What Traders are Talking About:
Overnight highlights: As of 6:15 a.m. CT, corn futures are around 1 cent lower, soybeans are mostly 4 to 8 cents lower and wheat futures are mostly 1 to 2 cents lower. While followthrough selling interest was relatively light overnight, bears are expected to maintain the upper hand during the daytime hours. Cattle and hog futures are expected to open weaker this morning.
* USDA again finds more corn and beans. USDA's Sept. 1 corn and soybean stocks came in higher than expected in the Quarterly Grain Stocks Report. Corn stocks at 824 million bu. were 136 million bu. more than the average pre-report guess and means USDA "found" an extra 163 million bu. of corn beyond what was estimated in the September Supply & Demand Report. Soybean stocks at 141 million bu. were 15 million bu. more than traders expected and 16 million bu. more than USDA estimated in the September S&D Report. The rise in soybean stocks came amid an upward revision to the 2012 crop, while the rise in corn stocks is likely due to displaced feed use, although it gives the impression there were some new-crop bushels counted as old-crop supplies. The bigger-than-expected Sept. 1 stocks shouldn't have been a surprise as USDA always seems to find extra bushels at the end of the marketing year, but yet the data triggered a bearish price response.
The long and short of it: The bigger corn and bean stocks at the end of 2012-13 mean there's now more "cushion" to start the 2013-14 marketing year. This will make it harder for corn and soybeans to find traction as harvest activity increases.
* U.S. gov't shuts down. Congressional leaders were unable to come to a compromise on a spending bill by midnight, meaning the government has temporarily shut down. During the shutdown, only "essential" government personnel will be allowed to work. That includes meat inspectors and APHIS personnel who check imports/exports, but overall, very few at USDA are considered essential. Therefore, data flow from USDA will be halted. USDA's websites now have the following message: "Due to the lapse in federal government funding, this website is not available. We sincerely regret this inconvenience. After funding has been restored, please allow some time for this website to become available again." The length of the shutdown will determine whether there's an impact on the October Crop Production and Supply & Demand Reports. If the shutdown lasts more than a couple of days, those reports may have to be delayed.
The long and short of it: From a market perspective, traders don't like uncertainty and a lack of data flow suggests there will be uncertainty. Therefore, I expect trading volume to slip some during the shutdown.
* Crop condition ratings improve. USDA's weekly crop condition ratings showed 55% of the corn crop is still rated in the top two categories, but there was a one-percentage-point shift from "good" to "excellent." For beans, USDA now rates 53% of the crop "good" to "excellent," up from 50% last week. When USDA's weekly crop condition ratings are plugged into the weighted Pro Farmer Crop Condition Index (0 to 500 point scale), the corn crop improved 3 point to 347, while the soybean crop rose 4 points to 339. Illinois paced the ratings improvement for both crops.
The long and short of it: It's late in the growing season to be talking about crop condition ratings, but the uptick in corn and bean ratings is psychologically price-negative.
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