months lagged considerably. Financials recovered about half of yesterdays losses while the metals are showing just a minor recovery after their huge sell-off. Farmer movement remains very limited at these prices and that likely continues for a while. Basis on corn continues weak in our area with rail values firming a whopping 2 cents in the last week but it's still a nickel weaker than we were going into the stocks report in late March. Basis should firm over the next few weeks. Those of you with May hedges need to be aware of the firming spread between May and July corn. As that spread firms it effectively weakens basis. Also for those in the July futures, the next 30 days should be our best window in pricing basis vs the July as well. Last nights extended weather forecast were certainly not the warm/dry scenario that came out Sunday night and had a hand in yesterday's sell-off. The eastern half of the country stays cool and much of IA, IL, and IN have 2 to 4 inches of rain falling the next few days. Planting progress will tend to fall further behind this week and may be supportive depending on how the extended forecast plays out.
Corn, beans, and wheat got pummelled today as outside forces combine to bring on a fresh round of liquidation in all commodities. Gold is down nearly 150 bucks per oz just today and over 200 bucks in the last two days. It certainly looks like managed money continues their overall master plan to exit commoditites in general as we have seen this pattern for several months now as their positions get smaller and smaller. Goldman Sachs and Citigroup both chimed in recently on the bull run in commodities being over. I guess when you look at cash corn at 6.21 and new crop at 4.78 and going to what many believe to be 4.00 or less it's a little easier understanding the selling pressure. Beans are in the same position. The March bean crush came in at 137 million bushel and yet the market was disappointed because it wasn't 140 million. Meanwhile, we need to average just 107 million bushel of soybean crush the next 5 months to meet USDA projections. I don't know if that's possible or not but the market seems to have little concern today. Some traders are still looking for one last, significant rally in old crop corn and beans but I'm starting to doubt how siginificant it will be. I hope we didn't just see it.
Old crop corn and beans lead the way higher again today on continued momentum from tighter than expected carryout in the U.S. New crop corn is getting a little support from cool/wet weather possibly delaying planting but one of the last record corn crop we had in this country was a year in which we had a cool, we spring with delayed planting. Keep in mind that world carryout levels for corn and wheat were just raised substantially. Use any strength in corn to continue to liquidate old crop inventory and scale-up into new crop sales. Soybean crush for the month of march comes out on Monday. Estimates are for March to be unchanged from February at around 137 million bushel but if that's the case we need to drop the monthly crush rate down to 104 million bushel per month for the remaining 5 months and the lowest we've ever donw is 122.5. Those in the market talking about importing meal needs are really fooling themselves. With vessel waits and transit times it would likely take 90 to 110 days from not to get any meaningful quantity into the interior U.S. I still don't know how the market reacts to this going forward. To complicate things further, bean movement off the farm will be near zero for the next 40 days. Up to now, managed money continues to sell any meaningful flat price rallies.
If you caught the corn market around 9:00 this morning it was trading up 12 cents but as we moved closer to 9:30 it started to fade and closed in the lower half of the range. We didn't mention it yesterday but the weekly ethanol grind rebounded quite a bit last week, back to levels last seen in June 2012. USDA did raise ethanol usage by 50 million bushel based on the rebound in margins but it remains to be seen if we can spread last years corn crop evenly enough around the country to keep all plants grinding thru the end of August. Exports came out this morning and at 185,000 mt they remains behind the newly advised (lower) pace. The winter corn crop in Brazil is looking great and Brazil and Argentina will continue to compete aggressively against the U.S. for months to come. Corn basis remains weak and I continue to think upside potential in corn is limited with too much world competition AND growing world supplies. Bean exports and meal exports were both very large once again. It seems every week I read someone saying "this SHOULD be the last week of good sales for beans and meal". Well, that just doesn't seem to happen and yet traders appear very reluctant to transform it into a flat-price rally, instead trading the spreads; may/july and old crop/new crop. World bean supplies are also more than adequate.
Was there a report today? You may have never guessed it as trading action was pretty tame except for the minute or two following the report. Corn carryover at 757 mil bushel was 67 million bushel under the average trade guess. Within seconds corn traded up 22 cents and in the next minute it was trading down a nickel. Obviously there were plenty of willing sellers above the market. Once you dig into the numbers, however, the numbers weren't really that bullish as the world numbers for corn, beans, and wheat were all higher than expected with corn 5 mmt higher, beans nearly 2.5 mmt higher, and wheat 2 mmt higher. China demand was part of the reason with corn feeding in China down 1.5 mmt, wheat down 3.0 mmt, and soybean imports down 2 mmt. USDA did not referance any particular reason but traders were quick to suggest that the reason was due to bird flu cutting chicken and pork demand as well as overall poor profitability for the hog sector. I'm not sure if the bid flu was the reason. We've heard the Chinese gov't has been stock-piling frozen pork for over 6 months and prices are still leaking lower. Is it a possible sign of slowing demand and slowing growth in China? Financial pundits are quick to say no but fundamental factors make me wonder. Bean carryout was unchanged in the U.S. Residual was down 30 mil bu implying a larger crop last fall. Upside looks limited but weather may provide a small bounce.
Corn and soybeans continue their rebound today. Farmer movement remains at a standstill for the most part. End-users seem to have excellent coverage for April and May and are being very patient and not willing to push bids at all to extend coverage into June/July. I believe they are thinking that they can afford to be patient as the farmer will have to come out of the field and face the reality that the 7.00 corn is a thing of the past and will start moving corn. It's a serious game of chicken but even if the farmer doesn't blink first, it's likely basis and spreads that do most of the work going forward and not a flat price rally. One has to only look at the bean market to compare as even though beans have a much tighter stocks to use ratio we still can't get beans to rally significantly either. I doubt if we're going to get much more strength out of this dead-cat bounce we're currently seeing. Beans are entering our 13.75 to 14.00 price range we talked about yesterday.
Beans saw a bit of a rebound today with spreads and basis both firming. A friendly report Wednesday could lift cash soybeans back above 13.75. Based on what we've seen I'd have to sell a few between 13.75 and 14.00 if we see it. Corn stayed in positive territory all day but the highs were made in the overnite session. Most of the strength evolved from bullspreading of the futures which may have been profit-taking there as well. The strength in the May against the other contracts remains a bit of a mystery. Basis along the river is barely above delivery equivilant and many cash traders expect weakness in the May to July corn spread and yet it firmed over 3 cents in the final minutes of trade today. So much for the index fund roll having a weakening effect. For those of you with old crop corn left be careful in getting too bullish here. It's easy to think we could have a substantial rally take place after more than a buck decline but past history is saying current values are still higher than they should be based on anticipated carryout.
Corn and beans both made new lows for the move today and closed at new lows as well. Continued liquidation of recent longs. Bird-flu hype from China is partly to blame and yet history has proven that the overall demand is affected very little even with very large outbreaks. Maybe we try and bounce a bit next week before the USDA report next Wednesday. I'm a bit surprised but from what I'm seeing today the average trade guess for carryout is 812 million bushel and for soybeans it is 136 million bushel. That means of the 370 or so million bushel of extra corn stocks only 180 would go to carryout for corn and of the 65 million beans only 11 million bushel would go to carryout. If printed that way I would think the market would definitely bounce maybe 20 to 30 cents, at least temporarily. I'm fearing that certainly more corn than that is added to the bottom line and we could see yet another bearish reaction. As stated yesterday, with similar carryout last year we traded about 60 cents lower in early June than where we are today. It appears that new crop weakness will continue to be an anchor to old crop prices as well.
Corn, Beans, and wheat all lower on the day. Corn and beans were lead lower by liquidation out of the front-month contracts as well as spread liquidation from being long the old crop, short the new crop. A new low was made for the move today for both corn and beans. Not exactly friendly considering this was the 5th day of trading since the bearish report but it continues to point towards just how bearish the report was. If you think the market is getting too cheap I'm afraid we have some more bad news. After a little research today; here's what we came up with: Last year in May, USDA was showing an old crop corn carryout of 851 million bushel. On June 1st, July corn futures traded 5.57. Flash forward one year, and based on the stocks report, most analysts are putting the average carryout over 900 million bushel. July corn futures today closed at 6.18. Based on this data alone, July corn could trade as much as 80 cents lower in the next 60 days. This is today's reality and a stark contrast from just a week ago but a 400 million bushel miss is just that bearish......period. Old crop bean sales were nearly 400,000 mt last week and based on USDA projections we really can't sell anymore without raising the estimate. Meal sales were also much higher than needed and I'm not sure we've slowed down bean crush much yet either. Meanwhile a new strain of bird flu in China is the cause of recent selling in beans.
Beans and meal were weaker today; some say on catch-up liquidation as we didn't see the same type of selling in beans as we did in corn and wheat. Others say Chinese demand is not as high as forecasted and concerns of a new strain of bird flu in China and still others are saying logistics are getting caught up in Brazil and that is bearish. Regardless, we still have a tight stocks scenario to play out in this country and I still think the tight farmer holding may eventually force at least one more flat price rally getting us back to 14.20 or so for cash. Wheat was the big mover today on thoughts China could turn to the U.S. to rebuild reserves after having issues with quality from China. Also, India appears to have raised the prices on the state reserves to be exported and are now un-competitive in the world market making the U.S. on of the remaining suppliers for now. Corn traded both sides with little conviction. New crop is getting a little support from the possibility of weather delays affecting at least some portions of the U.S. for spring planting. Old crop barely higher on the day but I believe we stay rangebound for now going into the April 10th report. Rallies into that report are meant to be sold and if the news is bearish sell the remainder of old crop on the day of the report. If the news is neutral to slightly friendly you still have to sell the remaining old crop bushels on any rally we get.
Corn and beans were both up about a dime or so this morning but more liquidation hit the corn market and down we went. There are still way too many longs in corn and they will continue to use bounces in the market to liquidate. We may be able to hold today's lows and try to bounce a little bit into the April 10th Supply and Demand report. Once again, that report will tell us how much of the stocks that USDA found will be added to the carryout. If the majority of the 400 million bushels get put to carryout the old crop corn market will be DOA and will vary likely leak lower the balance of spring and summer. There is still an old crop premium of nearly $1.40 per bushel and we know with time that erodes, especially if new crop continues to erode as well as spring planting gets underway in good fashion. If we have any bounce in corn going into the April 10th report I would probably sell half of the corn you still have that is unpriced and if the April 10th report is neutral to bearish, close your eyes and sell the remaining old crop. We still have all the new crop corn to worry about. Beans performed ok today. Traders recognize that much of the stocks increase should go to increase the exports and crush and with zero farmer selling beans may have a chance to recoup a fair amount of the 60 cents loss we just saw.
Leave it to the USDA to not be able to find their @#% with their own two hands.....Todays corn stocks imply that either USDA grossly over estimated the 1st quarter feed/residual number and corrected that error today, OR they missed the yield of last years corn crop by as much as 4.4 bushel per acre. Feed / residual for the Dec thru Feb time frame was put at 1.079 billion bushel vs a year ago at 1.547 billion bushel. That's a whopping 468 million bushel less than a year ago. How can anyone plan for that big of miss, it's just insane. The april 10th monthly report will tell us whether or not all of those found stocks go to the carryout or not. If most of them do it would imply a corn carryout north of 1.0 billion bushel. $7.00 corn is very likely gone for good. Maybe we get a shot at 6.70 or better but even that seems like a stretch right now. A large carryout also implies that anything larger than 150 bpa corn crop this year is big enough to increase carryout close to 2 billion bushel. $4.00 corn here we come. Bean stocks also surprised; 65 million bushel larger than the avg trade guess. Most if not all of those bushels should be used up with an increase in exports and especially the domestic crush. Beans maybe have a shot at 14.50 one more time as movement is likely limited off the farm now until well into May.
A slow start but we saw some buying build from lower values. Markets made thier highs over lunch and then settled a bit off the highs going into the close. Not much else for new today. All eyes are on the report tomorrow at 11 AM.
Corn saw a late-day recovery into the close yesterday but there was no follow-thru to that buying as overnight action was very muted and most of the day session was spent trading down 3 to 5 cents. The funds are long flat price corn, long the May / July corn spread, long old crop corn against new crop corn and also hearing they're long corn against beans yet as well. Makes me wonder how bullish the report has to be to avoid a "sell-the-fact" reaction as funds may try and use any strength on Thursday to take profits. There are viable arguments on both sides regarding corn stocks; either bullish or bearish. We've seen a lot of corn get priced the last two weeks but there are still a lot of un-priced bushels still on the farm. Regardless of what we see from the report it may be tough to break out of our trading range since harvest. $6.50 to $7.20 has captured the majority of the trading. We're a lot closer to 7.20 than 6.50 going into Thursday's report. Trade accordingly. Beans had a good close on rumors of some export business. No signs of it in the cash market but I also think the exporters got caught long some basis so unless the business is sizeable we may not see the export bids pick up much. At this point the processor is the market anyway, beating the exporter by as much as 40 cents.
