China Buys U.S. Wheat; Freeze Event In The Forecast

April 8, 2013 01:33 AM

What Traders are Talking About:

Overnight highlights: As of 6:30 a.m. CT, corn futures are mixed amid bull spreading, soybeans are mostly 9 to 16 cents higher on corrective short-covering and wheat futures are anywhere from 3 to 6 cents higher with Kansas City contracts leading gains. Based on overnight trade thus far and the overnight news, grain and soy futures should open firmer at 8:30 a.m. CT. But the key is whether price strength is sustained. Meanwhile, cattle and hog futures are expected to open the week steady to weaker amid followthrough selling after poor closes last Friday and given demand concerns. Any strength in the livestock markets will be limited to modest corrective short-covering.


* New trading hours in effect. Grain and soy complex futures started the new, reduced trading hours overnight. Electronic trading hours now run from 7 p.m. to 7:45 a.m. CT and then from 8:30 a.m. to 1:15 p.m. CT. Open-outcry hours now run from 8:30 a.m. to 1:15 p.m. CT.

The long and short of it: Traders hope the new, reduced trading hours will decrease the "lull" periods that developed during the 21-hour trading day.

* China buys wheat, weather a concern. Trade talk that China had purchased a significant amount of U.S. wheat has been confirmed as the state-run China National Grain and Oils Information Center says the country purchased 14 to 16 cargoes (nearly 1 MMT) of U.S. SRW wheat late last week. That's not only a sign of China's need, but more importantly that wheat prices dropped to "value" levels on the sharp price break. Wheat traders are also keeping a close watch on the weather as a freeze event is forecast for areas of the Central and Southern Plains this week. The areas most at risk appear to be Kansas and Oklahoma, but sub-freezing temps could dip as low as the Texas Panhandle.

The long and short of it: Wheat has fundamental support to build on the corrective rebound off the April 1 low, though the Chinese demand news is already largely "in" the market.

* China bird flu update. China now has 21 reported cases of the H7N9 bird flu, with six of those resulting in deaths. In an effort to contain the disease, China has culled thousands of birds and closed live poultry trading markets in the capitol cities of the three eastern provinces -- Shanghai, Zhejiang and Jiangsu -- where the disease has been reported. The World Health Organization says there's no cause for panic and commends China on its efforts to contain the disease.

The long and short of it: After being heavily pressured last week by concerns bird flu could cut Chinese feed demand, soybean futures are working higher this morning. While the bird flu situation remains a concern, it hasn't spread as rapidly as some traders feared it would last week.


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