What Traders are Talking About:
Overnight highlights: As of 6:00 a.m. CT, corn futures are trading 9 to 11 cents lower, soybeans are 1 to 5 cents lower and wheat futures are 6 to 12 cents lower. I expect bears to hold the upper hand this morning based on weather forecasts and a lack of bullish news. Cattle and hog futures are expected to open with a mixed tone this morning.
* Weather concerns ease. Despite a high pressure ridge setting up over the Corn Belt that will produce hot temps and block rainfall this week, traders' don't appear as concerned with the weather as they did last week. Temps are expected to be in the upper 80s to low 90s through Friday with very little chance for rains. There is a slight chance for rains to develop by the weekend and temps are expected to moderate early next week. The computer-generated National Weather Service forecast for July 20-24 calls for below-normal temps over the upper Midwest with normal temps forecast for southern areas of the region and mostly above-normal precip.
The long and short of it: With the NWS 6- to 10-day forecast calling for cooler temps and improved rain chances, traders are looking past the hot, dry forecast for this week.
* Watch for demand. With prices falling amid reduced weather concerns, December corn futures and November soybean futures are back to levels that triggered strong export demand last week. December corn futures are holding around $5.00, while November soybeans are trading around $12.50. As a result, traders will be watching to see if global end-user buying, especially from China, again resurfaces. If that's the case, downside risk is limited. If end-users pause this time, however, new-crop corn and soybean futures could slip below these key levels and not immediately recover as they did last week.
The long and short of it: Weather is the focal point to start the week, but demand will determine if futures continue to slide or quickly rebound.
* Chinese GDP drops, as expected. China's economic growth slowed to 7.5% from 7.7% growth in the first quarter, the second straight quarter of lower gross domestic product (GDP). Second quarter GDP was right in line with pre-report expectations, but still signals the Chinese government and the People's Bank of China (PBOC) face a tough task of trying to restart stronger growth. The governor of the PBOC says it will continue with prudent monetary policy while trying to spark economic growth.
The long and short of it: Because GDP was in line with expectations, there was limited market reaction overnight. Still, there are concerns about the slowed economic growth.
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