Corn struggled early, trading down 4 cents around 8 am but as the morning and day wore on we found some buying come back into the market and recovered all of Friday's losses. Funds have bought a lot of corn the last three weeks going from a small short position to long just over 100,000 contracts. They have bought a lot of it from the commercial as farmer sales have been heavy over the same time period. Will the recent buying limit the reaction to a bullish report if we get one? Possibly. For sure we will continue to see heavy farmer sales if the market move higher. On the flip side, if we get a bearish report we could see very heavy selling take place and 7.00 corn may be in the rear-view mirror. Plan accordingly.... Beans traded both sides; lower early, rallied with the corn but then sold off again to trade slightly lower on the day. Funds have pared back their length in soybeans having sold 39,000 contracts last week and are now long about 76,000 contracts. Old crop inverses look to hang around for quite a while yet in both corn and beans but keep in mind they will eventually disappear. USDA stocks and planted acreage report to be issued Thursday at 11 am and markets are closed Friday as will all Glacial Plains locations.
Corn saw some profit-taking today after an impressive run of over 50 cents from the recent low to yesterdays high. For the week May corn was up 9 cents but cash was up only 5 as the basis continues to weaken on huge movement in the western cornbelt. Wheat rejected early weakness to close slightly higher. Rain/snow in parts of winter wheat country is being offset by fairly good export demand and domestic demand as wheat goes into the feed ration, displacing corn. There will be plenty of very cheap, new crop SRW wheat available in a couple months that will continue to compete with corn. While we need that to happen, it also occurs at a time when U.S. corn exports continue to lag and another 50 to 100 milion bushel reduction may be necessary which will add to the carryout. Ethanol frind has picked up a bit but the projected annual grind is still suspect in my mind because I'm not sure the farmer in the north moves it soon enough to be able to rail it to the markets that need it or want it. Beans set back slightly after a two day run. Still some talk about possible old crop Chinese business out of the U.S. (and we did some last week) and yet the cash markets provide no evidence of such. USDA report next Thursday at 11 am. Markets may remain rangebound until then.
Much quieter today with not nearly as much movement here anyway. Sounds like a fair amount moved around the country though as basis continues to struggle again today. Exports this morning were 3.6 mb on corn, which is less than needed to get to the USDA export number. Bean exports were right on par with what is needed at 4.0 mb. Meal exports were off that charts however, which were over 10 times what is needed. Most experts feel we are going export meal at some point, but that is going to come with a price tag to get it to places in the country where it is needed. The meal number is probably what gave the beans a spark today, but also some evening up between the corn/bean spread. A couple beans moved today as they got back to 14.25 cash. The corn market traded 1-3 cents lower all morning, but managed to finish up a penny as beans seemed to pull them to positive territory. Remember the report is next Thursday, so take a good look at these corn prices.
I mentioned yesterday that technicals were turning friendly for the corn market. They have also turned friendly in wheat as well and with funds holding large, short positions, wheat lead the way higher today as those shorts are getting covered. Technical objectives for May corn are in the 7.39 area which is the 38% retracement level from the summer high to the winter low. Cash movement remains extremely heavy with basis levels delivered to the Texas feedlots down over a nickel from yesterday. New crop corn has rebounded about 23 cents from the recent low and we are starting to see producers selling a little new crop as well. Dec futures are at 5.67 tonight and every nickel closer 6.00 will uncover more selling. Beans were held in check much of the day but rebounded to close near the highs of the day. May beans tested the 14.00 area a couple times in the last few days and with corn and wheat moving higher it appears beans may have a bounce in them as well. Farmer selling of soybeans has been virtually non-existant over the last week since we broke the 14.50 cash area. I would like to think we can move back to that area at least one more time during the coming weeks but the trade remains heavily focused on large supplies coming out of South America. Still no answers on how we reduce crush as much as we need to. Soybean and soybean meal sales will be watched closely in the A.M.
Ethanol margins continue to improve and word has it that a couple of closed plants will re-open soon. This has funds adding to long positions but they were just recently back to even so they have plenty of buying power if they choose to do so. A general theme seems to exist that the stocks report will be friendly when issued on March 28th. Technicals have turned friendly with today's close and would suggest another 10 to 20 cents of potential upside. Please keep in mind that we have been in this position a few times now only to see the market sell off quickly before overhead objectives are met. Farmer selling remains very active in MN, SD, and ND in particular and basis remains defensive for traditional rail markets. Soybeans were very choppy on the day trading 5-6 higher overnight, near 7 lower early morning, 9 higher around 10:00 and then closed weak, down 3. China possibly cancelling some Brazil bean purchases that were supposed to arrive in January or February. Initial thoughts that some of that may be replaced with U.S. bushels was likely behind the initial rally today but that seems unlikely. Chinese demand is not going to decrease and this news is not bearish but the market reacted like it was. Weather may be a small factor with a normal to late spring poitning to the possibility of more soybeans.
Cyprus puts a plan in place that could take a levy on large bank deposits. The market fears that the same thing could take plave in our country at some point, but our money markets didn't seem to fear it much as we put our lows in early this morning and managed to battle back all day to finish only slightly lower. Either way it seems to have spec money nervous and had the longs in soybeans taking cover. Beans are right back at their lows from last month getting close to the 14.00 futures market once again. The corn market managed to battle higher towards the close and finished right at the highs for the day up 3 cents. This is our highest close for the move. Basis continues to feel weak on the rail as a lot of corn moved in the country last week. If corn stays above 7.00 cash I think it continues to move, as it should. 7.10 is the next target level to get a good chunk of corn to move. That's not that far away. Get your sell orders in if you have interest.
A disappointing day for the soybean bulls today. I suppose one could go searching for a reason why beans and meal sold off today and you'll find plenty, but bottom line it looks like momentum and volume waned on the upper end of the range, producer selling picked up and the technicals pounced on the first sign of weakness and down it went. Reasons? Beans stocks are building at Chinese ports (interesting rumor in that China only imported 2.9 mmt from the U.S. in Feb in China (polluting rivers?), hog margins have turned negative in China (they still have to eat don't they). Brazil is harvesting a very large crop and is over 50% harvested (what a shock, we didn't know they were harvesting?). Brazil Govt. may be eliminating a tax credit for soybean oil (a credible reason for weakness if true). US exports of both soybeans and meal have comr to a screaching hault (didn't we expect that and don't we need that to happen?)...... For every ying in the bean market there is a yang. Regardless, technicals are close to turning bearish on beans so we need a positive close tomorrow or things could get even uglier. Corn traded down over 12 cents with the weakness in the bean complex but strength in wheat based on strong export and domestic demand allowed corn to rebound late. Basis levels are weak as wheat is replacing corn in feedlots.
Corn managed to close above recent resistance but just barely. Another day or two of the market hanging around these levels should promote a little more upside. The keyword is little. Hard to judge it exactly but there are layers of resistance above the market and farmer selling has picked up substantially, especially in the NW corn belt. Sounds like things are still fairly quiet in the central and eastern corn belts where 7.00 corn has been trading for a while now. Resistance areas lie in the 6 to 15 cent range above todays close. Continue to scale up as we move old crop corn over 7 bucks. You can hold some back for the stocks report on March 28th but if we get a bearish number, be prepared for old crop corn to grind lower into spring and early summer and then pray for a major weather problem to develop somewhere else. Beans seem to be struggling to hold the upper end of the recently traded range but todays weakness maybe was due to corn-bean spread unwinding more than anything else. Still, export values at the PNW have dropped about 35 to 40 cents in recent days and the old crop export program for beans finally seems to be over. The good news is that the processor is right there to pick up the slack so posted basis to the farmer hasn't changed much.
Well, we had a report this morning and it ended up being pretty ho hum as the USDA seemed to take the month off! They left corn and bean carryout unchanged. Corn had a few minor changes in the balance sheet with imports up 25 mb, feed/residual up 100 mb, and exports down another 75 mb, so net no change to the carryout. Beans were completely the same as they changed NOTHING. How did they change nothing? Well.......thats a good question. Export demand and crush demand have been huge all along, and when are we going to make up for that? Well, in my opinion we are not going to. So is there more beans in the country that the USDA told us was not there before? Maybe...... We are like 9% ahead of last years crush and if we are going to be at the crush that USDA says we need to finish the year under last year by 5%. That doesn't seem likely to me. And thats not to mention that exports are also way ahead of what we need to be at the USDA number. It seems like the USDA drew a line in the sand and said we not putting carryout under 125 mb. The farmer is still pretty tight on what is left in the bins. Corn had a nice close today up 12 cents. Beans closed well also considering the initial shock of the report had them down 23 cents. Lets see what happens next week. Have your sell orders in if you have a price in mind.
Not much of a rebound in the corn today and actually traded much of the day lower, as much as 7 cents, before rebounding a bit late, mostly on the front months. New crop was 3 lower on the day. Dec futures are at 5.41 tonight and last year they bottomed out at 5.05 before the weather rally. If we hadn't had the weather problem last year futures were forecast to possibly slip under 4.50 and that could again be the case this year. Downside risk on new crop corn could be a buck a bushel today. If that's even close to a true statement, then the downside risk on old crop cash corn going into harvest is over $2.70 per bushel. I'll let that sink in for a minute..... Beans were choppy, continuing the pattern we've been in for some time now. Basis levels at the gulf and PNW for export both dropped significantly yesterday even after more old crop business was completed. It's starting to feel like there are more beans available to the market than what we had previously thought. The last 25% of the crop has NOT moved off of the farm and yet even with continuing old crop business basis levels aren't showing the strain like we thought would happen. That could mean we're up for a bearish stocks number come March 28th. I don't expect any overly friendly numbers tomorrow. The U.S. weather has an overall bearish tone to it as more moisture is being pumped farther north and west than it has in quite a while.
Wheat collapsed to new lows for the move and closed at the lows for the day. Funds continue to have their way, adding to already substantial short positions. Here's a sobering fact: May wheat in Chicago is just pennies away from the price it traded last June 15th, before the weather rally started in all commodities. May corn on the other hand is still about $1.55 higher than where it traded on June 15th. The question is this; is wheat undervalued and too cheap, or does corn have that much to lose and is currently overpriced? Here's what I know for sure: last night on our bid sheet old crop corn was $1.99 higher than new crop corn. It certainly appears that there are market participants that are looking at that large of a premium deciding that they are willing to take the risk in selling the old crop premium, especially when market pundits continue to predict 99 million acres, 164 bushel yield, larger carryout and the potential for new crop corn to slide another buck or more if weather turns out ok. A similar scenario is playing out in soybeans where old crop is a $2.44 premium to new crop. Today's action may be a warning sign. Historically, we almost never have our highs of year printed in January or February, but its becoming increasingly possible that it may be the scenario playing out this year. Moisture being forecast for NE, SD, and MN is about the only bearish fundamental thing I can find today. Stay tuned.
Higher closes. Corn traded higher most of the day but it seems like it's struggling to do so. We have talked about wheat being the anchor to the corn market and that continues. Still, the spreads in particular continue to suggest a rally in the corn market. March/May corn traded 3 1/2 cents higher again today to close at a 23 cents inverse. The cash market is against May futures and was up 6 on the day. Beans had very supportive news this morning with 330,000 mt of old crop beans sold to Unknown and another 345,000 mt new crop beans sold to China. Beans traded up 18 cents briefly but then spent the rest of the day working back to unchanged before a little buying showed up in the last minutes. I'm not sure if that was profit-taking or what. It may have been after yesterdays 21 cent gain but 330,000 mt of old crop sales is just way too large and yesterdays shipment pace of over 40 million also remains too large. Once again the trade is really struggling with how to trade the fact that the U.S. could literally run out of beans until September while world supplies are adequate with the harvest in Brazil and Argentina. USDA report Friday morning should show another increase in exports but USDA may choose to take it out of residual use instead of reducing carryout.
For the wheat enthusiasts out there it's interesting to point out that the spread between Mpls March wheat and Mpls May wheat contract in the last 5 days or so has gone froma 14 cent carry to the May contract to a 15 cent inverse and traded at a 20 cent inverse for a while today. Meanwhile, managed money continues to rule the wheat trade as they are extremely large shorts in Chicago wheat and continue to make the position work for them by selling into the black hole. corn tried to maintain a small gain but eventually it broke down and traded down as much as 12 cents before mounting a ocmeback of sorts to close down 5 to 8 cents. Corn basis and spreads continue to suggest a board rally but strength this morning was met with selling as wheat sold off hard. I still look for corn to move a little higher but maybe the rubberband in wheat needs to break as the shorts are likely stretched about as far as they dare and a short-cvoering rally there will certainly benefit corn. Beans sold off as corn did mid-morning but managed a strong reversal on the day with cash closing up over 18 cents. The bulls and bears continue to dual in the beans; caught between extremely tight old crop supplies and more than adequate new crop supplies as harvest continues in Brazil. The bulls won the round today. Stay tuned.
Old crop beans lower, old crop corn higher. Old crop to new crop bean spreads were weaker, old crop to new crop corn spreads were firmer. Corn appears to be trying to get some cash corn to move off the farm as basis and spreads have done a lot of work lately although basis seemed a bit defensive starting yesterday. We're hearing that the feedlots are starting to book 4 to 6 months of HRW wheat and replacing corn in the ration. Wheat has lost ground to corn for over a month and with the precip in winter wheat country it looks like it's losening up some bushels. The spread between May corn and July corn continues to invert which should push more corn into the pipeline earlier which may have a negative impact on basis going forward, especialy if the board continues to rally from here. (technicals are gaining upward momentum also). 7 bucks for cash corn seems to be moving corn for locations south of hear with a better basis. Meanwhile, the old crop bean sales are evidently old news as traders sold the rally yesterday and that selling continued today as beans were odwn over 18 cents for a while before coming back some. For the weak, cash beans are virtually unchanged with new crop down 4. I still think the direction of old crop beans could be dictated by how fast producers move the last 25 to 30 percent off the farm. If they wait until after planting we may see a decent reaction in the market. Problem is we've had a tendency to firm basis and spreads and not necessarily futures. The fact that the large funds are still long over 100,000 contracts isn't helping. Stay tuned.
