Big USDA Report Day For Grains

June 28, 2013 01:07 AM

What Traders are Talking About:

Overnight highlights: As of 6:00 a.m. CT, corn futures are narrowly mixed, soybeans are fractionally to 2 cents higher and wheat futures are mixed with a modest upside bias. Light and choppy trade is very likely to continue ahead of USDA's reports later this morning. That data will set the price tone ahead of the weekend. Cattle and hog futures are expected to mildly favor the downside this morning.


* USDA reports in focus today. USDA releases its key Acreage and Quarterly Grain Stocks Reports at 11 CT this morning. Ahead of the reports, much of the focus is on planted acreage following a very trying spring planting season. But traders also know it's likely the grain stocks data, specifically corn stocks, which could provide an explosive price move. The grain stocks data has a history of producing limit moves -- up and down -- as traders have consistently missed with their pre-report guesses by around 300 million bu. dating back to June 2010.

The long and short of it: The acreage data is getting the hype, but grain stocks are likely to set the price tone as the market is nearing the key post-Fourth of July timeframe.

* July grain/soy contracts into delivery. Today marks the start of the delivery process for July grain and soy futures. As expected, there were no deliveries against July corn and soybeans, as supplies are tight. July Chicago wheat had just 2 deliveries posted, while there were 9 deliveries against July soyoil and zero deliveries against July soymeal.

The long and short of it: With no deliveries expected throughout the delivery process for July corn and soybeans, there may be a short squeeze on anyone who carried a short position into the delivery process.

* More fallout from GMO wheat situation. Japan is looking to replace U.S. western white wheat as the variety used to make confectionery flour and tempura batter for the first time in 53 years amid fallout from the discovery of GMO wheat in Oregon. Japan will allow millers to buy Australian premium white wheat, Canadian western red winter wheat and U.S. SRW and club wheat to be purchased during a special dealing period that closes on July 5, according to Toru Hisazome, a farm ministry official in charge of wheat trading. An Asian trader told Reuters, "We don’t expect the ban (on U.S. western white wheat) to last too long. They (Japan) will resume U.S. wheat imports as mills in Japan are used to handling western white wheat, it is not easy to switch."

The long and short of it: Japan is showing no signs of letting up on its ban of U.S. western white wheat. The country has dragged out trade issues before -- Starlink corn and the BSE situation.

* Slightly bigger hog herd expected. USDA will release its survey of the U.S. hog industry this afternoon, which is expected to show a hog herd slightly bigger than year-ago. The average trade guesses in a Dow Jones newswire survey puts All Hogs and Pigs at 100.6%, Kept for Breeding at 99.9% and Kept for Marketing at 100.7% of year-ago. Summer/fall farrowing intentions will also be watched closely, though farrowings have been coming in stronger than intentions.

The long and short of it: The hog market is in the process of putting in a seasonal top. This data could determine if that top comes sooner or a little later.


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