What Traders are Talking About:
Overnight highlights: As of 6:15 a.m. CT, corn futures are trading 1 to 2 cents lower, soybeans are 2 to 3 cents lower and wheat futures are narrowly mixed. Cattle futures are firmer, while hog futures are narrowly mixed in electronic trade.
* Chinese January soybean imports down sharply from December, but up sharply from year-ago... China imported 5.91 MMT of soybeans in January, according to official customs data, which was down 20.1% from December but 23.7% more than year-ago. The vast majority of those imports were from the United States. Chinese soybean imports this month are expected to remain well above year-ago, with state-run China National Grain and Oils Information Center expecting the figure to top 5 MMT compared to 2.89 MMT in February 2013, though there will be a greater mix of Brazilian beans in this month's imports.
The long and short of it: With Brazilian beans currently $20 to $30 per ton cheaper than U.S. supplies, traders expect China to cancel some U.S. cargoes if they don't experience any shipping delays out of Brazil.
* Chinese trade data surprises, raises some questions. China's trade surplus widened more than expected to $31.86 billion last month from $25.6 billion in December. Exports at 10.6% above year-ago and imports at 10% more than last year both easily topped trade expectations. As a result, there's some skepticism over the validity of the trade data. Last year the Chinese government had to crack down on some firms after it was discovered trade numbers were being inflated. Some market participants are questioning the stronger-than-expected trade numbers due to the start of China's Lunar New Year celebration starting in late January. But the celebration didn't start until Jan. 31 this year and Chinese firms usually "stock up" ahead of the holiday down time, reducing the "weight" of that argument. If there's an impact on trade data from the celebration, it will likely be seen in the February data that will be released in early March.
The long and short of it: The questions with the validity of the Chinese trade data will have traders more closely scrutinizing upcoming trade numbers and all economic data, for that matter.
* Some relief for southern Brazil? Hot temps and dry conditions have baked southern Brazil for over a month. While that's starting to get some private crop forecasters to "lean down" on their Brazilian soybean crop estimates, yields of early harvested soybeans in Mato Grosso and Parana remain very strong, giving them pause in cutting their crop estimates too much. Forecasts call for some relief from the heat and dryness in southern Brazil Thursday and Friday as cooler temps and scattered rains move into the region. These don't appear to be "saving" rains at this point, but with late-developing soybeans flowering and filling pods, any precip now would be timely. Coverage levels from this system are likely the key.
The long and short of it: Brazil is going to grow a record soybean crop this year. Late-season weather in southern Brazil will determine how big the crop ends up being.
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