Zero deliveries for corn, beans, or meal as expected. Old crop corn sales were just at what's needed at 302,600 mt so we need to maintain that pace to keep USDA from revising the export forecast lower once again. Beans sales were better than expected with 689,000 mt. We only needed 95,000 mt coming into this morning so we just used up 7 weeks worth of demand and and now we only need to average about 54,000 mt per week. Meal sales are even more interesting as we sold another 250,000 mt of meal and coming into today we only needed about 20,000 per week. We traded it as bullish and well we should but even though beans finished 13 higher on the day and were over 14 cents off their highs. Cancellations from here on out are extremely unlikely as this is all spot business and there is no deffered business on the books to cancel. I look at todays bean trade as disappointing. Managed money continues to be satisfied with knowing world supplies are adequate and thus continue to sell the rallies in beans quite aggressively. At this pace of usage, however, the market is going to need the last 25-30% of beans that are still on the farm sooner rather than later. If we don't see them move until after we get done planting then maybe beans do get explosive at some point. Good close on corn but still not much moving. I think we get our chance at 7 bucks for cash in the the next weeks or so. Stay tuned.
Wheat started on firm footing today, trading up a dime at one point but couldn't sustain that move higher. Corn traded 3 to 4 higher early, then 2 lower and finished unchanged. The firm cash markets and thoughts of zero deliveries against the March firmed the old crop spread again today which supported the May contract as well. Beans traded 17 higher briefly after an announced sale of 120,000 old crop beans to unknown and 120,000 new crop beans to China but the 9:30 crowd turned out to be sellers and the nearby traded down a couple cents. A slow rally ensued with nearby beans finishing up 7-10 cents. Zero deliveries are expected in beans and meal. I'm hearing from floor sources that the Chicago crowd have turned decidedly bearish on all commodities and it doesn't matter if it old or new crop. We've talked about how they are looking at increasing S.A. supplies and the potential for big crops in the U.S. this year and they have been more inclined to trade new crop bearishness than old crop bullishness. A confirmation of zero deliveries tomorrow may be the ignition we need for a small rally. We are seeing an increase from producers in selling cash corn around 7.00 which we completely agree with.
We're finally seeing a little bit of strength in the corn board with old crop basis and spreads paving the way for a rally. Basis levels aren't exactly screaming higher, more like the turtle vs the hare, just slowly improving, but we've also seen the March/May corn spread firm 8 cents in the last two weeks, closing at an inverse of 10 1/2 cents today. We still have no hint of any export business to speak of off the PNW with South Korea buying July corn from Argentina overnight. We had hoped for some business to come back to the U.S. because of logistical issues in Brazil but so far that hasn't materialized. Without it, it's very likely that USDA will continue to lower the export projections in future reports and increase carryout. Weather has improved somewhat for the western cornbelt, esp KS and OK. One of the last potentially friendly wild-cards still to play out will be the March 31st USDA report giving us corn stocks as of March 1st. Will that continue to show higher than expected corn usage for feed or will it be a repeat of last year when USDA said our animals went on a diet and ate less? We also need to be aware that wheat has lost substantial ground to corn that last month or more and is likely going into more feed rations. Bottom line: I think we need to be more aggressive selling corn if we get back above 7 bucks. Let's hope we get the chance. Beans are looking for a reason to stay supported.
Corn held its own today lead by strength in the old crop months. It was a positive performance in light of beans trading down 15-20 cents much of the day before rebounding late to only close down 9. Wheat was the real dog today as the second rain / snow event for parts of the HRW wheat belt in less than a week had traders selling wheat aggresively into the final bell. The short position in Chicago wheat continues to build as traders ignore good demand as of late. Certainly the weather pattern appears to be changing but Chicago wheat at less than a 6 cent premium to nearby corn seems to be getting a bit cheap. Rumors of IMPORTS of beans from Paraguay into the U.S. apparently were going around on Friday and was part of the massive sell-off in soybeans. Technicals were certainly at play as well. Beans managed to bounce off the lows today but still closed lower. The time is running out for Brazil loading delays to have a large impact on old crop sales out of the U.S. and any confirmation of actual imports of either soybeans or meal could be very bearish. With weather seemingly changing producers need to take a long look at what unpriced corn and soybeans they are willing to hold going into spring. Todays prices may look pretty good in a couple months. Use rallies in the next couple weeks to make some sales and whittle down old crop positions.
May soybeans traded a 55 cent range today. The high was made overnight around 2 in the morning, up 27 cents. The low was made in the final minutes of trade. This was the 3rd time that very little time was spent trading above it only to have a major technical reversal occur. The last two times we've done this we saw at least two more days of heavy selling take place so we'll see if history repeats itself. For the week, cash beans still closed up 33 cents, new crop beans were up 4, cash corn was down 11 and new crop corn was also down 11. I'm still thinking we see a decent rally in old crop corn in the next few weeks as the market needs another round of decent movement of corn from the farm. Old crop beans is anyone's guess. We could see the trade unwinde recent spreads by buying corn and selling beans which would keep pressure on the nearby beans. Nobody really knows what's going on with China as in the past two weeks we've seen cancellations totalling 1.2 mmt but then they're buying new crop beans and in 3 seperate purchases this week they bought about 240,000 mt of old crop U.S. beans but rumors of more. Meanwhile, weather is Argentina is nearly back to normal and Brazil is harvesting a huge crop.
Corn and wheat continue to see big selling with both liquidation and the addition of new shorts in the market. Traders seemingly have given up on any old crop story and are focusing on big acres and yield potential of the new crop. Rain and snow in the western cornbelt and perhaps the beginning of a shift in the weather pattern to allow more systems into the same areas has added to the bearish tone. The same bearish attitude prevails in the new crop beans. Only the cash bean market is firm as traders continue to but the calender spreads as a way to play the tightness of the old crop bean carryover. There was some definite old crop bean business done off the PNW but the problem is most of the inventories in commercial hands have already been sold and fresh movement off the farm is non-existant so the cash beans are trying to entice fresh origination. We may have another 30 days of this to play out; at least until Brazil gets into the meat of their harvest and lines form at the export elevators. USDA is using 96.5 mil planted acres for corn and projecting a 14.53 bil bushel crop. Total use LAST year was 12.527 bil bushel. Current year demand is projected at 11.237 bil bushel. Even if demand rebounds to last year levels carryout could be well over 2 billion bushel with average farm price of 4.80.
Beans made the high today shortly before 8 a.m. It appeared the trade was looking for some additional old crop bean business to be reported at 8 and when that didn't happen we saw some profit-taking set in. By 10 a.m., beans were nearly back to unchanged before they found a bid again and the rest of day beans drifted in a range from up 10 to 16 cents, closing up 11. The trade is now more worried than ever about how Brazil handles the world demand logistically and fearing additional business comes back to the U.S. when stocks are already razor thin. Farmers have sold beans the last two days on the rally and major overhead resistance is now about 15 to 20 cents away. If farmer selling increases then resistance likely holds for a while longer. Corn and wheat traded lower much of the day but firming basis and spreads forced a bid to appear. It may take a couple more weeks but I expect a 20 to 30 cent rally in corn to get to a price where the farmer is a seller once again. Right now that probably takes 7.00 cash locally.
I haven't seen a day like today in a very long time where there was such a divergence between oilseeds and feed grains. Cash beans up 46 cents and yet corn was down 4 to 6 cents and wheat was down 8 to 10 cents. Weekend rains in Argentina were deemed disappointing with a forecast for good amounts and coverage for this coming weekend. Southern Brazil is faring better as the system moves north. There was also an announcement of 100,000 mt of old crop beans sold to China this morning and export shipments for last week rebounded back over 40 million bushel from 30 last week. I would think todays reaction was appropriate if not for the fact we had negative old crop bean exports announced last Thursday and another 250,000 mt of beans cancelled on Friday morning. It seems a bit overdone but traders are also starting to doubt if Brazil can logistically handle world demand the next 6 months. As far as corn goes, I doubt that the corn fields in Argentina recieved rains but the bean fields got missed. Instead, traders are focusing so intently on huge planted acres and the promise of big yields giving us a huge surplus of corn next year. We'll see about that. Meanwhile, wheat was very weak, ignoring good recent demand, good shipments last week and instead traders focused on the first meaningful precip for KS and NE in the form of snow the next couple days. Really, it's that bearish??
Very quiet day today as the markets try and rebound from what seems like over sold conditions. Traders likely square up positions for the long weekend. We had an announcement this morning that 250,000 mt of old crop soybeans that got CANCELED by unknown, most likely China. When that new hit the wire beans went from up 9 to unchanged, but then tried to battle back the rest of the day. This ended the longest down streak in corn of 10 consecutive days since 1965. Lets see what happens next week as volume and news are both light today. Reminder: There are no grain markets on Monday, so GPC will not be purchasing grain till Tuesday morning. We will take sell orders if need and put them in for Monday night grain trade. Have a good weekend.
Showers continue to hit Argentina and the overall dry areas appear to be shrinking. Rainfall the next 1-5 days is expected over much of the growing areas and will be watched closely to see if amounts and coverage verify. We have likely priced it in already so if the system disappoints then it may allow corn to bouce a bit. Corn export sales were better than a week ago but still less than needed to meet USDA projections. Beans sold off at 7:30 this morning. Expectations ran high for very strong export sales. Not sure why as there have been no sales announced and we know the world is transitioning to S.A. for its needs. Old crop sales were a negative 109,000 mt as small purchases were offset by cancellations by China. By all accounts, inventories are running lower than normal in China and crush margins are good so this was a surprise. Brazil bean basis has firmed a dime or more in the last week and logistical issues could still send more business back to the U.S. I would expect a bounce tomorrow on short-covering ahead of the long weekend. Markets are closed on Monday and GPC will not be buying grain on Monday.
Corn has now been down 9 days in a row, the longest such streak since 2009. Yesterday I said beans had seen liquidation for 3 days in a row and it was actually 5. We saw a small bounce today but only after beans had traded down nearly 17 overnight. Corn tried to rally after trading down about 9 cents overnight with the nearby March contract trading a nickel higher briefly but another round of selling took it back down. Informa is evidently using a working carryout of 517 mil bushel and they suggest that old crop futures and spreads will need to rally from here to continue the rationing job. Interesting to note the average nearby futures price they suggest for the next 12 months. JFM at 7.35. AMJ at 7.80. JAS at 5.95 and OND at 4.10. They are suggesting higher prices for the 2nd quarter which would typically correlate to a normal spring-time high but look how low their new crop levels are. Keep in mind this would suggest cash prices around 3.60 per bushel this fall. The last 10 days has the trade centered on new crop supplies becoming available in S.A. along with huge crop production potential in the U.S. this year due to big acres. It remains to be seen if they continue with this general theme and for how long as their actions will dictate the ability of the old crop months to rally.
Day 3 of liquidation in the soybeans. Day 8 in the corn. Most of the weakness today was caused from traders unwinding the calandar spreads on both corn and beans; selling the front contract months and buying the back months. They are taking profits on their bull-spread positions. Some weakness also came from the wheat pit as traders saw some rain on the radar in parts of TX and OK. We often mention the herd mentality when it comes to grain trading and its painfally obvious that the herd has temporailyswung from bullish to bearish. A large protion of the bearishness is predicted on new crop supplies becoming available in S.A. as well as predictions for record acres and production in the U.S. this year. Recall that last year our market declined from the Jan report right into late June before the weather rally took hold. In that time Dec 2012 traded close to 5.00 and Nov 2012 beans slipped under 13 bucks. Today, Dec corn is at 5.63 while Nov beans are already under 13.00 at 12.76. Support in the old crop month because of extremely tight old crop carryout in both corn and beans should help the new crops from completely falling out of bed here but be aware that rallies are meant to be sold in both the old and new crop. At this point, I'm not sure what turns the herd back to being bullish other than the old crop tightness but that's obviously not helping out today.
The bean market got no help from the S.A. weather forecast today as light showers fell and more are on the way which may limit damage going forward, at least with the current forecast. Technically, beans failed to trade over 15.00 last week and without anything overly bullish from the USDA on Friday it gave the technicians a strong signal to pare long positions. In addition, we have a lot of money that continues to think the long term direction of our grain markets are down based on a large production rebound in South America and a forecast for the same in the U.S. this year. With that as their rallying cry, they are willing sellers on any strength attempts regardless of the old crop fundamentals. Ultimately that forces spreads and basis to do a lot of the work to coninue to try and pry grain from the farmers hands. An article this morning detailed how the NW corn belt (ND, SD, and MN in particular) may be the spot that will have the hardest time replenishing subsoil moisture going into spring thus increasing the needs for very timely rains throughout the growing season. We all know summer rains aren't metered out very well. The very same area holds a lot of the free supplies for corn and beans that the market is going to need in the coming months which sets the stage for a very big game of cat and mouse as we move into spring and summer.
