Weather Is Improved. Does It Matter?

September 16, 2013 01:08 AM

What Traders are Talking About:

Overnight highlights: As of 6:00 a.m. CT, corn futures are steady to 1 cent higher, soybeans are mostly 8 to 15 cents lower and wheat futures are mixed with an upside bias. Corrective trade is expected to carry over to this morning's open. Cattle futures are expected to open the week slightly firmer, while hogs are called steady to weaker.


* Weather is improved. Does it matter? Rains swept across the Corn Belt over the weekend and temps turned much cooler. Forecasts call for moderate temps and scattered rainfall chances through the middle of the week across the Corn Belt. Based on overnight price action, traders view the improved weather conditions as beneficial for the soybean crop. But the recent extreme heat has caused a portion of the soybean crop to start shutting down, which will limit any benefits from rains and cooler temps. Still, some of the crop that is still green would be aided. It's too late for rains to have much positive impact on corn.

The long and short of it: While benefits from improved weather would likely be minimal, price action signals traders feel soybeans would be helped.

* Attitudes reflected in speculative positions. Commitments of Traders data released by the Commodity Futures Trading Commission Friday afternoon continued to show the divergent attitude speculators have toward the corn and soybean markets. The speculative community built its short position in corn in the week ended Sept. 10. While speculators trimmed their net long position in soybeans, they remain solidly positioned on the long side of that market.

The long and short of it: Even though speculators' attitudes are clearly displayed by their positions in the corn and soybean markets, the data also shows there's plenty of room for speculators to unwind their positions and still remain much friendlier toward soybeans than corn.

* Fed watch this week. There was news on the Fed front over the weekend as Larry Summers withdrew from consideration for the chairmanship position that will open up when Ben Bernanke exits his post at the end of January. Janet Yellen and Donald Kohn, the Fed's current vice chairwoman and past vice chairman, respectively, are thought to be the top candidates to head up the Fed. The real attention on the Fed this week, however, will be on the two-day Federal Open Market Committee meeting Tuesday and Wednesday and Bernanke's quarterly post-meeting press conference. Most economists expect the Fed to begin to taper its economic stimulus as economic conditions continue to gradually improve.

The long and short of it: With the Fed in focus this week, the macro-economic front will take on greater importance for grain markets.


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