Another Night of Cold Temps; Rains on the Way

April 12, 2012 03:33 AM

What Traders are Talking About:

* Another night of cold temps, but limited damage expected. Temps again dropped below freezing in parts of the Corn Belt overnight. That will cause stress to emerged corn as leaves were singed, but with the growing point still below ground in the coldest areas, this will not be a "killing" freeze. There were multiple pictures of singed corn that made the rounds through social media outlets yesterday, so there are likely to be more pictures today. The soft red winter wheat crop also appears to have skirted major damage despite the advanced maturity as temps didn't get low enough for long enough. Warmer temps and rains are forecast to move across the country's midsection the next four to seven days and expected to produce 2-plus inch rains across much of the central Corn Belt. Rains will slow early planting efforts, but will provide a much-needed boost to soil moisture.

The long and short of it: Weather is providing something for both bulls and bears, with forecast rains price-negative and the cold temps mildly price-supportive. My guess is the rains will tame buying interest tomorrow -- ahead of the weekend.

* Corn sales strong, beans disappointing. Weekly export sales for corn came in stronger than expected at 959,100 MT for 2011-12 and 16,700 MT for 2012-13. China bought 60,000 MT of U.S. corn the week ended April 5. Soybean sales were below expectations at 460,100 MT for 2011-12 and 176,300 MT for 2012-13. Of those totals, China was the main buyer, purchasing 134,500 MT of old-crop supplies and 170,000 MT of new-crop beans. In addition, USDA announced daily soybean sales of 115,000 MT to China (55,000 MT 2011-12 and 60,000 MT 2012-13) and 189,000 MT to unknown destinations (79,000 MT 2011-12 and 110,000 MT 2012-13).

The long and short of it: Weekly sales were disappointing for soybeans, but the daily sales to China are supportive. Plus, traders assume the purchases by unknown destinations are also China. The demand side of the soybean market remains supportive.

* Chinese economy in focus. The World Bank now sees Chinese economic growth at 8.2% this year compared to its previous forecast for 8.4% growth. But the World Bank revised up its 2013 Chinese growth forecast to 8.6% from 8.4% previously. Meanwhile, the People's Bank of China reported Chinese new bank lending surged to 1.01 trillion yuan ($160.1 billion) in March -- up 49% from March 2011 and the biggest monthly gain in new lending since Jan. 2011. China's money supply last month increased more than expected to 13.4% above year-ago. Those are signs of traction in China's efforts to ease monetary policy and boost credit to support its cooling economy.

The long and short of it: Attention on the world's No. 2 economy is high as China appears to be walking a very fine line when it comes to monetary policy in regards to promoting economic growth and limiting inflation. Chinese first quarter GDP data is scheduled to be released Friday and will be a focal point of investors to close out the week.


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