Well, we get a neutral report that trades about a nickel range initially in both corn and beans, but then beans tank as traders unwind their spreads corn and wheat vs beans. Just the opposite as they have been trading for the past 2 weeks. Corn carryout up 30 million in the U.S. up about 30 million from the Jan USDA number. World corn up 2 million from the Jan USDA. Bean carryout down 10 million from the Jan report, which was pretty close to the trade guess. World beans up .5 million. One surprising fact to me is that they did not raise bean exports, which I thought they should have with the strong export sales lately. Either way, with beans trading down 33 cents today it seems like non-sense. Weather forecasts have not changed much from yesterday. It had Argentina and S. Brazil dry through the middle of next week. The USDA dropped Argentina's bean production, but raised Brazil to offset equal amounts. Let's see what happens over the weekend with Sundays forecast, as that is always important in a weather market. I would expect beans to be able to make some type of a rebound. Beans need to hold 14.46 on the March futures. We got to within a nickel of that today. Corn managed to hang in there pretty well today all considering. Have a good weekend and be careful with the weather that's moving in tomorrow.
Corn and wheat export sales both disappointing and the sell-off in the feed grains continues. The avg trade guess for the USDA report tomorrow is for corn stocks to increase 16 mil bushel and wheat stocks 11 mil bushel. I fear larger increases; at least 50 mil bushel for both corn and wheat. Technicals are also very weak for corn as we closed at the lowest price since the last report day on January 11th and are in danger of washing out the market once again back to the December lows, which is another 32 cents from today's close. I don't see anything on the horizon that would give us a strong rally. Old crop bean sales were much larger than expected at 896,000 mt. It was good for an initial 5 cent rally, another nickel after the 9:30 crowd traded the numbers but after that we settled back most of the day and closed down a penny. Expectations for beans are to see a 6 mil decline in carryout with adjustments made to either exports, crush, or both. The current residual number in beans that the government is using is 30 million. Last year they were using just 1 mil bushel. It feels like the market has more beans available to it than the balance sheet would suggest as even with the large export number last week basis was defensive and is off 20 cents or better from the highs. That could mean that any increases in demand may be offset by a lower residual number, thus leaving carryout unchanged. Stay tuned......
Corn continued the sell-off today after failing to take out resistance to the upside. The solid close below 7.28 on the March contract projects a move to recent support of 7.14. December lead the way lower today trading down 11 cents. Re,member that we are pricing the avg of Dec futures during the month of Feb for revenue insurance purposes so it would be nice to keep Dec futures closer to 6 bucks but the trde continues to look at the possibility of increasing old crop supplies along with 99 million acres of new crop. We will absolutely need to buy back demand under that scenario and that means getting cheaper than expected for a longer time than expected. Even then, I worry if we can take business back away from Ukraine, Brazil and Argentina if the grow decent corn crops again this year. In my book even a national yield of around 157 bpa could leave us a carryout of 2.2 billion bushel and cash corn slipping under 4 bucks. Hope not. Beans reversed lower after having the highest closing price of the move yesterday. Basis values remain defensive in the U.S. and china goes on their New Year h oliday starting Monday so things could be quiet for a while, just waiting for Brazilian harvest to expand and see the boats start getting loaded. I think the claims of the boat lineup being bullish are exxagerated. It may take a few more weeks of dryness and proof of actual yield loss to move march futures thru resistance above 15 bucks.
Corn and wheat performed poorly today, following thru on yesterdays weakness. March corn failed at resistance over 7.41 and today flirted with closing under support at 7.28 but got above it in the final minutes of trade. Corn and wheat stocks are expected to grow in Friday's USDA report while soybean carryout is expected to decline by about 6 million bushel. Recent trade action showing traders willing to buy beans and sell corn and wheat. Weather in S.A. showed few changes from yesterday. Dry for another few days before two rain systems make their way into Argentina and Southern Brazil. One longer-term forecast put better odds on a wetter last half February which would still be very timely. Yield losses at this point are still minimal. It seems that traders are putting a lot of their bullish spin on the bean market due to large lineup of vessels waiting to load beans and meal and that may in turn force additional business to the U.S. Export values in Brazil arrived early, that is NOT because of harvest delays. The 15.00 area on March beans was very stiff resistance in December. If you recall, after failing to trade above it, beans lost a buck in just three days. The forecast today doesn't indicate to me that we need to trade substantially over 15 bucks. Stay tuned.
Corn and wheat traded mildly higher overnight into this morning but when export inspections came out for last week it was just another grim reminder of how poor they are running and down we went. The previous week corn inspections were 21 mil bu giving traders some optimism that maybe we were turning the corner on sales but flash forward one week and we were barely over 5 million bushel. There are still analysts thinking that Brazil could run into tough enough logistical problems to move some of the optional origin sales to the U.S. to procur but it's looking more and more likely that we NEED that type of thing to happen just to meet the latest USDA projection, otherwise I've seen export estimates as low as 750 to 825 million bushel vs USDA at 950 million. The window for wheat is closing even faster and although Egypt bought one cargo of U.S. wheat over the weekend the trade was disappointed in the amount. Beans hung onto decent fains on the day but were a dime off the highs. The Argentine Ag Minister rated their corn crop at 83% good to excellent, down 4 points from the previous week and beans at 88% good to excellent, down 3 points. I don't see a huge yield decline on the way based on these crop ratings and the trade may be reluctant to trade much higher than today's levels ahead of Friday's USDA report. Most traders are looking for a slight increase in the corn carryout and a slight decrease in soybeans.
Firm early trade in corn and wheat gave way to light producer selling and profit-taking as the day wore on with corn down 4 to 5 cents for cash and wheat down 13-15 cents. I haven't seen what the reason for the sell-off in wheat was about but I'm pretty sure the major factor in wheat is that India has come out of left field to be a major player in the export market, just in the last 30 days. They were not in any world balance sheets as an exporter and not there is talk they could export up to 6 mmt. That's a huge amount of wheat that would have had a major impact if it had to be sourced from the U.S. Instead, Chicago wheat has dropped another 40 cents in relation to nearby corn in just the last 5 weeks. Ultimately, it could be another bearish factor for old crop corn prices as wheat finds itself into feed rations instead of corn. Heck, if it gets too much cheaper the ethanol plants might start sourcing it as well. Beans closed on the positive side but well off early morning highs (up 18 cents at the high). Mid-day updates added a bit more rain into Argentina but then there still remains another 6-8 days before the next rainfall is forecast. Sunday night could be volatile trade either way. We continue to suggest the use of sell-orders if you have a price in mind.
Very slow trade today with low volumes. Some profit taking set in after the run yesterday as farmer movement was substantial across the country. Also, more rainfall than expected fell in growing areas of Argentina overnight and the high pressure rigde forecast to form is slow in doing so which may allow more rainfall than expected in the next 10 day window. Corn was lower much of the day but a late round of buying got the nearby contracts into positive territory. Trade seemed technical in nature as old resistance held today as support which attracted a little buying as the day wore on. Beans also had a late round of buying after spending much of the day trading 10-16 lower but still closed down 8 cents on the day. We're still thinking that sales need to be made into this rally. If you have a price in mind call us with your sell-orders as the market remains skittish and volatile and can turn quickly on weather forecasts.
Corn and soybeans shot higher at 4:30 this morning. Between 7 and 9:30 they consolidated gains but the 9:30 crowd were buyers with corn moving slowly higher into the close while beans pretty much made their highs by 10 and traded a very narrow range the rest of the day. Weather in Argentina wasn't much different than yesterday but once we got above last weeks highs on corn and beans the market was able to attract additional technical buying. Once again we're going to hear that technicals have turned and this or that is the next objective on the chart. Be reminded that we are trading a weather market here and we can turn lower at any minute. In the case of corn, one can argue that we still haven't traded last Friday's cattle on feed report to any extent (bullish cattle, bearish corn) and ethanol grind last weeks was trimmed once again to the lowest level in years as more plants close the doors. We will soon be talking about old crop corn carryout moving higher. Meanwhile on the new crop, Dec futures at 6.00 looks formidable today. Beans are watching weather closely but also seeing the boat line-up in Brazil continue to build almost daily. Even though S.A. production will still be very large the trade worries more every day about whether they will be able to meet the demand or will some buyers turn to the U.S. to fill in. That is demand that we can ill-afford with our tight carryout.
Corn traded a very narrow range since 5 pm last night. Beans were a bit more volatile trading a 17 cent range. Weather updates are still a bit mixed with the amount of rain to fall in the event later this week but most seem to agree another 6 days or more goes by after this front without much rain so coverage and amounts this week will be closely watched. We continue to trade within the established ranges and weather the next couple weeks will dictate which way we break out of the ranges. We are seeing a pick up in movement for both old crop corn and beans. It remains dry in the west. I read one new wire today that mentioned they've seen 5 forecasts for the growing season so far. Two called for drought similar to last year, one for half a drought (covering the western corn belt) and two called for normal weather. Without the soil getting recharged in the western corn belt will normal weather be good enough?
The 9:30 crowd were buyers of corn today, but they waited until updated weather forecasts after 11 am to continue to buy and make new highs for the day into the close. March corn has traded a range of 7.15 to 7.35 for the past two weeks. A close over 7.35 would be technically friendly. Cattle on feed numbers released Friday were bearish corn, friendly cattle. Exports remain sluggish and it seems we're hearing about more slow down of ethanol plants around the country. If that continues to happen traders will ultimatley start moving carryout ideas higher and along with record planting intentions this spring prices would likely work lower with time barring a major weather issue once again. We still need to get the Argentina corn and Brazil corn crops produced without yield loss as well and the next two weeks will be very critical in determining that. As far as soybeans go, it appears the trade may be thinking that production in Argentina could slip further but that Brazil production is making up much of that so far with at least one analysts raising Brazil production ideas again last week. The world is also waiting to see it there are any problems getting new crop beans to port and loaded out in a timely manner. If not that may mean another round of old crop beans purchases from the U.S.
A mixed bag today. Overall, showers in Argentina were disappointing the lasdt 24 hours but when the GFS weather model added precip in the Feb 2-5 timeframe in the mid-morning update, we saw beans lose 15 cents and corn about 9 cents rather quickly. Beans managed to recover lead by the front months while corn never did recover, closing down 1-4 cents. Export sales were good for wheat, old crop beans, meal and oil and disappointing on the corn and that's how we traded things today. We've had a pattern the last 2 weeks of trading S.a. weathe friendly on Sunday night into Monday but have found selling at the top end of the ld or newly established ranges. this type of action is likely to continue unless we can start putting a dent in the Brazilian bean production or we see additional corn and wheat export demand show up, esp corn. Meanwhile, hearing ethanol margins, especially some of the deferred spring and summer months improved dramatically this week. They can buy corn futures and sell ethanol futures but they still need to buy the cash corn and with the cash markets flat to inverted across the country that's a tough buy.
Generally, a decent close today. Corn was down a nickel overnight and much of the morning. Once the weekly ethanol number came out it seemed to calm the market and start a recovery. Plenty of traders were expecting another plunge in ethanol production but we saw a 1% increase for the week. I don't see anything new in the cash markets to reflect the strength in the nearby corn spreads. March/May firmed 2 cents to close at even money and March/July was up nearly 6 cents to close at 9.5 cents inverse. If you still have March hedges in place we may have just seen our last opportunity to roll to the May at a carry. Export sales come out in the morning for last week. Once again traders will likely be holding their breath waiting for the results. A 2nd week in a row of a solid number would go a long was towards providing additional support underneath the market. Beans traded nearly 20 cents lower a couple different times. Technical selling after a rejection of new highs for the move combined with a slight increase in moisture chances for Argentina were the excuses. Still, beans managed a dime rally in the final half-hour of trade and closed down just 2 cents. We've defined our range again for a while but until proven wrong it appears we should be selling into strength on both corn and beans. New crop levels need to be watched as well, particularly in corn.
Most of the wires yesterday talked about the friendly technicals in soybeans after the close above 14.50. Beans traded both sides overnight, firmed after 9:30, but when the buying dried up it didn't take long for the sellers to show up and they leaned on it the rest of the day. Some may argue the forecast added moisture for late next week in S.A. and we are trading weather here but I didn't see any meaningful change to the forecast. Still, most traders agree that we need to see the dry pattern stick around for another 10 days to two weeks to start chipping away at production estimates in any meaningful way. We have seen producers sell more beans in recent days than we have in a long time so that selling has hit the market as well. In corn, the highs on Monday night, early Tuesday morning matched last weeks highs but buyers backed away at those overhead resistance levels. It seems when there isn't anything else to trade we strictly trade momentum and once the upside momentum failed, traders turned it the other way. Cash corn premiums remain a bit defensive without an export program but I'm hearing ethanol crush margins have improved substantially in recent days. (gas at the pump moved from 2.88 to 3.25). That likely provides support as does the ongoing weather concerns in SA. We're likely rangebound for while longer although at higher prices than we were recently.
Corn traded mostly higher overnight but gains were trimmed by the 9:30 crowd and never fully recovered the rest of the day. Wheat saw good gains overnight but really got hit hard after 9:30 closing on the lows down 11-12 cents. Some talk about Russia not doing away with an import tax may have been negative news but others link it to plenty of worl business floating around but the U.S. is missing out on most of it. Australia, China, India, and even France are the main competitors right now with India coming out of nowhere to be just a small exporter to now talk of up to 6 mmt of export sales as they've had several good crops in a row. Beans stayed firm all overnight and day session but did close about 9 cents off the highs but still up 22 on the day. Technicals have turned friendly for soybeans as well as the forecast remains drier than normal for much of Argentina and parts of S. Brazil. A report from there this morning mentioned little if any damage has occured so far but it remains dry another 2 weeks production ideas could start to be trimmed. Current forecasts suggest rain in the extended forecasts but not wide-spread soaking rains. Traders feel corn is running out of gas on the current rally. Ethanol grind will be closely watched tomorrow as will any signs of life in the export market.
