What Traders are Talking About:
Overnight highlights: As of 6:15 a.m. CT, corn futures are trading 2 to 6 cents lower, soybeans are narrowly mixed and wheat futures are roughly 5 to 8 cents lower. Based on overnight trade, grain and soy futures are likely to open with a choppy to weaker tone this morning, with the upside limited to mild corrective buying if there's a bounce attempt. Cattle futures are expected to open steady to weaker on pressure from the Cold Storage Report. Hog futures are called steady to firmer despite slighlty negative Cold Storage data Monday afternoon.
* Corn planting progress even slower than anticipated, but markets don't care. Traders had low expectations for corn planting progress and the pace still came in slower than anticipated. As of Sunday, USDA says only 4% of the U.S. corn crop was seeded -- well behind 26% on this date last year and 16% on average. Corn planting is only 1% complete in Illinois, Indiana and Ohio, while Iowa, Nebraska, Minnesota and the Dakotas have no corn planted yet. Missouri is 13% seeded, while 5% of the Kansas crop is planted. Traders are hopeful the corn planting pace will actively pick up next week, although soils are still far from being ready for field work across much of the Corn Belt.
The long and short of it: A lack of buying interest in new-crop corn futures overnight suggests traders are not concerned with corn planting delays at this time. In fact, they feel aggressive corn planting progress will be made once soils dry out and that long-term benefits of rain are greater than planting delays.
* HRW ratings continue to decline. Recent freeze damage continues to gradually show up in deteriorating conditions of the HRW crop. When USDA's weekly crop ratings are plugged into our weighted Pro Farmer Crop Condition Index (0 to 500 point scale), the HRW crop dropped another 8 points to 264. Crop deterioration in Kansas, Texas and Colorado more than offset an improvement in the Nebraska crop. Since it can take a couple weeks for damage from a freeze event to show up, further deterioration is expected in the weeks ahead. Plus, overnight temps again dipped below freezing in areas of the Plains and sub-freezing readings are likely again tonight.
The long and short of it: Our CCI rating signals the HRW crop is borderline "fair"/"poor" and declining. There's still time for some crop recovery if weather turns ideal, but the clock is ticking and weather is still far from ideal.
* Economic red flags in China. China's vast manufacturing sector slowed this month based on preliminary data. The HSBC flash purchasing managers' index (PMI) declined to 50.4 in April from a final reading of 51.6 in March. Export demand remains the biggest area of concern, with the new export orders sub-index falling to 48.6, which signals contraction in foreign demand. Because China's manufacturing sector is key to the country's economic well being, this data raise red flags with the economic recovery, especially after disappointing first-quarter GDP data last week.
The long and short of it: The disappointing Chinese flash PMI data is weighing on commodities. If China's vast manufacturing sector slows, demand for raw commodities needed to produce goods will decline.
* Meat stocks raise more demand concerns. USDA's Cold Storage Report showed record-large beef stocks for the end of March and the second highest pork stocks in storage for that date. Beef stocks totaled 513.243 million lbs. and pork stocks were 648.789 million lbs. as of March 31.
The long and short of it: This data is negative for livestock futures as beef and pork stocks topped expectations. More importantly, the data confirms traders' concerns with red meat demand.
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