What Traders are Talking About:
Overnight highlights: As of 6:00 a.m. CT, corn futures are trading 1 to 2 cents higher, soybeans are 7 to 12 cents higher and wheat futures are mostly 2 to 4 cents higher. Key today is whether bulls can maintain (or build) overnight price gains. Cattle futures are expected to open with a mixed tone as traders await cash cattle trade, while hogs are seen favoring the downside after a poor close Wednesday.
* Countries could be unknowingly buying U.S. grain. Normally, exporters must report daily sales of 100,000 MT or more of grain to USDA's Foreign Ag Service, but with the government shutdown, the daily export sales reporting system has been halted. Therefore, a country could be buying large quantities of U.S. grains without them being reported. So, what's stopping China (or any other country) from "flying under the radar" on purchases and snatching up a bunch of U.S. grains without having to "officially" report them? Quite honestly, I was surprised to see a Reuters story on Wednesday citing a Chinese buyer as saying his firm had bought 420,000 MT of U.S. corn. There's no the incentive to privately tell the market of purchases during the shutdown.
The long and short of it: It's quite possible foreign countries could be loading up on U.S. grain purchases without them being reported due to the government shutdown. I guess we'll find out when USDA is back up and running and export sales data is released again.
* Big data void ahead. So far, the absence of USDA data has been an annoyance. Instead of getting the normal regular flow of USDA data, grain and livestock traders have had to dig a little deeper to get private data. But the data void is about to get bigger as USDA's October Crop Production and Supply & Demand Reports previously scheduled for Friday morning will not be released due to the shutdown. Therefore, traders will now be left wanting more than private data can provide. Think of it as a caffeine headache. The longer the market goes without its caffeine (USDA data), the greater the piercing headache becomes.
The long and short of it: The longer the shutdown lasts, the greater the "need" for USDA's data. The greater the need for fresh data, the more likely traders will be reluctant to add new positions.
* Yellen tabbed to lead Fed. As widely expected, President Obama on Wednesday nominated current Fed Vice Chair Janet Yellen as the next Chair of the Federal Reserve last week. Interestingly, Obama chose to make the announcement in the midst of the government shutdown. Possibly, this was the president’s attempt to divert negative attention from him as he battles Congressional Republicans over spending. Most likely, it was an attempt to ease market concerns in this time of growing uncertainty in Washington. A Yellen-led Fed (she's expected to be confirmed by the Senate) is seen maintaining the cautious approach to tapering the monthly bond purchases until the economy significantly strengthens. That would be friendly for stocks and commodities. Meanwhile, the minutes from the last Federal Open Market Committee meeting signal there are a vast range of opinions on the needed course of action among the Fed governors, but the majority feel the quantitative easing is working and they are fearful of tapering too soon.
The long and short of it: Odds of the Fed tapering its bond buying this year are low even though the decision not to taper in September was a "relatively close call" for several of the board members.
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