One of those days where the markets just kind of hangs around all day and does nothing. Probably has a lot to do with the long weekend. The only news out today was Informa's guess at next years crop. They came up with 99.3 mil. corn acres with a yield of 160.5. That is 2.1 mil more acres than last year. Does that seem reasonable? Yep. Maybe the yield is a little high, but that would be my only argument. With all the land coming out of CRP it is hard to believe yields can be too big on that land the first year. Bean acres they pegged at 78.8 million and a yield of 43.8. Still hearing a few ethanol plants possibly shutting down. Some due to a lack of margin, or maybe a lack of corn in areas. We need to keep an eye on that as if more shut down that corn saves on the carryout. Lets see what the weather forecast turns up over the long weekend for SA. That will be important to Tuesday's open. Have a good weekend everyone!
Not much new today besides the weekly exports and an updated forecast for SA. Corn exports were ok at 15 million bushel, which is in line with what is needed for the USDA exports. Beans on the other hand were HUGE. 59 million bushel. Not sure if you read that right......? 59,000,000 bushel. The largest export number we have had this crop year. We only needed like 8 million a week to come out to the USDA export number. This gave the bulls some more ammo, but guess what? The traders didn't seem to care today. The markets closed lower. Corn traded lower the entire session. Beans managed to climb higher about 9:30, but that didn't last long. We traded as much as 14 cents lower, but closed about 6 cents lower. Everytime it seemed like beans would catch a bid, someone was there to sell. Tomorrow if Friday, which means we will be on a three day weekend with no markets on Monday due to Martin Luther King day. The updated forecast for Brazil and Argentina has a better chance of rain for late next week. Is that why we ended up lower today? Who knows.......
By: Craig K
After 7 straight days closing cash corn higher the 9:30 crowd turned sellers and decided to take some profits. It also did not help that the ethanol production number this morning took a big decline. Oh and to top that off, there was an announcement of a couple plants in Nebraska that said they were shutting down for a while. Add all that up today and we trade corn lower. Unitl right at the close that is.........We managed to jump up about a nickel in the final 2 minutes of trade to make it 8 straight days higher. We are still waiting for exports to pick up, but still nothing. We are going to need them to pick up if we want this market to take another jump from here. For those of you with hedges in the March still, the March/May is back to even money. Keep an eye on that and be thinking about rolling at any type of a carry. Beans close to 20 most of the afternoon also peaked at the close trading up as high as 25 cents. This was on the news that the 2 week forecast for Argentina and S. Brazil is dry. The one system they have coming at them got downgraded to very small amounts of precip. You know everyone loves to trade weather! Bean basis continues to firm, as some crushers are starting to wonder where they are going to get beans from come the summer months.
By: Craig K
Corn and wheat continued higher on the day. Corn ran into heavy resistance at 7.34 March and at that level has hit initial technical objectives. A close over 7.34 could propel corn up to the 7.50 area for March futures but it feels like too much corn is moving right now to be able to go that high without exports showing back up. ADM on the last trading day for January bean futures surprised many by issuing over 250 bean receipts. That had beans lower by about 9 cents going into 5 am this morning and then inexplicably, beans rallied about 28 cents over the next hour, only to begin a slow decent lower the rest of the session, closing down 4 to 5 cents. I'm guessing a bit of back and fill after yesterdays large gains. Beans should stay relatively well supported in this price range until we see how the next two weeks plays out in Argentina and S. Brazil. The two-week forecast does not have much for rainfall being forecast and with 98% of the beans yet to fill weather could still take center stage. No sales were announced this morning. The weekly report will be out Thursday and bean sales should be very solid. Corn will be looking for any sign that export interest is picking up in the next few days and weeks.
Day two after the report had more traders interesting in covering short flat-price positions and evening up inter-market spreads, most notably buying beans, selling corn. Soybeans likely recieved a boost from another 120,000 mt of old crop beans sold to China along with a forecast for much of Argentina and Southern Brazil that's a bit on the warm/dry side. It's too early to say for sure that the pattern has changed but if it has it could definitely affect pod-fill going forward. Old crop corn and beans continue to gain on the new crop as the trade is still looking at a record U.S. corn crop and a record S.A. bean crop to more than replenish supplies at some point but old crop stocks will remain tight in the U.S. until hervest. 600 million bushel corn carryout today is a lot tighter than 425 mil bu back in 1996 because of the huge increase in ethanol demand. The fact that corn stocks were well below expectations means feeders likely did a good job of locking in corn prices on the way up last summer. Now consider that prices have moved lower from December 1st and they likely were able to add additional coverage to lock in profitablility. Also consider extremely low hay supplies, that old crop wheat is too expensive to feed an the fact new crop SRW wheat is not available for a long time; how are we rationing corn today? Still, hearing many traders feel that corn carryout continues to grow from here. We'll see.
Corn planted acreage up 300K, harvested down the same. Yield up 1.1 bpa increased production 55 mil bu. Corn stocks below the low end of the range at 8.03 so USDA had to increase feed/residual usage and did so by 300 million bushel. Ethanol grind unchanged. To keep carryout over 600 million bushel they revised exports down a whopping 200 million bushel. We now only need to avg 13 million bushel per week. Bottom line: hard to imagine exports can go down anymore. If the export pace picks up soon the market has additional rally potential. Without it we may be limited to another 20 to 30 cents. I would revise sell-orders down from 7.25 or higher down to low 7.00 range. Wheat was supportive as total winter wheat acreage was a bit less than expected and wheat feeding was increased 35 million. With little evidence that we've fed much wheat yet, a lot of it will fall on the new crop SRW to be fed which means mostly corn gets fed the next quarter which may give us a friendly March stocks report on corn as well. Beans: Harvested acres UP 400k. Yield up .3 bpa increased production 44 mil bu. Because of the higher corn usage, crush had to go up and they raised that 35 million. Exports unchanged. The trade will closely monitor old crop exports and crush. Downside may be limited for a while but upside is as well especially with good weather in S.A.
Bean export sales were 322,000 mt, meal 54 and oil 31. Corn was only 12.6 and wheat was 234. Beans were at the high end of the estimate. In addition, another 341,500 mt of old crop beans was announced this morning to China and unknown with another 246,000 mt of new crop. Beans traded sideways to higher from 7:30 to 9:30 with the high put in within seconds and then almost as fast the market sold off 13 cents. Anybody who had a fundamental belief that the bean market had to be supported because of the tight U.S. carryout has been wrong, including me. There is a large fraction of the trade that is still willing to sell strength in beans because of the new crop supply in S.A. Argentina just finished up planting so we still have 30 to 90 days growing weather to get thru before their entire crop is safe. Without a weather problem developing it appears that beans will continue to trade in a sideways to lower pattern going forward. The report tomorrow could change that but a case could be made for a bullish wheat and corn market and still have the bean market trade sideways to lower. We will be buying grain in the morning and the report comes out at 11. Let's see what the report has in store for us.
Beans continue to trade very narrow range with nearly the daily movement we've seen the last few days. Corn was higher all session while wheat tried to be higher early but closed lower. The spread between wheat and corn continues to narrow which will encourage more wheat feeding eventually. The action in corn could certainly be some short-covering as the index funds were not expected to be big sellers of corn like they are in wheat and soybeans. Not much else for news besides a couple more cargoes of beans trading to China off the PNW. One of our export contacts suggests we could continue to see some late Feb and even early March business before the majority of sales switch to South America. Weather in S.A. continues to be fairly good overall. There are areas of NE Brazil that is very dry but accounts for maybe 10% of total production. There has been some talk of a pattern change in Argentina going from very wet to warm/dry. A system is due in early next week and if that fails to deliver we could put some premium back into the bean market as they are just wrapping up planting. Until then we still have to get the report out of the way and anemic trade continues for now.
Not much new news today as we traded small ranges on both corn and beans overnight and it stayed that way until 9:30 when someone decided to buy corn. We traded up as much as 9 cents. At that same time however we had beans down a dime, but they eventually pulled back to around unchanged. The market seems to be stuck with many traders waiting for the report on Friday. Most feel to add a new position at this point would be risky considering the Dec. 1 stocks reports has been limit moves the last 5 years. This one again has traders nervous. Strong cash markets have pushed March/May corn spreads back to an inverse. Keep an eye on that if you have hedges hanging out there in the March. Basis does continue to firm slightly. As we continue closer to the report on Friday at 11 AM, I think we continue to trade sideways from here. Conab is going to put out their SA soybean production estimate tomorrow. I am guess the USDA will increase soybean production numbers on this report, but will also increase exports and crush to offset that some. Corn is anybodys guess, but I think there is a lot of corn in the farmers bins yet and they should lower exports as well. Both of those then adding to the ending stocks in corn.
By: Craig K
All markets rebounded and closed higher today. A corn sale of 102,000 mt to unknown was announced this morning. It's not much but we haven't seen a daily announcement for weeks and it was double the amount of last weeks export sales. U.S. corn is competitive into many world markets right now. Rumors of SPain interest in U.S. wheat and other European demand to the tune of 700,000 mt was in the market and yet for much of the session funds were selling wheat. Funds are short in Chicago and long in KC. The index funds are supposed to rebalance starting tomorrow with selling in Chicago and buying in KC expected. It's likely that much of this has already been done and any impact is in the market. No sales were announced for soybeans but bids were firmer for PNW beans last Friday and there seemed to be some depth behind it. Most markets closed in near the upper end of the trade range from 9:30 to the close which could inspire some additional buying / shortcovering tomorrow. Corn basis and spreads have firmed the last week. THe end-user needs coverage. There are some bushels moving with a small January to-arrive book on and some producers are setting basis on March hedges but the market will need more movement eventually and the farmer is NOT much of a seller at todays prices.
A quiet overnight session with corn mixed, beans and wheat firmer. Export sales came out with beans at the high end of the range, meal a bit weak, oil strong. Corn almost non-existant at 49,000 mt but nobody expected much. wheat was near the high end of the range at 400,000 mt. Markets leaked lower after 7:30 as the sales weren't enough for anyone to buy the market. Beans started the slide faster than anything else but everything accelerated to the downside when Informa came out with crop production estimates. They are raising corn production by 75 mil bu and beans by about 69 mil bu. They don't have that good of a track record anymore but the bears used the numbers to continue to pile on. I would expect some short-covering actividty next week as the HOliday trade is fianlly over and all players are back to work, including China. Some bean business has been done off the PNW the last day or two but we haven't seen any announced sales. Picking up it's China. It goes to show that business will not end her Feb 1st as most traders seem to think. With the PNW beating the transit time vs Brazil by nearly 3 weeks, we could continue to sell and load beans to China right up to mid-March even. I'm hearing crush margins are as good as they've been in China in the last 2 years so you can bet they don't want to go without beans either. Not exactly bearish. let's see if we get the bounce next week. Just a reminder, the report time changes to 11 am on this one vs the old time of 7:30 am.
A bit calmer trading environment today but corn still had about a dime range during the session, soybeans about 24 cents and wheat about 10-11 cents. Although we are to see index fund reblancing occur n ext week, I understand that the prospectus states they owe the investor the closing values during the rebalancing period. Open interest has gone down a lot the last 2-3 days in wheat and corn and today we saw additional selling hit both market right at the closing bell which reaks of index selling. It certainly appears the index funds are selling early. The good news behind that is the ability of this market to see some short-covering next week ahead of the USDA report. With out the index selling we may see more upside potential if short-covering ensues. We're certainly due for a bounce with the markets technically oversold and shorts probably not wanting to carry their positions into the report. The USDA announced another Chinese cancellation of 315,000 mt this morning which probably explains why the bean market tanked 15 cents about 4 am. the good news is the early morning lows held on two attempts during the day trade. After the 2nd test with support holding, beans bounced 15 cents into the close to finish down a nickel, not 20 cents. Maybe this is an indication that we are low enough for now as today's low also happens to match the mid-November low.
Almost unbelievable price action in light of what we saw happen in other markets. Financials and energies were much stronger on the day as were most soft commodities and metals. The only selling seen today was in the grains. We had no overnight trade due to New Years but everything was called higher at 9:30 due to the outside markets. Grains did open higher but within minutes we started to leak lower and within about 30 minutes things turned negative and selling accelerated. I haven't talked with anyone that understands where the selling came from today or why it was so aggressive. It appeared to start in the wheat which is really hard to believe as the U.S. sold over 1.0 mmt last week and we have now been over the weekly amount of sales needed to meet projections for the last 4 weeks running. Paris milling wheat was actually over 20 cents higher yet as Chicago wheat was near a dime lower but that got pulled down eventually as well. Soybeans traded up 25 cents, but closed down 17. USDA report will be issued a week from this Friday. I can't imagine any numbers that would be bearish at these prices but then again I didn't think we'd be this low right now either. I heard there was a little new crop selling in corn and beans today to protect new crop margins but nothing locally except a little cash corn.
