What Traders are Talking About:
Overnight highlights: As of 6:00 a.m. CT, corn futures are narrowly mixed, soybeans are 5 to 10 cents higher and wheat futures are steady to 3 cents lower. Since the government shutdown began, choppy trade has been common as traders have no conviction behind their buying or selling. Cattle and hog futures are expected to open the week with mixed trade.
* China buying soybeans? There's no physical proof China booked some U.S. soybeans overnight, but something caused prices to turn higher. After gapping lower and dropping below support at the early October lows, something caused soybean futures to reverse course just when it looked like the bearish floodgates opened wider. Some wire service reports signaled the price turn around overnight was due to harvest-delaying rains forecast for areas of the Corn Belt this week, but that seems like a stretch.
The long and short of it: Given the price action overnight, I wouldn't be surprised if there's talk of China buying U.S. soybeans on the price break.
* Focus remains on private data. The government shutdown continues, meaning grain traders must rely on private data for price direction as USDA data remains shelved. Corn and soybean traders are watching harvest reports and any demand developments reported by the private sector. Wheat traders are keeping a watch in demand and the global supply situation. With harvest in full swing, corn and soybeans must fight harvest pressure, though rains forecast this week may slow harvest activity. Wheat futures are trying to extend the price recovery as traders sense global supply woes will eventually lead to improved demand for U.S. supplies.
The long and short of it: The uncertainty created by the government shutdown and looming debt ceiling is not encouraging traders to add new positions. In fact, it threatens to further reduce trading volume.
* Chinese soy imports decline sharply. China imported 4.7 MMT of soybeans in September, which was 26.2% less than August and 5.4% lower than year-ago. Through the first nine months of this calendar year, however, soybean imports of 45.75 MMT are up 3.3% from year-ago. While September soybean imports slowed dramatically from August, China is still expected to import a record amount of soybeans this year as domestic production is falling while demand is rising. State-run China National Grain and Oils Information Center says Chinese soybean production this year is expected to fall 4.2% from year-ago.
The long and short of it: China's appetite for imported soybeans is big and expected to get bigger as the country appears very willing to let the U.S. and South America grow the bulk of its soybean needs while it tries to encourage more domestic corn and wheat production.
* China trade data disappoints, inflation accelerates. China unexpectedly saw its exports drop 0.3% in September while imports rose 7.4%, leaving the country with a trade surplus of $15.2 billion for the month. That was far below expectations and down sharply from a trade surplus of $28.5 billion in August. Meanwhile, China's consumer price index (CPI) came in at a 7-month high of of 3.1% above year-ago in September, up from a 2.6% rise in August. Food prices surged 6.1% above year-ago last month, while non-food prices rose 1.6%. China's producer price index (PPI) declined 1.3% versus year-ago in September.
The long and short of it: The combo of disappointing trade data and rising inflation is not a good sign for the world's second largest economy. But neither is seen as bad enough to be a major concern at this point. China will release key GDP data later this week.
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