What Traders are Talking About:
Overnight highlights: As of 6:00 a.m. CT, corn futures are narrowly mixed, soybeans are 4 to 6 cents lower and wheat futures are 1 to 4 cents higher. Given the government shutdown, traders may take a stronger risk-averse stance ahead of the weekend. Cattle futures are expected to open weaker after disappointing steady to weaker cash cattle trade late Thursday, while hog futures are called steady to firmer this morning.
* Gov't shutdown -- day 4. The U.S. government remains on shutdown, the fourth day of inactivity. Unfortunately, there doesn't seem to be much, if any, progress being made as little more than finger pointing is occurring in Washington. It now appears the shutdown may not end prior to mid-month when the debt ceiling is hit. Meanwhile, the marketplace is having to deal with a lack of data due to the shutdown. The most critical data to date, the September jobs report, is postponed this morning. From an agriculture standpoint, signs point toward the October Crop Production and Supply & Demand Reports scheduled for Oct. 11 being pushed back.
The long and short of it: Markets are holding up relatively well given the lack of government data. But the longer the shutdown lasts, the greater the odds investors will take a risk-averse stance.
* Private data key In the absence of government-issued market data, information from private sources is being watched more closely. Earlier this week, FC Stone released updated crop estimates, pegging the corn crop at 14.150 billion bu. on a national average yield of 158.7 bu. per acre. The firm upped its soybean crop forecast to 3.163 billion bu. on a national average yield of 41.4 bu. per acre. Last month, FC Stone forecast the corn crop at 13.942 billion bu. (156.4 bu. yield) and the bean crop at 3.146 billion bu. (41.2 bu. yield). Informa Economics will release its October crop estimates later this morning. Traders are also closely monitoring harvest reports, which are generally coming in at or above expectations, though early harvested crops should be better-yielding this year. On the demand side, yesterday's weekly export sales data was postponed, leaving traders to monitor export activity through data from export sources. A pickup in corn and soybean demand this week suggests end-users see recent price pressure as a buying opportunity.
The long and short of it: The marketplace is not completely without fundamental direction given the government shutdown, but traders will now put more stock in private crop estimates, especially if USDA's October crop reports are postponed.
* Black Sea wheat struggles. Cold and excessively wet weather is delaying winter wheat seeding in Ukraine, so much so that the country's ag minister says production could fall by approximately one-third to around 15 MMT from around 22 MMT this year. That would leave enough wheat to meet domestic needs but would dramatically slow exports in 2014-15. Meanwhile, Russia is experiencing much the same conditions through central and southern production areas of the country. Some industry insiders believe the countries may see wheat production cut by a combined 17 MMT next year.
The long and short of it: The Black Sea struggles are giving the wheat market a boost, though much of the support will be longer-term as there will be less competition for U.S. wheat in the 2013-14 marketing year when U.S. wheat supplies will be borderline tight.
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