I'm not sure what to make of today. I suppose I'd label it a supportive day which could lead to additional strength the balance of the week. After trading down over 4 cents early, corn saw some sh ort-covering and it was enough to make the highs of the day in the closing range. We have mentioned tht fact tht trend-following funds have been shorting the corn and wheat market last week. the selling in beans last week, however, was continued liquidation of open, long positions. Beans traded down nearly 20 cents at one point this morning but were trading down just 2 cents most of the afternoon until a final round of selling hit again in the final minutes to force them to close down 8. We continued to see a trend of bean oil higher and meal lower which appears to be some short-covering in the oil and liquidation of the meal. hearing Index funds need to buy meal for their funds the 2nd full week of January along with selling beans, wheat and corn but one source today indicated that much of that may have already taken place with use of options and other methods so we may not see much of an impact next week. Time will tell. The selling in beans continues to be tied to year end selling, financial cliff b.s., front-running of the index selling in the new year and so on and so on..... the fact that the U.S. carryout will be razor-thin has had little impact of late as no major threats are seen to S.a. production and traders continue to de-risk on increasing world supplies. Another 140,000 mt of U.S. beans were sold to unknown this morning but it had little or no impact at the time of the announcement. Corn basis is firming on a lack of producer selling and end-users looking to extend coverage. It still seems suspect that May thru July values are
improving as well as but I still can't link it to export business. HAPPY NEW YEARS EVERYONE...!!
Corn basis has firmed the last few days. There are signs that there may be some export business coming to the U.S. I haven't confirmed anything from the exporters themselves but if we see some sales show up next week it will be a very good sign for continued basis appreciation as ewll as a flat price rally. Corn sales last week were at the low range of expectations at 110,000 mt. Wheat sales were way above estimates of 400 to 600,000 mt at just over 1.0 mmt. That's a big number. Wheat was able to post a higher close but it felt like the shorts were defending their position pretty hard. a fair amount of tender business was floating around this week also so a recovery in wheat prices will certainly help the corn as well. Soybeans posted a higher day in pretty quiet trade. Export sales for beans were just 87,000 mt. The trade estimate was 400-600,000 mt. I have not idea why expecations were that high as there was over 900,000 mt cancelled last week but only 354,000 showed up on the actual sales report. Are they coming in the future? Were they already reported? I don't know, I just thought 87,000 was a good number. We also saw China buy 165,000 mt this morning as well as 30,000 mt to unknown. Both supportive as we keep selling beans. There was 368,000 mt of Non-China bean purchases last week. that's way more than we need on a weekly basis not including china.
More liquidation, fund redemptions, selling ahead of the index-fund rebalancing in January....whatever the reason, we were lower again today. The selling pace appeared to slow but that's little consolation. I'm hearing there are no longer any corn offers out of Brazil for January or February. If true, that should bring some export business back to the U.S. Corn values are firming up a bit but no detectable export demand yet. Also hearing exporters bought a bunch of wheat futures today but evidently not enough to offset the fund selling. Regardless that should indicate some demand. U.S. wheat was very competitive 30 cents ago... We should be able to stabilize and start a recovery process into the January crop report but I have no idea how much we bounce.
On Monday we saw a light volume recovery session with corn closing up 2 cents and beans up 9 cents. Today we had the makings of a positive day but it didn't happen. Crude oil traded higher much of the day, over 2 bucks. The U.S. dollar was low much of the day. We had a soybean sale to China and one to unknown announced at 8:00 and export inspections on soybeans were 7 million bushel higher than the average trade guess. The market opened at 9:30 and it was very briefly higher before more liquidation hit all the grain pits. Corn and wheat steadily eroded much of the day and both closed at a new low for the move. Soybeans tried to hang in there but were eventually pulled down as well. Market participants seem to be scared of any long position and the feeling appears to be one of "sell the rallies" until proven wrong. Some analysts suggest that the new year will bring fresh eyes and opinions to the market along with some strength into the January crop report. We'll see how it plays out. The U.S. is the cheapest wheat in the world right now and should pick up sizeable business soon. Corn has narrowed the gap substantially but it needs proof that exports are picking up.
Low volume, rebounding trade from the relentless fund liquidation of the last several days. Corn moved down into the middle of the gap area yesterday that was left on the chart from back on the 4th of July but after the 3rd attempt at completely filling it ( it missed it by 4 cents, the full gap was 9 1/2 cents) the selling slowed and allowed corn to close 9 cents off the lows. Overnite and today we saw corn move higher from the from the opening bell and closing near the hi ghs. ?volumes were light but it was an encouraging sign nontheless and a close back over 7 bucks is a psychological boost if nothing else. A lot of positions were closed out and in addition, new shorts have entered the market. That will tend to support our market for now but provide fuel for shortcovering if given a reason. that reason needs to be a pick up in the exports which I still believes happens with time. Time itself may be a cure as well as i doubt traders want to be short going into the Jan 11th report. Beans finished near the lows yesterday on liquidation after more Chinese cancellations. I'm hearing that these cancellations were part of "frame contracts", no basis or board established and part of the delegation signing from last winter. meanwhile, several Chinese buyers have continued to buy U.S. soybeans and carryout remains very tight. Export basis was firmer today after being a dime lower yesterday. Part of the lower basis was fear more than anything fundamental and weaker values at the gulf were partially becaue of weaker barge freight as water levels have risen significantly. There are no signs in the cash market of mass cancellations. Overall, a nice close today. Look for more rebound action but we'll likely need weather issues in S.A. to match our recent highs which means we may have to lower our target price by 25 cents or so to the 14.75 area.
Continued ewakness across the board today. An announcement of more bean cancellations didn't help the cause. We did bounce off the lows so hopefully we can hold and rebound a little from here. DK
Most days you can back into an explanation of why the markets are doing what they're doing. Not today. For a rfew years now we've had to watch the outside markets for a clue to the direction of the grain markets. when financials and crude oil are higher and the dollar lower, grains typically go up and vice versa. Lately, we've had at least 5 days in the last 3 weeks when we've had the dollar very weak and the grain markets have still traded subtantially lower. The DOW has gone from 12,500 to 13,300 and the grains have ignored it. Crude oil had traded from 84 to near 90 bucks a barrel and the grains have ignored it. The dollar has moved lower for the past 30 days, geting close to the lows from last September and the grains have ignored it. I've asked around for an explanation but I haven't found one yet. Maybe todays action is just a function of funds cleaning house prior to the Holidays. We also have month-end, quarter-end, and year-end. As much as soybean basis has already rallied it may have more work to do to encourage farmer movement. A 60 cent break certainly won't encourage sales anytime soon. Still, the next couple weeks will need to be analyzed closely. I would like to see sales made prior to the January crop report to protect ourselves somewhat. Hopefully some end of year short-covering or new year buying will occur to make our decisions easier.
Beans and corn both broke lower overnight between 2 and 3 in the morning. EVeryone seemed to be asking what caused the sell-off and we got our answer at 8 this morning when USDA announced a cancellation of a Chinese bean purchase of 200,000 mt, a cancellation of an Unknown pu rchase of 120,000 mt and a Purchase of 110,000 for a net loss of 310,000 mt. It certainly appears that something happened and (inside ?) traders took advantage of it before the news hit the wire this morning. Still, the fundamental side doesn't make sense that China would buy over 2 mmt in the last 10 days and then sell cancel some of it. There is some speculation that this was nothing more than a roll from the gulf to the PNW or just an outright attempt by China to manipulate lower prices. In fact, there was talk of them buying additional cargoes today (that obvisously no-one paid attention to). Regardless, traders were already sellers from a technical standpoint when futures failed to hold the 15.00 level and todays info just gave them more reason to sell. Technical damage could have been done today it depends how fast we can rebound. Wheat found some buying late to close in positive territory. It has been the most beat up commodity lately but rumors of business are starting to float around again. Corn traded down to support, bounced, sold off again and bounced into the close to continue to hold the 7.20 level on the close. That may be just enough technical support to get a small rally the rest of the week. It may depend on what soybeans do.....
A bit of a disappointing day. Corn initially traded higher overnite as beans quickly moved thru the 15.00 area on the Jan contract but as the night wore on corn came back to unchanged to slightly lower. The 9:30 crowd turned into sizeable sellers and down we went. We're still fighting with but holding support on the nearby march contract around the 7.20 area. Profit-taking hit the beans as corn and wheat both struggled. A late attempt to close back above 15.00 failed as just enough selling showed up to keep jan beans unchanged on the day. A close above 15.00 will likely add more technical momentum to the move but traders appear a little reluctant to chase it quite yet. Rain in Argentina, too much, again, but the trade just doesn't want to trade that story without U.S. exports showing signs of life. Let's see if turn-around tuesday gives the market some life tomorrow. Seasonals point towards higher prices into the first of the year.
We got the higher trade we were looking for today. Nearby corn really gained on the new crop today as funds were relentless sellers of the March contract all week long but after support areas held yesterday at the close they reversed course and bought some back today. I don't look for anything too special to happen in the corn market for a while unless eans make a major move higher. If corn gets back to the 7.20 to 7.30 area I'd have to let some more old cro go as I fully expect a repeast of last winter where rangebound trade will occur multiple times with the upside limited the farther we go into winter/early spring. a march forecat that puts moisture into the corn-belt prior to the planting season could be a real butt-kicker to the corn market. Beans closed firm and made a new high close for the move but failed to take out the 15.00 overhead resistance on the Jan contract. I'm guess we take it out early next week barring any bearish news on our fiscal matters. I'm not sure buy stops are above the market or not but I'm still targeting about a 30-35 cent minimum move from todays close putting cash beans around 15 bucks. Reward the market at that price, especially if you have beans in town as we were at that price as harvest began last fall and we bottomed out around 13.40. Boots on the ground in Brazil are still predicting a huge crop, maybe bigger than currently forecast.
The biggest amount of weekly soybean sales for the year ws just barely enough to k eep cash beans on the positive side going into the close. corn made a new low for the move today taking march futures down to 7.15 but it did close back above 7.19 on the day which is technically significant. We had two other lows in mid-November around 7.14 and although challenged, those lows held on the chart as well. Wheat just about closed green today but a little more late-session selling was just too much. Wheat sales were good today, just over what is needed on a weekly basis and with the 45 cent break the last few days it's even more competitively priced and I wouldn't be surprised to see a decent bounce real soon. Corn sales came in at 260,000 mt which was about as expected but still running a little light. corn seemed to be hit the hardest today with "fiscal cliff" selling as funds remain sizeable longs in corn. Eventually that seemed to weigh on the soybeans. Bean sales were 1.32 mmt, (over 48 million bushel!) and meal was 272,000 mt, oil 30,000. All sales were way more than needed on a weekly basis to meet current projections. A close over 14.81 on the Jan ct would have been better techncially. meal closed firm but funds continue to add to shorts in bean oil so bean gains were pared back somewhat. Look for higher trade tomorrow, including corn. Corn and wheat should both be at long-term support levels but I don't expect a run back to the highs anytime soon either. More rains forecast for Argentina early next week with 1 to 3 inches forecast. Obviously corn didn't trade that today. I doubt we see the progress in either corn or bean planting that the trade is expecting. Hard to evaporate flood waters in a couple days.
Soybean basis continues to improve. Export sales out tomorrow morning for last week should show another huge week for beans and meal. Futures remain stagnated but with a little more momentum should make another attempt at the 15.00 level on the Jan ct with the 15.30 area being the ultimate target for this move. If achieved, 15.00 cash beans will be a reality but a weather problem in South America could quickly escalate prices well above that. Wheat broke hard yesterday on the increase in carryout and we saw follow thru selling today, weighing on the corn as well. It seems traders are bracing themselves for antoher poor week of export sales in the morning for corn and wheat. Corn made a new low for the move today but came back and closed above yesterdays low so it looks like we're finding support here at these levels. Basis remains defensive without exports so I don't look for any major recovery in corn prices real soon. Beans really felt liket hey could have pulled away today but wheat and corn acted like a well-placed anchor. Meal made a new high for the move today but beans are 15 cents off of last Friday's high. All the calendar spreads firmed vs the nearby Jan ct which is supportive and along with the red-hot basis, it may eventually be enough to help rally the board to that 15 to 15.30 area.
USDA supply and demand report today. No production updates. All corn numbers were unchanged. Even corn exports. Maybe the USDA gets the point that U.S. exports will be back-end loaded this year as we discussed yesterday. Soybean crush was up 10 million bushel and carryout down 10. About as expected. Exports could have been increased again based on recent sales but I'm guessing that 130 mil bu is their "pipeline" number, especially this early. If production inches up on the Jan report expect exports to offset any increase. Nearby contracts in both corn and beans gained on the deferred months which should mean our recent slide in corn is over as we've reached an area of support. Corn attempted and did make a new low for the day after the crop report was issued but we rebounded off of those levels. Beans traded a 23 cent range on the day with the high trading in the minute following the report and the low printing when corn and wheat posted their lows shortly before noon. Wheat was the real dog of the day and it likely hept selling pressure on the corn and beans. Wheat exports were dropped 50 million bushel and Chicago sold off bit time, closing 27 cents lower and making a new low going all the way back to July 3rd when all commodities moved higher on the drought. Sure seems overdone as U.S. is seeing more demand.
Corn and wheat were under heavy sell pressure again today as traders fear increases in carryout that will not be made up going forward. We've talked on and off about how world demand will be forced to switch to U.S. supplies for both corn and wheat but that isn't likely to happen until the first quarter of 2013. USDA is likely to accommodate the bears and lower both corn and wheat exports tomorrow but it's also likely that they revise them higher sometime in the future. How it all plays out will be quite interesting. We are very likely at longer-term support levels for both corn and wheat but fiscall cliff and EU recession talk will keep the bulls in hibernation until exports actually start increasing. Beans had a pretty good day overall, shaking off an 18 cent decline in early trade to close higher. Still, the inverses in the market continue to erode as river conditions may prohibit the delivery process from working. Demand remains huge and yet only the basis seems to be concerned. Heavy snowfall and cold temperatures will do very little to entire the farmer to open up the on-farm bins. Look for basis on soybeans to continue to improve. Trade chatter about sunshine in Argentina. The trade seems to think flood waters can evaporate overnight. Buenos Aries forecast called for nearly an inch of rain today/tonight....
