What Traders are Talking About:
Overnight highlights: As of 6:15 a.m. CT, corn futures are narrowly mixed, soybeans are 5 to 10 cents higher, and wheat futures are 1 to 5 cents lower with Chicago and Kansas City leading losses. Beans are supported by corrective buying, while wheat is facing season pressure. Corn is caught in the middle. Cattle futures are expected to open steady to lower, while hogs are seen opening mixed.
* Talk of 'ideal' weather surfaces. Producers know weather conditions have been anything but ideal so far this growing season. But multiple wire service stories yesterday used "ideal," "near-perfect" and "favorable" to describe current weather conditions. Reporters don't just make this stuff up. They all have a long list of traders, analysts and industry sources they contact on a daily basis for comments on why price action is doing what it's doing. If wire services are using these words/phrases to describe the weather, that's what the "market" is telling them. While that may not be the reality across farm country, it's quickly turning into the perception. And in trading, perception often trumps reality.
The long and short of it: While a cool, wet spring has delayed planting and crop development, traders feel warmer, sunny conditions will give crops a significant boost. That perception will make it hard to entice active buying interest in new-crop corn and soybean futures for now.
* Acreage the next focus. Traders haven't given a lot of attention to planted acreage so far, though planting delays and talk of prevent plant claims have helped limit selling pressure on new-crop corn futures. With USDA's Supply & Demand Report out of the way, focus now shifts to the Acreage Report at the end of the month. That should give traders a much better idea of planted acreage. Unfortunately, it won't be a final answer as USDA's survey work for that report was done while some planting decisions were still being made. As a result, USDA may have to resurvey plantings in some areas at a later date.
The long and short of it: There's a lot of uncertainty heading into the Acreage Report at the end of the month. Some are expecting corn plantings to fall into the low-90-million-acre range, while others anticipate only a mild reduction from March intentions. There are also questions about how many originally intended corn acres will be switched to beans and how many bean acres will be claimed as prevent plant.
* Trading partners still awaiting GMO wheat test. USDA said yesterday it is still working on a test kit for GMO wheat it can provide exporters and our trading partners. Until a rapid test kit is available, sales of U.S. white wheat out of the PNW will be slow as many key trading partners have halted purchases. While USDA has stated it has confidence there is no GMO wheat in the commercial supply, trading partners are going to take the "safe" route.
The long and short of it: The GMO wheat uncertainty is adding to seasonal price pressure as winter wheat harvest is picking up in the Plains. That will keep wheat on the defensive near-term.
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