What Traders are Talking About:
Overnight highlights: As of 6:15 a.m. CT, corn futures are trading steady to 1 cent lower, soybeans are 2 to 3 cents lower and wheat futures are narrowly mixed. Cattle futures are firmer, while hog futures are mixed in electronic trade.
* Beans pause, but momentum clearly with bulls. Soybean futures were lower overnight amid light profit-taking after recent strong gains. But there are no indications the recent price rally is showing signs of stalling. March soybean futures got within a dime of the contract high yesterday as fears of active Chinese cancellations of U.S. soybean purchases have eased. Has China canceled some U.S. cargoes? Yes. Will they cancel more? Yes. But there isn't as much concern on that front now as there was several weeks ago. There are already reports of some logistical problems (truck backlogs at the Port of Santos that I highlighted last week) and now the terminal temporarily going down at Rio Grande (see the following story). While fears of massive Chinese cancellations are declining, Brazilian crop estimates are also being lowered. Untimely late-season rains in central Brazil are causing quality and yield concerns, while prolonged heat and dryness in southern Brazil have trimmed crop prospects there though timely rains and cooler temps are now being seen.
The long and short of it: The path of least resistance in the soybean market is up and bulls clearly have momentum. But barring significant shipping delays in Brazil, the period of price strength is limited.
* Southern Brazilian port damaged. One of five terminals at the southern Brazilian Port of Rio Grande was damaged Sunday and will reportedly require two weeks to repair. The port has gained popularity the past couple years as exporters seek alternatives to the ports of Santos and Paranagua due to logistical problems there, and last year overtook Paranagua as the country's second largest soy exporting port. While soybean harvest hasn't started in far southern Brazil, Reuters reports three ships loaded with soybeans and four carrying corn have left Rio Grande already this year.
The long and short of it: Losing one-fifth of the port's capacity at this point is not devastating, but it outlines some of the many logistical problems Brazil faces in exporting its record crop.
* Winter won't end. As if this winter hasn't been cold and snowy enough, the country's midsection is about to endure another blast of unseasonably cold temps through next weekend. Daily highs will consistently run at least 20 to 30 degrees below normal and local weather forecasters are calling for record-low temps on multiple occasions. There is concern with the winter wheat crop, which has already taken a beating from the harsh winter conditions. The crop should be readying to green up, not bracing for another right hook from Mother Nature.
The long and short of it: Fortunately, the winter wheat crop (both SRW and HRW) went into dormancy in fairly good condition, but there's no doubt the crop has been nipped this winter. And the portion that hasn't been hurt by bitterly cold temps is suffering from ongoing drought in the Southern Plains. Some of wheat's many "lives" are being used this winter.
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