What Traders are Talking About:
Overnight highlights: As of 6:00 a.m. CT, corn futures are narrowly mixed, soybeans are mostly 3 to 7 cents higher and wheat futures are mostly 2 to 5 cents higher. With soybeans signaling a potential upside breakout from the extended sideways range, price action in the soybean market will be key through the daytime hours. Cattle and hog futures are expected to open with a mixed tone this morning.
* China rejects another cargo of U.S. corn. On Friday there were reports China rejected a cargo of U.S. corn. Exporters have reportedly confirmed China has recently rejected two U.S. corn shipments -- both reportedly Syngenta Agrisure Viptera corn (aka MIR162) -- and say the cargoes will be resold to other Asian destinations. So far, the market has handled the rejections relatively well, though the Chinese rejections of U.S. corn shipments are countering what is otherwise a strong pickup in corn demand.
The long and short of it: If this situation lingers and there are more rejections, the greater the odds it will become a key market issue and weigh on prices.
* Export demand remains strong. USDA's export sales numbers for the week ended Nov. 21 showed soybean and corn export demand remains strong. Net weekly soybean sales of nearly 1.406 MMT for 2013-14 and 364,900 MT for 2014-15 topped expectations by a wide margin, with China accounting for the bulk of the purchases. Corn export sales were also strong at 1.007 MMT. Meanwhile, wheat export sales of 562,200 MT were within the guess range. Obviously, China's appetite for U.S. soybeans is very strong, as it always is at this time of year, while foreign buyers see corn and wheat as a "value" buy at current price levels.
The long and short of it: Export demand is price-supportive for soybeans. For corn and wheat, export demand is doing little more than helping limit selling interest at this point.
* China's manufacturing sector continues to expand. China's official Purchasing Manager's Index (PMI) came it at 51.4 in November, which was unchanged from October and an 18-month high. The sub-index for export orders improved to 50.6 last month from 50.4 in October. China's final HSBC PMI, which measures smaller manufacturers, dipped to 50.8 last month from 50.9 in November, but that was higher than the flash reading of 50.4. Any PMI reading above 50 signals expansion within the manufacturing sector. Meanwhile, China's National Development and Reform Commission says it expects the Consumer Price Index to expand in the lower end of the forecast 3% to 5% range next year.
The long and short of it: China's economy is showing just enough strength to limit concerns. But economic data isn't strong enough to convey extreme confidence.
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