Pre-Report Positioning In Full Swing

June 27, 2013 01:16 AM

What Traders are Talking About:

Overnight highlights: As of 6:15 a.m. CT, corn futures are mixed, soybeans are 2 to 5 cents higher and wheat futures are 1 to 6 cents higher. Pre-report positioning is very likely to dominate price action throughout today's session. Cattle futures are expected to open with a firmer tone, while hogs are seen opening steady to slightly lower this morning.


* Pre-report trade in full swing. The bulk of price action from now until USDA's reports at 11 a.m. CT on Friday will be focused on squaring positions. Traders are expecting corn acreage to be lower than March intentions, but the level of reduction is a major question mark after serious planting problems in some areas, namely northern Iowa and southern Minnesota. Soybean acres are expected to increase some from March intentions, but again, how much is a question mark as some soybean acres still aren't seeded. And then there's the extreme wild card -- corn stocks. Since June 2010, USDA has had a history of shocking the market with its quarterly grain stocks data.

The long and short of it: Traders are unlikely to actively add new positions on either side of the market as there's a lot of uncertainty ahead of USDA's data.

* Better weather in forecast. Soggy areas of the western Corn Belt are forecast to get at least a temporary reprieve from recent, heavy rains, while some of the drier areas in the far eastern Belt are expected to pick up some rains through the weekend. The National Weather Service forecast for July 2-6 also calls for drier conditions in the soggy areas and improved rain chances where they are needed. Forecasts suggest weather conditions will improve -- at least temporarily. But in a year that has produced rains (usually heavy) across Iowa, southern Minnesota, northern Missouri and southern Wisconsin even when they haven't been in the forecast, those of us in these areas are hopeful, though skeptical.

The long and short of it: Weather forecasts are trending price-negative and traders are turning deaf ear to crop concerns in the western Corn Belt.

* Argentina halts wheat exports. Argentina has told exporters it won't authorize any more shipments of wheat/flour for 2012-13 as domestic flour and bread prices have soared, according to a Dow Jones newswire story that cites a source in the export sector. The Argentine government has made no official announcement, but the Domestic Commerce Minister reportedly met with exporters earlier this week to inform them of the decision. Argentine wheat/flour exports were already reduced sharply from 2011-12 after a small 2012-13 wheat crop. Meanwhile, the Argentine government has authorized 16 MMT of corn exports for 2013-14 -- 1 MMT more than 2012-13 -- as it tries to encourage producers to plant more corn.

The long and short of it: This could boost Brazilian demand for U.S. wheat as it typically brings in most of its wheat from Argentina. But overall, this has limited market impact as global wheat supplies are on the rise.


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