What Traders are Talking About:
* China buying U.S. wheat? Rumors China bought up to 10 cargoes of U.S. wheat circulated through the market Wednesday, which was largely the reason for strong price gains. The talk of Chinese purchases came one day after media reports that China is disgruntled with the gluten content of Canadian spring wheat shipments, giving it some legitimacy. But as one industry source told me, "I want to see actual proof of Chinese purchases before I get too excited." Another rumor making its way through the market yesterday was that Russia was also buying U.S. wheat. That would be a major development, but seems far-fetched.
The long and short of it: Confirmed demand news is needed to fuel a sustained price recovery rally in wheat futures
* Chinese bird flu concerns build. China now has nine reported cases of the H7N9 strain of bird flu, with three of those instances resulting in deaths. An Associated Press story says some scientists are concerned the virus has mutated, which would make it harder to detect and create a greater threat of an epidemic. Meanwhile, China's handling of the bird flu news is being highly monitored amid claims the country has been slow to report these situations in the past. Chinese officials are saying they will be both timely and forthcoming with news on the current situation.
The long and short of it: The bird flu "outbreak" seems to be relatively small at this point. But concerns the disease may not be as detectable as some strains in the past are raising worries that it could spread rapidly. From an agriculture standpoint, the impact on China's soybean meal demand is the key.
* Japan unveils aggressive monetary policy. The Bank of Japan announced aggressive measures to fight years of deflation, pledging to to pump around $1.4 trillion into its economy in the next two years in hopes of pushing inflation to 2%. The central bank plans to double its government bond holdings in that time. The Japanese market met the news of the aggressive monetary policy stance with a bullish reaction. Meanwhile, sharp pressure on the yen helped drive the U.S. dollar index to its highest level since late July of last year, which is pressuring grain and soy futures this morning.
The long and short of it: This is a high-risk/high-reward move for Japan as it seeks to break out of its decades-long deflationary funk. The impact on the dollar is the key for commodities.
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