China Q1 GDP Disappoints

April 13, 2012 01:51 AM

What Traders are Talking About:

* China's economic growth slows more than anticipated. China's first quarter GDP came in at a lower-than-expected 8.1% above year-ago -- the lowest growth rate since the first quarter of 2009. Economists expected growth of 8.3% for the quarter. That's down from 8.9% in the fourth quarter of last year and the fifth consecutive quarter of lower growth. The People's Bank of China now faces the tough task of trying to promote economic growth while also combating inflation, a situation acknowledged by Premier Wen Jiabao following the release of the first quarter GDP data. But most economists expect China to focus more on growth than inflation, which points to further easing of monetary policy.

The long and short of it: The lower-than-expected Chinese GDP data is mildly supporting the U.S. dollar and weighing on commodities, with the metal markets leading declines. The U.S. stock market is also expected to face pressure from the Chinese data today. But while the numbers are initially negative, they could end up being supportive for ag commodities -- if China further eases monetary policy to promote economic growth.

* Friday the 13th. Today, Friday the 13th, is a day that those who are superstitious fear most. The fear of Friday the 13th is called friggatriskaidekaphobia or paraskevidekatriaphobia. But there is no market "doom" associated with Friday the 13th. In fact, the U.S. stock market has a slight historical upward bias on this day.

The long and short of it: While there's a slight historical upward bias on Friday the 13th in the U.S. stock market, the Chinese first quarter GDP data points to a lower performance today -- at least initially.

* Iran aggressively buying Indian soymeal. Iran has recently booked up to 275,000 MT of Indian soymeal at record prices and is said to be negotiating for another 200,000 to 250,000 MT, export sources told Reuters. The aggressive purchases of soymeal come after Iran recently purchased 2 MMT of milling wheat. Iran is expected to make "substantial" purchases of feed grains, according to the Reuters report. Because of Western sanctions against the country, Iran is being forced to source grain/soy needs through whatever countries it can -- despite the price.

The long and short of it: Iran's strong demand for soymeal is tightening world supplies, which are already going to be less than expected due to South American soybean production shortfalls this year.


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