What Traders are Talking About:
Overnight highlights: As of 6:00 a.m. CT, corn futures are 1 to 2 cents higher, soybeans are mostly 3 to 4 cents lower and wheat futures are 1 to 3 cents higher. Unless fresh market-moving news surfaces, it should be a relatively quiet day in the grain markets. Cattle and hog futures are called to open under light pressure this morning.
* China rejects U.S. corn shipment. China has rejected one cargo of U.S. corn because it contained traces of an unapproved GMO corn variety -- Syngenta's Agrisure Viptera (aka MR 162). Agrisure Viptera is approved for use in the U.S. and is widely grown here, but it's not on the list of approved GMO varieties for shipment to China. The country is expected to approve this variety later this year or in the year-ahead. This variety is approved by a number of other countries, including Japan, the European Union and Mexico. Trade sources feel this was an isolated incident, but China will now reportedly increase inspections of corn, along with fishmeal and wheat shipments.
The long and short of it: This should be a short-term issue, but the U.S. has had other instances like this turn into bigger issues than originally thought.
* Winter wheat conditions unexpectedly tick down. USDA's winter wheat crop ratings as of Sunday showed 63% of the crop in the "good" to "excellent" categories, while 7% of the crop was rated "poor" to "very poor." That's a 2-percentage-point decline in the top two categories and a 2-point increase in the bottom two categories. When USDA's weekly crop condition ratings are plugged into the weighted Pro Farmer Crop Condition Index (0 to 500 point scale), the HRW crop slipped 3 points to 366, while the SRW crop held steady at 380. Of the HRW states, declines in Oklahoma, Texas, Colorado and Montana outpaced slight gains in Kansas and Nebraska.
The long and short of it: While winter wheat crop ratings unexpectedly ticked down, the crop is in very good shape heading into dormancy. If there's going to be a sustained rally in wheat, it must be demand driven.
* Hog weights record high. The average slaughter weigh in Iowa/southern Minnesota rose to a record 280.8 lbs. for the week ended Nov. 9. That's up 1.1 lbs. per hog from week-ago and 8.2 lbs. heavier than year-ago. The record hog weights are coming at a time when slaughter numbers are also on the rise. So while packers are working with very strong margins, there's no need for them to raise cash hog bids in order to get needed supplies.
The long and short of it: The increase in pork is putting added pressure on pork demand to chew through the excess supplies. But the pork cutout value is holding relatively strong as pork is still cheap compared to beef.
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