What Traders are Talking About:
Overnight highlights: As of 6:15 a.m. CT, corn, soybean and wheat futures are mixed to mostly lower. Corn and soybean traders are trying to sort out the weather and planting delays while wheat traders are being very cautious given the potentially negative GMO wheat news yesterday (see first piece below for details). Cattle and hog futures are expected to open with a mostly firmer tone this morning, though buying interest is likely to be light.
* Fallout from GMO wheat discovery. On Wednesday, USDA alerted that an unapproved strain of GMO wheat was discovered in Oregon. (Click here for details.) Overnight, responses started coming from U.S. trading partners. Japan canceled an offer to buy 24,926 MT of U.S. western white wheat in its weekly tender and will temporarily halt purchases of such wheat. "We will refrain from buying western white and feed wheat effective today," Toru Hisadome, a Japanese farm ministry official in charge of wheat trading, told Reuters. Hisadome says Japan will stop buying U.S. western white wheat until a test kit is developed to identify GMO presence in shipments. Meanwhile, the European Union (EU) Commission has asked the U.S. how to test for unapproved GMO wheat and says it would block shipments if they contained the unapproved strain. An EU spokesman says there is no talk at this stage of broader measures and that any ban would have to be set for the EU as a whole, not individual states. South Korea, China and the Philippines say they are monitoring the situation closely.
The long and short of it: This is price-negative for wheat. USDA must act quickly to ease concerns amongst U.S. wheat trading partners or this could be potentially very damaging for the U.S. wheat industry.
* Heavy storms pound western Corn Belt. Heavy rains, high winds and hail tore through the western and southern Corn Belt yesterday and through the overnight hours. The heavy rains fell on already saturated soils, causing washouts, heavy ponding and flooding through the region. Unfortunately, more heavy rainfall is in the forecast for the western Belt through Friday. The heavy rains are forecast to make their way into the eastern Belt today and last into Saturday. This not only stalls planting efforts for a while as soils now need a string of warm, sunny days to dry out, but will require replanting of some acres.
The long and short of it: It's already late for corn planting and now it's going to get later. For the wettest areas, it will be well into June before producers can return to fields.
* Chinese firm buys Smithfield. Shuanghui International Holdings Limited agreed Wednesday to purchase Smithfield Foods for $4.7 billion. The deal means China's largest pork producer is buying the world's largest pork processor and hog producer, opening the door for a lot of U.S. pork to be shipped to China. While the deal must still get approval from the U.S. Committee on Foreign Investment, our sources expect it to be okayed.
The long and short of it: The hog market reacted positively to the news yesterday, though some of the initial enthusiasm faded by the close. Still, this is seen as a positive for U.S. pork exports.
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