What Traders are Talking About:
Overnight highlights: As of 6:15 a.m. CT, corn futures are trading fractionally to 1 cent higher, soybeans are mostly 4 to 7 cents lower and wheat futures are mostly 2 to 4 cents higher. Position evening ahead of USDA's reports on Friday is likely to keep trading volume relative thin today. Cattle and hog futures are expected to open narrowly mixed this morning.
* China relaxing inspections of U.S. DDGs. Reuters reports Chinese quarantine authorities have sped up inspections of U.S. dried distillers grains (DDGs) and they are being "quite flexible" on their inspections. As a result, some Chinese buyers have resumed shipments of U.S. DDGs. Private firm Shanghai JC Intelligence Co. says 20% to 25% of imported DDGs passed inspections last week. That rate is now up to 40% to 50% and is expected to rise to 60% to 70% next week. Meanwhile, trade sources expect inspections of U.S. corn shipments to remain tight. "The corn issue is unlikely to be resolved in the short-term -- it is something (being carried out) in relation to the government stockpile scheme and domestic supply situation," one trading manager with a major feed mill told Reuters.
The long and short of it: The price of U.S. DDGs at export terminals has strengthened this week after being under heavy pressure since the Chinese rejections began, offering another signal that the DDG situation is returning to "normal."
* U.S. officials continue to push for approval of MIR 162. A delegation from the U.S. Grains Council (USGC) is in China this week hoping to get the country's approval of MIR 162 (Syngenta's Agrisure Viptera), which has triggered the rejection of over 600,000 MT of U.S. corn and dried distillers grains shipments. In December, China's approval process for MIR 162 was discussed in talks between the two countries as part of the Joint Commission on Commerce and Trade, but that meeting failed to produce a final resolve. Syngenta told Reuters, "As far as the status of the approval, we are doing everything we can to find out what, if any, questions the Chinese Ministry of Agriculture has about our dossier for the Agrisure Viptera trait. We have been proactively offering additional information, but we have not had any formal, official feedback from the ministry to know what is holding up the approval."
The long and short of it: As mentioned above, while the DDG issue seems to be cooling, the corn situation is likely to linger. Until China approves MIR 162, the situation will continue to be a "wet blanket" over the corn market.
* Good start to Brazilian soybean harvest. Soybean harvest is underway in Brazil's top soybean production state of Mato Grosso and early yield reports are strong, according to Pro Farmer South American consultant Dr. Michael Cordonnier. He reports early yields are averaging 47.8 bu. per acre, compared to normal yields for early maturing soybeans in the state of around 40 bu. per acre. While harvest activity will gradually pick up, it's not expected to become active across Mato Grosso until late this month or early February. Meanwhile, relief from recent heat and dryness is forecast for Argentina's grain belt Thursday and Friday, though some forecasters are calling for a return of heat and dryness next week.
The long and short of it: Unless the heat and dryness spreads to Brazil or private crop forecasters start actively cutting their Argentine estimates, traders' concerns will be limited. In fact, prospects for record South American soybean production are starting to weigh more heavily on soybean futures.
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