What Traders are Talking About:
Overnight highlights: As of 6:15 a.m. CT, corn futures are trading mostly 1 to 2 cents higher, soybeans are mixed amid bull spread unwinding, while wheat futures are 3 to 4 cents higher in Chicago and Kansas City and steady to fractionally higher in Minneapolis. Given a lack of market-moving news this morning, I expect similar price action to carry through to the open this morning. Cattle and hog futures are expected to open with a mostly firmer tone this morning.
* Farmers selling old-crop corn? Since May 13, July corn futures have slid around 15 cents with the "reason," according to trade sources quoted by newswires being a pickup in farmer selling. Based on these comments, farmers are letting go of some old-crop inventories now that they got much of their new-crop corn planted. Really? The vast majority of producers I've talked with who still have old-crop corn say those bushels aren't for sale at current prices. In fact, most say bin doors are locked and it would take an $8 cash price to free up their remaining old-crop inventories. Admittedly, I have talked with only a very small sampling of producers about this, but I'm confident that their attitude on this situation is relatively representative of the overall attitude.
The long and short of it: The rapid planting progress made over the past week may be a factor in old-crop corn futures softening, but that's mostly a trade "reason."
* China cancels South American soyoil. China has canceled up to 150,000 MT of South American soyoil purchases as ample supplies have driven domestic prices lower than import prices, according to state-run China National Grain and Oils Information Center (CNGOIC). The think-tank failed to give any specific details, but domestic soyoil prices are currently around 8% below import prices, plus Chinese soybean imports are expected to increase the next couple months as Brazilian supplies flow more freely from ports, suggesting crushers will have plenty of supplies to process.
The long and short of it: Market impact from this news should be limited, especially since the cancelations were for South American supplies.
* Focus on Bernanke, FOMC minutes. Fed Chairman Ben Bernanke testifies before the congressional Joint Economic Committee this morning. Focus will be on any comments concerning the Fed's plans for its aggressive bond-buying program. On Tuesday, New York Federal Reserve Bank President William Dudley and St. Louis Fed chief James Bullard down played the chances the Fed would signal a readiness to reduce its bond buying at its meeting next month. This afternoon, the Fed will release minutes from its last Federal Open Market Committee meeting, which investors hope will give them a clearer picture of the eventual exit from the aggressive quantitative easing.
The long and short of it: Investors will closely dissect Bernanke's comments the FOMC minutes as there is an increasing anticipation the Fed may begin to phase out its quantitative easing.
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