What Traders are Talking About:
Overnight highlights: As of 6:00 a.m. CT, corn futures are trading around 4 cents lower, soybeans are 12 to 16 cents lower and wheat futures are narrowly mixed. Selling pressure is likely through the morning hours and then traders will decide how they position themselves ahead of the holiday weekend based on midday weather updates. Cattle and hog futures are expected to open with a mixed tone this morning.
* Cautious trade ahead of holiday weekend. Soybean futures posted double-digit losses overnight as it appears traders are eager to take profits on recently added long positions ahead of the holiday weekend. Corn futures are also lower as attitudes remain bearish in that market. Forecasts offer the hope for some "relief" from the oppressive heat, but temps are expected to remain above normal next week and there are very few rain chances in the outlook. While some farmers are reporting premature death in corn and soybeans due to this week's extreme heat, traders are wanting to trim their long exposure heading into the weekend.
The long and short of it: Many traders will reevaluate the weather/crop situation when they return from the long holiday weekend.
* Sept. contracts move into delivery. Today is first notice day, the start of the delivery process, for September grain and soy futures. As expected, there were no deliveries against the September corn, soybean or soymeal contracts. And there were only 19 deliveries against September SRW (Chicago) wheat futures.
The long and short of it: Due to very tight supplies, September corn, soybean and soymeal futures should go through the two-week delivery process with no (or very few) deliveries.
* China may scrap cotton stockpiling program. China's cotton industry is calling for an end of the state stockpiling program in favor of farmer subsidies. In addition, China's textile manufacturers are asking the government to end licensing controls on cotton imports and abolish sliding-scale import taxes on cotton. The calls for reform come as the Chinese government is sitting on more than half of global cotton stocks. China top economic planner, the National Development and Reform Commission, has reportedly completed a draft plan to abolish the stockpiling program and switch to a farmer subsidy plan, but is still seeking industry input.
The long and short of it: Market implications from the decision on China's cotton policy could be significant, especially how China chooses to liquidate its state-owned reserves if the stockpiling program is ended.
* Happy Labor Day. Grain and livestock markets will observe normal trading hours today ahead of the holiday weekend. All markets and government offices are closed Monday, Sept. 2. I'll be back with my normal market commentary on Tuesday, Sept. 3. Have a happy and safe holiday weekend.
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