What Traders are Talking About:
Overnight highlights: As of 6:00 a.m. CT, corn futures are trading 1 to 2 cents lower, soybeans are mostly 3 to 4 cents higher and wheat futures are fractionally to 2 cents lower. Light and likely choppy trade is expected to close out the week as this will be the final day for some ahead of Christmas. Cattle futures are expected to open mixed with an upside bias while hogs are called weaker.
* China confirms reported U.S. corn rejections. China has reject a total of 545,000 MT of U.S. corn so far due to the presence of MIR 162 (Syngenta's Agrisure Viptera), which is unapproved in the country, according to quarantine officials. That tonnage lines up with what I reported earlier this week. The issue of approval of MIR 162 and other biotech issues was raised at Joint Commission on Commerce and Trade (JCCT) talks between U.S. and Chinese officials this week. USDA Undersecretary Michael Scuse said USDA Secretary Tom Vilsack "is making every effort" to get the issue resolved as quickly as possible. Because of China's "burdensome" process for biotechnology approvals, "this is not going to be just a United States-Chinese issue."
The long and short of it: The market already knew about these rejections, so this "news" isn't highly price-negative. But more rejections are very likely and the situation continues to hang over the market like a wet blanket.
* Update on Argentine wheat situation. Argentina's ag ministry raised its 2013-14 wheat crop forecast to 9 MMT from 8.5 MMT previously. The increase was in part due to an increase in wheat acreage from month-ago. The higher crop forecast comes as Argentine exporters are awaiting the government's go-ahead to ship 1.6 MMT of 2013-2014 wheat that has already been sold, as I reported yesterday. A Pro Farmer Member from Argentina believes Argentina will have a 10 MMT wheat crop, at the least. He says, "The government will open exports once it has absolute confirmation there is this amount of wheat or more. So, in my opinion, sooner or later we will export 2 MMT to 4 MMT of wheat."
The long and short of it: According to this Pro Farmer Member, Argentina is "a mess" politically and there are riots and looting over surging inflation. Global end-users could very well be fearful of this situation and turn to other more reliable sources for their corn, soybean and wheat needs. This situation will be one to watch as it evolves.
* U.S. working to restart beef exports to China. Another topic discussed at this week's JCCT talks between U.S. and Chinese officials was the restarting of U.S. beef shipments to China, which have been restricted since 2003. Progress on that front was reportedly made, but China's Vice Agriculture Minister Niu Dun says the countries are still working on agreement on the range of products to be approved as well as safety and traceability. He's hopeful final agreement can be reached by "next July."
The long and short of it: Chinese beef demand is ramping up as its middle class rapidly expands. It behooves the U.S. to get beef exports restarted to China as quickly as possible.
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