What Traders are Talking About:
Overnight highlights: As of 6:00 a.m. CT, corn futures are narrowly mixed, soybeans are 2 to 8 cents higher amid bull spreading and wheat futures are 1 to 5 cents lower with HRW contracts leading declines. Cattle futures are mixed with the April through December contracts slightly lower and far-deferred months mildly higher. Hog futures are firmer this morning.
* Some Plains rains, but not enough. Rains fell on areas of the Plains the past 24 hours, providing much-needed precip to the parched region. Rains were generally in the one-quarter to one-half inch range across the bulk of Texas, Oklahoma and Kansas and some of the driest areas got little more than a "dust settler" -- if that. Heavier rains were seen in central Oklahoma and far northeastern Kansas. A long-time crop-watcher emailed me late last evening saying key areas of Kansas missed much of the rain and the front had passed.
The long and short of it: The rains are a reason for traders to lighten their long exposure ahead of the weekend and USDA's reports Monday. Much of the benefit from rains through most of the key HRW production areas was offset by very heavy winds.
* China ramping up efforts to sell cotton reserves. Earlier this week China announced it was cutting its floor price on cotton reserve purchases by 4.2% in an effort to move more of the state's massive stockpiles. Now, there are reports China is going to increase the amount of cotton it requires domestic textile mills to purchase from state reserves before it will grant them import quotas. Multiple sources with knowledge of the situation told Reuters Chinese textile mills will get 1 MMT of cotton import quotas for every 4 MMT of state-owned reserves they purchase. Last year, Chinese mills got 1 MMT of cotton import quotas for every 3 MMT of state cotton they purchased.
The long and short of it: The Chinese news has increased volatility in the cotton market as traders weigh ramped-up efforts by China to sell state cotton reserves against the tight U.S. supply situation. The broadening pattern and increased volatility in cotton futures this week is a potential topping signal, but the cotton market has been very resilient thus far.
* Ukraine gets aid. Ukraine got pledges for $27 billion in aid over the next two years as key global leaders support the country in its battle with Russia. The International Monetary Fund (IMF) will provide $14 to $18 billion of the aid, with the remainder coming from the U.S., EU and others. At the same time, the West has increased restrictions/sanctions against Russia in hopes of isolating its financial system, thus reducing its ability to push forward in military efforts against Ukraine.
The long and short of it: The geo-political posturing has not impacted grain trade so far. But this is a situation grain traders will continue to watch closely as any disruptions on grain movement out of the Black Sea region could lead to more demand for U.S. grains.
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