What Traders are Talking About:
Overnight highlights: As of 6:15 a.m. CT, corn futures are 5 to 7 cents lower, soybeans are 7 to 11 cents lower and wheat futures are 3 to 4 cents lower in Chicago and Kansas City with lesser declines in Minneapolis. Given the improved forecast, overnight losses should transition to day trade. Cattle and hog futures are expected to open the week with a mixed tone.
* Improved weather forecast this week. Forecasts call for warmer and generally sunny conditions across the Corn Belt this week. But the forecast is not void of rain chances, so there is some risk of the forecast not panning out as favorable as what it currently appears. After a slow start to the growing season, crops should perk up with some heat and sunshine. If they don't there will be greater concern, especially among producers if not the trade. Spotty emergence is already a concern for many producers in the wet areas as it appears seeds didn't sprout between tile lines due to the excessive wetness.
The long and short of it: The current weather forecast is price-negative as traders feel warmer, sunny weather will benefit crop growth, which it will. But spotty stands, slow growth and remaining unplanted acres are still a concern.
* USDA's June S&D Report out Wednesday. USDA will revise its old- and new-crop balance sheets on Wednesday. Only minor revisions are expected to the 2012-13 supply/demand tables. Focus will be on how USDA handles the late start to the growing season in the corn and soybean tables. A further trimming of corn yields from trendline levels is expected. Some are also anticipating planted acreage will be trimmed, but I expect USDA to wait as the Acreage Report is coming at the end of the month. While planting date isn't as important to soybeans as it is to corn, it's hard to imagine USDA will continue to forecast a record national average soybean yield given the slow planting progress.
The long and short of it: The new-crop balance sheets will tighten for corn and soybeans, but probably not as much as some traders are anticipating.
* Chinese data sparks growth concerns. Chinese trade data released over the weekend is concerning as exports rose only 1% in May while imports dropped 0.3%. Exports to the European Union and U.S., China's largest customers, slowed for a third consecutive month. On the ag front, soybean imports totaled 5.1 MMT, which was up 28.1% from April but down 3.4% from year-ago. Through the first five months this year, Chinese soybean imports are down 12.2% from year-ago at 20.57 MMT. Meanwhile, Chinese inflation declined last month with the consumer price index coming in 2.1% above year-ago. Food prices roe 3.2% while non-food prices firmed 1.6%.
The long and short of it: The trade data is most concerning and is causing some economists to lower their Chinese economic growth forecasts.
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