What Traders are Talking About:
* La Nina coming to an end. The current La Nina event is winding down and ENSO-neutral conditions are likely by the second half of spring, according to the Australian Bureau of Meteorology. The bureau says climate models it surveys suggest the Pacific Ocean will continue to warm over the coming months. This past week, widely followed Iowa State University climatologist Elwynn Taylor said the odds of a trendline or better U.S. corn yield this year have increased. He now sees a 10% chance of a 164.2-bu.-per-acre (trendline) yield, with 60% odds that yields will reach 168 bu. per acre and a 30% chance of yields falling to 148 bu. per acre. Changing atmospheric conditions highlighted by NOAA research meteorologist Dr. Klaus Wolter are a key reason Taylor increased his yield odds. In his latest analysis, Dr. Wolter says the possibility of La Nina persisting into June has diminished to 30% from 50% previously and there's a "distinct possibility that we could see a switch to El Nino by mid- 2012." Taylor says in addition to Dr. Wolter's climate analysis, he also considered "current subsoil moisture across the Corn Belt and the history of conditions following stressful years in the region of South Carolina."
The long and short of it: The transition from La Nina to ENSO-neutral and possibly to El Nino could have a major impact on weather during the U.S. growing season. If the Pacific waters warm very quickly, it would increase the moisture flow across the middle of the country this summer. A slower transition would mean La Nina (warmer, drier) conditions would linger deeper into the growing season.
* More talk of Chinese corn demand, but no confirmation yet. Dow Jones newswire cites a source at China-based consulting agency Shanghai JC Intelligence Co. as saying Chinese feed mills have signed deals for corn imports and more are shopping for corn. This is very similar to a story Reuters ran earlier Monday, citing Asian trade sources. While there is no hard confirmation of the Chinese demand talk, strength in corn basis and the newswire reports suggest Chinese buyers have purchased some U.S. corn -- likely a small tonnage.
The long and short of it: Where there's smoke, there's usually fire. In this case, it appears the Chinese purchases are likely small, but there may be interest in additional purchases of U.S. corn from private firms. As of now, it doesn't appear state-run firms COFCO or Sinograin are seeking U.S. corn.
* Attention on the Fed. The Federal Open Market Committee meeting will conclude with a statement on monetary policy and the economy around 1:15 CT this afternoon. With the Fed very likely to maintain its stance to keep short-term interest rates low through at least late 2014, much of the attention will be on comments concerning economic growth and whether there's any mention of possible quantitative easing.