Poor export sales for corn has traders continuing to exit corn positions. It will be interesting to see what USDA does on corn exports on the S&D report next week. the current sales pace suggest exports should be lowered by at least 50 million bushel and carryout raised but a reduction in Argentina production, a later harvest overall in S.A. and the fact that all of S.A. export capacity will be used for beans thru June and even August should lead to sizeable increase in u.S. corn exports after the first of the year. In addition, many traders continue to believe that the USDA is underestimating EU feed grain demand by 6 mmt or about 235 mil bushel, which if correct, will have to be sourced from the U.S. as all other sources are empty or unavailable. Meanwhile, the low water on the river is causing spreads to weaken, even for soybeans. The market is beggi9ng for beans today and yet the futures market is building a carry. the board will have to respond to a flat price rally eventually and we are a buck off the recent lows, but farmer selling interest doesn't pick up until another 75 cents or more with some willing to hold out for 16 to 17 bucks. I have never seen a 25 cent move in basis in about a weeks time or basis just about outpace the board. The close in corn was negative today and may suggest a move back to 7.05 march futures based on technicals. Wheat and beans are likely well supported at current levels and will tend to limit additional losses. Basis remains on the defensive for corn, however, and until we see that improve futures will continue to be rangebound. We're back towards the low end of the range.
Corn Exports sucked, only one cargo or 50,000 mt sold last week. Corn closed down 6 cents. Wheat exports just ok, just below what we need to average per week. Wheat closed up 2-3 cents. Beans exports: 1.142 mmt, meal sales 463,200 mt. Unbelievably huge sales for beans and meal. With what we're seeing this week, next weeks reported sales should once again be very large. Beans closed just like you would want to see today....Initial profit-taking on the sales report after new highs were made overnight. Beans traded down 6 cents briefly as corn and wheat helped pull them lower but then slow but sure they moved back higher and we made new highs for the session into the closing bell. Any shorts in the market are on the run and along with strong demand for U.S. products, we're seeing at least some threat to South American production. RJO'Brien was on the Linder network talking about 6 to 12 million of acres in Argentina that may go unplanted. One story I read today about the wheat in Argentina called for 3.5 to 6 inches of rain in the Parana region today thru tomorrow. The current forecast in Beunes Aires is for rain today with another 1 to 2 inches tonight. The current pattern in soybeans suggest a cash price of 14.75 -14.90 is possible. I would make a sale in that price range......
We said yesterday that the way beans traded from 18 lower to a slightly higher close, and a 2nd close above the old gap area should give traders enough momentum to test the high end of the range. Overnight action saw one test of the 200 day moving average around 14.64 but much of the trade was just under that level. After a quick attempt to fake out the market at 9:30, traders turned buyers and we likely hit stops on the way. Beans closed on the highs, up 24 cents. Now we are just a nickel away from the next level of resistance around 14.84 but I think we have a test of 15.00 coming fairly soon. Basis on beans continues to firm with talk of up to 18 cargoes of beans trading to China for Jan and FH feb. (close to 40 million bushel). I'm not sure how much press it's getting but private farmer group in Argentina thinks up to 7 to 10 million acres may not get planted at all because of flooded fields. If something like this proves true then maybe beans have another buck to rally. We'll see.....Corn and wheat were reluctant followers today as export business appears scarce. Egypt bought U.S. SRW wheat over the weekend and yet we're about unchanged or lower from last Friday. If sales are happening and not reported on the daily system we'll see them tomorrow morning. Lately if sales are poor we sell off so stay tuned......
As we know all to well the market may have a general direction in mind but it's never a straight shot up or down. Beans had a great technical close yesterday closing above the old gap area above 14.50. We had tested the 200 day moving average around 14.62, actually 3 to 4 times now in the last couple days, but when we found a lack of buying up there the technical traders took hold and started selling aggresively. Today we saw beans down 18 cents at one point, testing the 20 day moving average and apparently running out of selling because beans managed to work all the way back to unchanged by the close, at least on the front months. Meal also closed well, a touch higher on the day. This should give the bulls enough momentum to again try and take out the upside of the range. Corn meanwhile was difficult to explain today as the nearby contracts have collapsed against the deferreds with March/May now trading a carry. The spread from March to July has gone from a 16 cent inverse to 4 cents. Some of this has to do with a weaker tone to basis around the country as we did see farmer movement last week. Most of it has to do with fears over the river closing. To me the fear and reaction just isn't justified as the percentage of corn exports out of the gulf is very minimal and the impact shouldn't be that great.
Corn saw 8-10 cent gains overnight but the 9:30 crowd turned sellers. Volumes remain thinner than normal with many market participants on the sidelines. Technicals seem to rule the day as we ran into resistance at 7.64 on the March contract and it immediatley backed away from those levels. Export sales were a disappointment last week and export inspections were as well. The holiday and wet weather on the PNW may have been a factor. Until we see more consistent export business the corn market will likely spend more time in our recent range. Support moves up to the 7.40 area on March corn with todays high of 7.64 as resistance. Wheat saw the first business of the year to Egypt and yet it closed lower. Wheat failed to bounce from the lows on Friday like corn and soybeans did so a lower close today surprised many. Maybe the winter wheat droubt story is old, maybe the short in Chicago is protecting his position....not sure. Soybeans saw the highs overnight around the 200 day moving average of 14.62. We tested it twice and came off of it both times rather quickly. Beans sold off when corn did but lead the way higher into the close. This is our first close over the old gap area of 14.50 1/2 and technically, opens the door for a test of the 15.00 area. Before that, we likely encounter heavy resistance around 14.80 - 14.84.
Overall a disappointing day in the market but with the recent run we were on and the fact that it was month-end, we had poor corn and wheat exports reported this week and the low water on the river creating all kinds of uncertainty in the market it wasn't near as bad as it could have been. Corn closed higher for the week as it challenged initial support and held. Beans also ran all the way down to the 14.28 area on Jan contract which was the old resistance, now new support and it held. Beans closed a dime off the lows of the day and the nearby meal contract actually traded slightly higher in the final minute. The outside markets were neutral to wupportive yesterday and today and that probably kept us from falling too far in the corn and beans as well. Evidently there was a rumor out today that China had cancelled beans from Brazil for Feb shipments. I find that incredibly hard to believe. In fact, this week we saw a February bid for PNW beans for the first time which means someone has bought beans out in that time period. If indeed some Brazil beans were cancelled for Feb it may actually be bullish, not bearish, as those beans may have been switched to the U.S. as an origin. As long as outsides don't crash next week I think we trade sideways to higher as friendly technicals are still in play, at least for now.
The December contracts for wheat and corn got hammered today as traders get out og positions ahead of 1st notice day. Traders are expecting meaningful deliveries overnight because of the low water conditions but we'll see what happens. The export market has not been a very big part of the overall demand so it appears they're overdoing the weakness in the spreads. To be able to roll to the May at a 2 or 3 cent cost isn't a bad idea. We'll have a better idea tomorrow when we find out what the delivery situation is. Export sales for corn and wheat were both below expectations and added to the negative tone even though it was a short, Holiday week. Bean sales also came in slightly below expecations while bean oil was huge (as expected because of the daily announcements from last week) but soybean meal was also HUGE, a new weekly high of 365,000 mt. Reports are Argentina bean crush is starting to run on fumes and thus world demand will need to be satisfied by U.S. supplies thru Feb/March. Ironically funds sold the front month bean contract same as corn and wheat and the just doesn't make sense. May beans were up 8 while the nearby contract was up 2. The market needs the farmer to sell beans and today's action doesn't help that.
Overnite saw mixed action with corn and beans slightly higher but turning a touch weaker into the early morning hours. After 9 am the DOW cratered, trading down 110 points, crude oil was close to 2 bucks lower and the dollar was firmer so corn traded down as much as 5 cents and beans almost 10 cents. The 9:30 crowd shoed up as buyers for the 2nd day in a row. The ironic thing about today was as the day wore on the DOW was trading 70 points higher, the dollar lower and crude only down 50 cents but corn and beans both lost momentum into the close. I don't want to read too much into today's action. We were bound to see some profit-taking on the recent run but I also like the fact that corn was able to hold the gains, even after a 49 cent run from the recent lows. Funds are doing all they can it seems to protect their record short soybean oil position. China bought another 290,000 mt of beans yesterday which could explain part of the board action yesterday. Two more heavy rain events are forecast for argentina and parts of central and southern Brazil remain on the dry side. This should force additional shorts to cover in the bean complex. Technicals have turned positive. March corn has the potential to test the 7.76 area and Jan beans have potential to test the 14.80 area on this move.
Yesterday I wasn't sure if the bulls would embrace recent strength but said the overall timing is right for continued strength. Today the 9:30 crowd showed up as buyers and that continued all day with the corn market making a bigger push after 1:30 and beans testing the 2nd level of resistance around 14.50. Soybeans did fill the gap left on the chart on November 9th at 14.50. As long as we hold these gains tonight into tomorrow, corn will likely challenge recent highs about 12 cents above the market while soybeans may test the 14.80 to 15.00 area. Funds are a record short in soybean oil, which many of those positions are now losers and could force more shortcovering. I don't want to get too excited here, however, as we have seen these markets fail at resistance, most notably back on Novemeber 9th so we still need to be a bit careful here and be willing to reward the market for the rally. Corn is 49 cents off the recent lows and beans are about 77 cents off the lows.
Corn, soybeans, and wheat all closed higher today but it almost felt like we closed lower on the day. Our highs were made early this morning and the rest of the day was spent retreating from those early highs. Also, in somewhat odd trading, even though the board closed higher, it was lead by the new crop months in both corn and soybeans, not the old crop. There was some cash corn moving today but basis levels remain well supported and there was very little soybean movement today. Overall, we'll take the gains. The charts/technicals are starting to look a little more supportive as a buy signal was issued on my corn chart last week and a buy signal was issued today on the beans. These aren't 100% accurate by any means and outside market will still have major impact the next few weeks and months as both the U.S. and Europe continue to struggle with their respective "financial cliffs". Argentina continues to get too much rain threatening both corn acres and yield. Even with the threat of added soybean acres, as mentioned above, it saw new crop beans leading the way higher today. Once again......odd. Volumes picked up today vs last Friday but it was still light compared to recent trade. I'm not sure the bulls are ready to embrace recent strength but timing seems right for continued strength.
A very short trading session today from 9:30 to noon. Volumes were only about 25% of normal at best today and market action was supportive but muted. We had the stars align to have a pretty strong performance today with the down up 170 points and the dollar down 3/4 of a point along with heavy rainfall again in a large part of Argentina which continues to delay both bean and corn plantings but with such low volumes we just didn't get enough buying to move thru some initial resistance points. Export sales were better than expected for corn, wheat and bean oil and about what was expected for soybeans and meal but both continue to run at a much higher pace than we need. Some light selling late affected the beans and meal. it will be interesting to see what the outsides do on Monday. If neutral to stronger we should be able to push corn and beans higher and challenge some resistance levels above the market.
The 9:30 crowd has been buyers the last couple of days but today they were sellers. Corn was trading up 2 and beans up 8 going into 9:30 and in about 25 minutes, beans traded 16 cents lower and corn 7. Maybe it was just a bit of profit taking after two days of higher markets. Overall, volume was extremely light today so it's hard to put too much stock into today's trade. We had announced sale of 120,000 mt of soybeans to China this morning, 20,000 mt of soybean oil to China, and another 56,000 mt of soybeans to unknown, possibly China or India. In the last 7 days, we have seen announced sales of soybean oil of nearly 170,000 mt. Based on the last USDA report, we only need to AVERAGE 5,000 mt PER WEEK to meet projections. Do the math and you come up with 34 weeks of demand was just taken out.....34 WEEKS OF DEMAND IN ONE WEEK. It's hard to understand why the market did not react to that this morning. My guess is a lot of traders were sitting on an airplane during the session. What's even more interesting? Consider that as of last week, funds are holding a RECORD SHORT POSITION in soybean oil to the tune of over 67,000 contracts. Fundamentals are starting to dictate that those positions be covered sooner than later and will help support/rally the bean market going foreward.
Corn saw some good follow-thru buying from Friday's reversal action and closed well above the old support in the Dec (7.32) settling at 7.38. Continued talk of a lack of offers out of Ukraine, Brazil, and Argentina along with backups in loading times, especially in Brazil, is steering export business back to the U.S. as we have talked about for a couple of weeks now. The trade had wanted to see the proof of business and that should start showing up in the weekly export sales totals going forward. World traders also continue to think that EU corn imports could be understated by as much as 6 mmt and if true, it's more demand than is currently penciled into our balance sheets. Wheat was a reluctant follower today. The dryness in winter wheat country is old news and the trade is a bit disappointedthat Egypt has not tendered for wheat as the U.S. is hoping that we are competitive and will get a piece of that business. Other business remains light but routine. Beans traded higher today as well but just couldn't find enough buying to break out of the low end of the range here. Last Thursdays close around 14.02 on the Jan contract provided resistance so far. A pop above there could give us another 25-30 cents relatively quickly but traders seemed reluctant today. History says we should be close to seasonal low for beans.
