What Traders are Talking About:
Overnight highlights: As of 6:00 a.m. CT, corn futures are mostly 2 to 4 cents higher, soybeans are mostly 4 to 6 cents higher and wheat futures are 9 to 13 cents higher. Bulls are expected to maintain control into the start of the daytime session, but the key to near-term price direction is whether grain futures can post a strong close for the week. Cattle futures are expected to open lower after a poor close Thursday. Hog futures are seen opening with a mixed tone this morning.
* China buying U.S. soybeans too. As I earlier reported, China has bought at least 1.2 MMT of U.S. corn this week. But the Chinese buying spree didn't stop with corn. The country has also been purchasing U.S. soybeans, booking at least six cargoes (360,000 MT) yesterday. These soybean purchases were reportedly for Dec. and January delivery. There's also talk Chinese importers have been shopping/buying U.S. soybeans for January and February delivery. The price break during the government shutdown obviously gave Chinese importers a chance to book supplies "under the radar." But with USDA back up and running, any purchases over 100,000 MT as of yesterday will now be officially reported.
The long and short of it: The Chinese demand has helped corn and soybean futures put in temporary lows. But the buying spree likely needs to continue for futures to see sustained buying interest. At least we know there's solid demand under the market. The question is whether the demand will persist as prices rise.
* Argentine wheat forecast much lower than expected. Argentina's ag ministry pegs its 2013-14 wheat crop at 8.8 MMT in the first forecast of the season. That's far below most private estimates, many of which are around 10 MMT. In the September Supply & Demand Report, USDA projected the 2013-14 Argentine wheat crop at 12 MMT.
The long and short of it: The low wheat crop forecast from the Argentine government suggests the country's wheat crop has suffered far more damage from recent frost/freeze events than previously expected. If that turns out to be the case, it would paint a brighter export outlook for U.S. wheat.
* China Q3 GDP supportive for commodities. China's economy grew at a 7.8% clip over year-ago in the third quarter, which was up from 7.5% growth in the second quarter and in line with expectations. Chinese GDP through the first three quarters this year stands at 7.7%, keeping the country on track to hit its yearly growth target of at least 7.5%. China continues to far outpace the other major global economies on growth, but the world's second largest economy is forecast to show its slowest yearly growth pace in 23 years.
The long and short of it: Many economists feel Chinese economic growth will slow during the last quarter of this year, but the stronger Q3 data is supportive for commodities as it shows China's economy is healthy, meaning its appetite for raw commodities will be solid, if not strong.
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