What Traders are Talking About:
Overnight highlights: As of 6:00 a.m. CT, corn futures are trading 1 to 2 cents lower, soybeans are 3 to 5 cents lower in old-crop contracts and mixed in new-crop contracts, while wheat futures are narrowly mixed. Cattle futures are slightly weaker in electronic trade this morning, while hogs are narrowly mixed.
* Logistic issues in Brazil already? Brazil's record soybean crop is not yet one-third harvested and there are already reports of logistic problems coming from the area around the Port of Santos, Brazil's largest grain port. In addition to the poor road conditions Brazilians face every year in getting their crop from fields to ports, there are reports of truck backlogs around Santos. The Brazilian government implemented new rules for driver hours and a system for trucks entering ports in hopes of cleaning up some of the major congestion problems the country experienced at harvest time last year, but early reports are not favorable as truckers seem to be showing a general disregard for the new rules.
The long and short of it: Logistic problems are common in Brazil. Key is how China reacts. If the logistic issues become severe, the threat of aggressive U.S. soybean cancellations by China would go down.
* Outlook Forum numbers out today and Friday. USDA's annual Outlook Forum is today and Friday in Washington DC. The event features USDA's first look at the 2014 crop year, with highlights today expected to be a look at acreage projections from USDA Chief Economist Joe Glauber. He has previously indicated acreage assumptions will be different than those released in USDA's baseline projections last week. Because the baseline projections were based on data from late last year, they had to assume the old farm legislation (the new farm bill wasn't passed yet). The new projections will take into account the new farm bill. There very likely would have been an ACRE payment under the old farm bill that would have encouraged some to plant corn. With ACRE not a part of the new farm bill, there isn't that incentive so USDA's corn acreage projection is likely come in lower than 93.5 million acres projected last week, while soybean acres are likely to be up from the 78 million projected last week.
The long and short of it: While the data USDA releases the next two days are very early projections that will change, they still have the ability to move the markets. If the data is as I expect, it could be mildly friendly for new-crop corn and negative for new-crop soybeans.
* China's manufacturing sector continues to slow. HSBC's preliminary purchasing managers index (PMI) for February dropped to a seven-month low of 48.3 from a final reading of 49.5 in January, signaling China's vast manufacturing sector is contracting. Employment is down, along with domestic demand, while export orders are up slightly but still below the contraction threshold.
The long and short of it: China's economy isn't a major concern, but it is getting more attention as growth slows. Some are calling for the Chinese government to step up efforts to boost its economy.
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