We trded the outside markets a little more today as the financials weakened along with crude and the dollar was steady to slightly firmer. The trade remains very concerned about additinal liquidation due to the fiscal cliff that everyone talks aobut and seemingly is willing to sell any strength in the market as evident by steady to higher night markets only to see them sell off during the day. It appeared we were low enough yesterday and that fundamentals may help to rebound the market but today that looks doubtfull again. Export sales will be announced in the morning. the trade seems to be expecting sales on everything to be on the low side so a surprise there may help us close out the week on a firm note. The DOW has lost nearly 8% in short-order and may be due for some type of correction as well. While weather in S.A. has improved we still hear there are some problem areas and plenty of land in Argentina is too wet to plant and a forecast next week calls for heavy, widespread rainfall in Southern Brazil and the wet areas of Argentina. We'll see if that plays out. Basis levels continue to firm around the country with export corn at the gulf up about a dime and beans up 13 cents since late last week. The arket feels like it's april and the s.a. crops are int he bin but it's Mid-November and the U.S. farmer is not engaging the market at these prices.
Basis firming, spreads firming, and firming futures albeit in extremely subbued action. We saw the 9:30 crowd come in selling corn again this morning althought it wasn't near as deep as what we saw yesterday and the market rebounded much earlier today than yesterday. Beans traded their highs about 2 am last night but nearly mathced those highs around 9 am this morning before retreating again with the 9:30 selling. Good close for the most part but it certainly appears that end users and specs alike are being very careful with the market right now not knowing if we will see another big wave of fund liquidation take place or not. Financials weakened throughout the day today but crude maintained nearly a one dollar gain and the U.S. dollar traded quietly on both sides. The weak financials may have kept traders from getting too aggressive on the buy side as well. Regardless, we need to get to a price in the next couple weeks that the farmer is will to sell both corn and beans. That likely takes 40 cents in corn and at least 50 cents to 75 cents in beans, probably more. Bean crush came in well over the top and estimate and we shipped 64 million bushel of beans last week. Huge demand. China bought 120,000 mt of U.S. beans today and Unknown bought 40,000 bean oil taking out 8 weeks of demand in one purchase.
Marketing 101: Firmer basis (check), usually leads to firmer boards spreads (check), usually leads to a board rally (front month closed higher, first say in the last 5). Basis has firmed as the board has crashed the last week. Farmer sellins is zero and we exported an unbelievable 64 million bushel last week. How are we going to maintain that stem hitting the export channel say nothing about the domestic demand if we don't rally the board? Market hasn't seemed to care for the last week but it is so very early in the marketing year and the full frowing season is now ahead in South America. Now that the seed is out of the bag and in the ground it is at risk so maybe we find support here and look for a reason to rally. Strong basis and firming spreads is giving us that reason today. The November bean contract expires tomorrow and that contract gaind 13 cents on the January today and the January contract gained a nickel or more on all the deferred contracts. Corn and beans were both very weak mid morning but reversed course and closed higher. Not quite a key reversal but we'll take it. Corn tested and traded below yesterdays lows, but failed to uncover enough selling to keep the downtrend going. USDA announced a corn sale to unknown for 159,000 mt. We knew U.S. is getting competitive. It's a start......
Most fundamental traders are at a loss for words today after another 40 plus cent decline in beans and 20 cent losses or more in the wheat markets. The outside markets had little bearing on the sell-off we saw in the grains today. It appears to be mostly technical in nature. Corn tested the recent low in the Dec contract around 7.32 early this morning after trading up a couple around 7:00 this morning only to plummet a dime in mere minutes. The first push down to 7.32 held but then another wave of selling took it out and down we went. This is the 2nd lowest close of the fall in corn going back to the day prior to the Sept 28th stocks report. That morning before the release of the report, Dec corn traded a low of 7.05 and today's lows was 7.125. January beans came within two cents of 14.00, closing down 46 cents at 14.05. Zero movement by the farmer will eventually put a floor under the market but we just don't know when the funds will be satisfied with their positions. To show a bean carryout of 140 million bushel on Novemeber 9th with the rest of the world out of soybeans and having adjusted demand for U.S. higher by 350 million bushel in the last 31 days should not be this bearish. Also, corn and wheat are buying demand on this break. Demand the corn market can ill-afford right now.
Report data: Corn yield up .3 bpa, imports + 25 mil bu, feed/ind usage up 17 mil bu = carryout up 28 mil bu at 647 vs avg trade guess of 635. Trade disappointed that harvested acres were not revised lower and will have to wait until the January report. Beans: yield up another 1.5 bpa. Exports + 80 ml bu, crush +20 mil bu put carryout at 140 mil bu vs avg trade guess of 133. Massife fund liquidation on the 7 mil bushel miss. Was this the last day of get me out type liquidation ?? We last traded this level on July 3rd, the day before the major weather rally erupted. The entire weather rally is gone. it's nov 9th and demand remains huge ( Non-Chinese buyers accounted for 12 mil bushel of U.S. beans last week and we still need to avg only 8.5 per week. These customers will continue to buy weekly in addition to the Chinese) Bean basis could be explosive in the coming weeks farmers are unwilling sellers at todays price and the market will need the physical beans. Wheat: U.S. carryout was up 50 mil bu on a reduction of exports. World carryout was up 1.2 mmt vs expectations for a 2 mmt drop. USDA is missing the fact that world prices are firming substantially on corn and wheat and their idea of world trade differs greatly on what we hear from the trenches. In fact, a wire report this morning had Japan buying 500,000 mt of U.S. corn at a 20 dollar per ton premium to Brazil because Brazil had fallen so far behind on shipments into Japan. Corn and wheat will have a friendly bias going forward which will support beans eventually as will the cash market for beans.
Wheat continues the upside move, especially in KC and Chicago wheat where they finally look to break outo f the mostly sideways channel that they've been trading in since last July. paris milling wheat again closed at a new ct high and it sounds like it's down to France and the U.S. that has surplus amounts of milling wheat available to the world. chicago wheat is about 51 cents from the July highs and with the breakout to the upside imminent that would be the target. Longer term that will provide support to the corn market but it sure didn't today with corn closing down 3 cents. The USDA will have to address the issue of wheat feeding at some point. last year, we fed 163 mil bu of wheat in the U.S. but at the time wheat was just a small premium to corn. Today it is $1.60 premium and way too expensive to feed and yet USDA has a whopping 315 MILLION bushel of wheating being fed vs the 163 last year. that's not going to happen and it shouldn't be too early for USDA to adress it in tomorrow's report. Bottom line, corn feeding is understated, maybe by as much as 150 mil bushel or more. If nothing else changes that would imply carryout at 469 mil bu and today's price is undervalued. Beans are still struggling. Beans sales were just what we need on a weekly basis at around 7 million bushel but there were cancellations by unknown of over 400,000 mt and that seemed to spook the trade today. Meal and bean oil sales were huge, however, way over what we need on a weekly basis. Big picture; it doesn't matter if we ship the beans or the products, we still have way too much demand right now and the market is about to find out real soon how tight the U.S. producer is willing to hold 14 dollar beans after he saw 17 bucks. Lots of numbers by USDA in the report, both U.S. and world balance sheets will be interesting to see what they come up with.
Corn and beans started out the morning session very weak as the DOW financials opened down over 200 points and crude oil quickly was down over 3 bucks. The 9:30 crowd waited a few minutes but turned out to be buyers laying in the weeds. Corn went from down 5 to up 9 in about 30 seconds. Wheat appeared to be the leader early with Chicago wheat up 17 on the day while corn settled back somewhat, closing up 3. We've talked about some of the fundamentals firming up for corn and wheat both but right now it's the wheat that has the market's attention. We are getting closer to pricing U.S. corn into the world market but the trade just doesn't want to buy into it quite yet. Still, wheat can't go up on it's own and it will continue to provide support. World corn and wheat carryouts should drop in Friday's report and I just wonder if USDA doesn't take a look at the feed/residual number on corn as there is just no way we are going to now feed over 300 million bushel of wheat in this country, not at the premium it is commanding today and has now for the last 30 days or so. Beans, especially the front month contracts suffered the most as traders still fear a substantial yield increase in Friday's report. Beans also seem to be the short leg on long corn, long wheat, short bean spreads. Fundamentals remain strong.
The grains were firmer out of the chute last night but chopped plenty before moving higher. Beans put the highs in this morning at 15.23 as we tested the high price for the week so far. The test failed. There is a gap on the chart from last Fridays close to Sunday/Monday trade from 15.26 3/4 to 15.23 3/4. A close back above the gap would likely prove friendly but even though beans traded higher today there was a late round of selling that moved them about a nickel down from where they were trading. Corn and wheat both closed firm but for the most part trade was uneventful. Paris milling wheat futures are making new highs for the move as supplies are short. Ukraine and Russian supplies are also short and now we're hearing (finally) that U.S. wheat is competitive in the world market. If we can get a bit name like Egypt to buy from U.S. soon then maybe our wheat market can break out of recent (most sideways) trend that is has been trading. Chicago wheat is nearly 75 cents off of the summer highs. WIth problems in our HRW wheat surfacing with poor conditions due to extremely dry conditions and poor germination those highs may be the target in coming weeks. That would be able to provide support to corn and maybe get cash corn back above 7.25.
Another day of heavy liquidation for soybeans. Forecasts have evened out a bit with more rain in the dryer parts of central and northern Brazil and less in the saturated parts of southern Brazil and much of Argentina. Export inspections were huge once again, pushing 59 million bushel and yet that and an extremely strong sales pace of meal and beans has done little to stem the tide of liquidation. It's still plenty early to put the South American crop in the bin but blame it on the election, fears of Europe or the stronger dollar, whatever it is has lead to additional selling. Every morning I come in and read that there "is little downside potential in soybeans" and yet here we are at the 3rd lowest closing price of the year. I have been pretty outspoken in my thoughts about the bean markets ability to rally. Goldman Sachs has a price estimate of 18.50 for the last quarter. Morgan Stanley is talking about higher prices for corn, wheat and beans. Maybe it's true that things get most bearish at the bottom and most bullish at the top but right now I'm getting an uneasy feeling about the potential for beans to rally significantly without a weather problem showing up in South America. Fundamentals all tell me something different but the funds and money flow are in control, at least for now.
The first wire report I read after the close offered this as opinion: "if the outsides were not so weak, grains would have been higher today. This was all outside money today!" They go on to say the market is almost ignoring fundamentals right now as they are focused on money flow and the outsides. Fundamentals remain friendly and yet the money trades the ranges for now. As always, it's just so amazing how we can go from the top end of the range back to the low end of the range. From yesterdays at 10 am to today at 1 pm, soybeans dropped 47 cents from high to low. Amazing.....Oh I forgot to mention that export sales for soybeans today was over 27 MILLION bushel. We only need to average about 8 million bushel weekly from here on out. This pace can't continue but today's values are doing little to ration demand. At the same time, price is low enough where the farmer in not engaged and likely won't be for another 2 months or until we see a substantial rally. I have no idea how this scenario plays out. Wheat was the strongest leg of the complex closing slightly lower on the day. Very poor conditions with a LOT of winter wheat yet to germinate and no forecast for rain have the trade getting a little more nervous as U.S. wheat is getting more competative in the world. Lack of wheat feeding s/b friendly corn eventually.
Soybeans managed a decent gain, closing above initial resistance of 15.50 on the Jan contract. If we can get a close over 15.64 it projects a run up the 16.00 area give or take which is what we're looking for. Wheat closed green today as well Winter wheat ratings are the worst they've been in 27 years with just 40% of the crop rated good/excellent. There are large parts of NE, SD and KS where emergence is a huge problem with no rain in sight. Not good. Corn traded higher all night and most of the day but ran into a buzz-saw on the front months when the index roll started. They are long the front contract and usually roll from Dec to Dec. thus we saw Dec 2012 down 4 3/4 on the day whle Dec 20-13 was up 3. A lot of traders have pre-positioned ahead of this roll so I don't expect a lot of impact after today. first notice day for Dec ecorn is still a full month away. U.S. corn prices continue to get more competitive int he world exort market with potential to see some business start showing up in Late November or December. depending on the country and the quantity it could be the one thing to get us out of our current range and move corn into the 7.40 to 7.50 range once again.
Think about this one.......What's wrong with this picture; Corn exports have been non-existant since last June. Month after month, USDA has revised the export forecast lower and many traders still think they're too high. Yet lately, the gap between Brazil and Argentina corn and U.S. corn delivered into Asia has narrowed from as wide as $55 per ton to just $15 per ton. Suddenly, there is "hope" for U.S. corn exports. Well there better be or we may still be overstating them by 200 million bushel or more. Regardless, corn rallies on the hope.....Now look at beans. We consistantly sell more than double what we need on a weekly basis, we have shipped out an average of over 60 MILLION BUSHEL PER WEEK the last three weeks, meal exports are huge as well, and yet the trade seems more concerned about USDA raising the yield by another 1/2 bpa than anything else. They look at exports and yawn. With the board 13 cents higher today the trade is convinced the 80 mmt Brazil bean crop is already in the bin. Seems a lot like the U.S. scenario last spring when the same traders had a 166 bpa corn crop in the bin. Remain patient on the beans. The longer we trade like this the more explosive the upside may be.