Traders See Steady Corn Acres, Increased Soybean Plantings

March 26, 2013 01:08 AM

What Traders are Talking About:

* Steady corn acres, bean plantings could be record-large. Based on pre-report expectations, traders anticipate USDA's Prospective Plantings Report will show producers intend to plant 97.3 million acres to corn compared to 97.2 million acres last year. Meanwhile, record soybean acres are expected, with the average trade guess at 78.5 million versus 77.2 million last year. Traders expect spring wheat acres to rise marginally from year-ago to 12.5 million, while cotton acres are expected to drop sharply to 10.08 million.

The long and short of it: Given these expectations, it will be hard for corn planting intentions to produce a bullish surprise, in my opinion, while the door is open for a friendly soybean figure because expectations are so high.

* Some freeze damage expected. Crop watchers say sub-freezing temps across areas of the Plains the past two nights will cause some damage to the winter wheat crop, although it will be at least several days before the extent of damage will be known. Crops in Texas and southern Oklahoma are most at risk because there is more of the crop jointing there than in areas further north. While some crop impact is likely, wheat has proven before it can recover from a freeze if conditions thereafter are favorable.

The long and short of it: Based on price action in the wheat market yesterday and overnight, traders aren't overly concerned with potential freeze damage. But for a crop that already had several strikes against it due to tough conditions last fall and through winter, this is another hurdle.

* CME Group raises new-crop corn margins. CME Group announced Monday initial margins for new-crop corn futures for speculative accounts will be raised by 33.3% to $2,700 per contract, effective at the end of business today. The initial margin for hedgers and exchange members will rise by a like amount to $2,000.

The long and short of it: It's not bullish when margins are raised.


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