Ready Or Not, Weather Markets Begin

May 21, 2012 01:53 AM

What Traders are Talking About:

* Ready or not, focus turning to weather. Grain traders are starting to take note of the dry conditions across much of the country after hot, dry and windy weather last week. While some rains were seen over the weekend, they were scattered in nature. Forecasts call for cooler temps early this week, but heat is expected to build the second half of the week, with above-normal temps likely during the upcoming holiday weekend. Rain chances are limited this week, with just light, scattered precip likely across dry areas.With dryness threatening to erase some of the benefits of the fast start to the growing season, traders are beginning to more closely monitor weather forecasts.

The long and short of it: The start of weather markets could create very volatile trade. Wheat traders built weather premium into the market last week and it appears corn and soybean traders will follow suit.

* Cattle on Feed Report: bullish. Last Friday's Cattle on Feed Report showed On Feed at 99%, Placements at 85% and Marketings at 100% of year-ago levels -- on the bullish side of the average, pre-report guesses. This marked the first time since May 2010 feedlot inventories have been below year-ago and at 11.11 million head, the On Feed tally is the lightest since September 2011, when 10.73 million head were in feedlots. During April, producers placed 1.521 million head of cattle into feedlots -- the smallest monthly placements total since July 2009.

The long and short of it: In addition to the bullish Cattle on Feed data, cash cattle prices came in $3 to $4 higher late last Friday and outside markets are supportive. That points to a strong start to the week for live cattle futures.

* 21-hour grain trading underway. CME Group was given approval last Friday for 21-hour electronic trade of grain and soy futures at the Chicago Board of Trade -- 5 p.m. to 2 p.m. CT -- beginning today.


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