What Traders are Talking About:
Overnight highlights: As of 6:15 a.m. CT, corn and wheat futures are mixed with a slight upside bias, while soybeans are 2 to 3 cents higher. The light trade seen so far this week will continue through the daytime hours as traders are waiting on USDA's report data on Friday. Cattle futures are expected to open mixed, while hogs are called lower.
* Waiting on Friday. Trade has been predictably quiet in the grain markets this week as traders wait on USDA's crop updates Friday. Typically, traders don't actively add new positions ahead of key USDA reports, but that's even more so the case this time around. While traders fully expect USDA to raise its corn and soybean crop estimates as yields have consistently come in "better than expected," there's a high level of uncertainty after USDA was forced to cancel its October crop reports due to the government shutdown.
The long and short of it: Pre-report positioning will keep grain markets quiet until Friday at 11 a.m. CT. At that time, USDA's data will determine if the current price downtrend extends or there's a trend reversal.
* South American soybean acres likely to rise more than expected. South American soybean production was already expected to be record-large for 2013-14 as planted acreage expands from year-ago. But South American consultant Dr. Michael Cordonnier says production could increase even more than expected as planted soybean acres may come in higher than previously thought. In addition to a sharp increase in full-season soybean acres in Brazil, Dr. Cordonnier says there's now talk of safrinha (second crop) soybean production in parts of Brazil, including the top production state of Mato Grosso, where there's speculation 1 million hectares of safrinha soybeans could be planted. And soybeans are also likely to pick up some additional acres from corn in Argentina, as well.
The long and short of it: Barring a weather disaster, South American soybean production will be record-large, which threatens to act as a wet blanket on soybean futures.
* Brazil expected to use more soybeans domestically. The Brazilian government is reportedly looking into a plan to raise requirements for biodiesel blends in diesel fuel as early as January. The Brazilian Energy Minister, Edison Lobao, said yesterday the government was evaluating a blend increase, but didn't provide any details. Brazilian soy crushers have advocated in the past to increase the blend requirement by two percentage points to 7%, which would result in an additional 8 MMT to 9 MMT of soybeans being processed for biodiesel.
The long and short of it: An increase in the biodiesel blend requirement in Brazil would "wipe out" the expected increase in Brazilian soybean production this year. So, while Brazilian soybean production is expected to be record-large, it doesn't necessarily mean Brazil will export more raw soybeans from the 2013-14 crop.
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