What Traders are Talking About:
Overnight highlights: In overnight trade, corn futures were mostly 16 to 19 cents lower, soybeans 3 to 8 cents lower in all but the May contract and wheat futures 7 to 12 cents lower with Chicago and Kansas City leading losses. Based on improved weather forecasts and overnight trade, bears should hold the solid upper hand when the day session begins. Cattle and hog futures are expected to open with a mixed tone this morning.
* Improved weather weighs on corn. Forecasts calling for much warmer and drier weather the first half of this week has traders feeling farmers will actively plant corn after weeks of delays. This afternoon's Crop Progress Report from USDA will be another reminder of the very slow planting pace. But some areas still have standing water in fields, which will continue to delay plantings. Plus, the forecast signals another wave of rain is likely to roll through areas of the Corn Belt the second half of the week. Still, a better weather forecast is enough to put the corn market on the defensive to start the week.
The long and short of it: Perception is key in futures markets and the perception is that the current forecast will support a sharp pickup in planting activity.
* Weather market = increased volatility. Corn is a weather market with traders' attitudes being shaped by the "latest" weather forecast. Some weather markets like last year last for months. But most are much shorter and and attitudes can change multiple times -- and quickly. The only certainty in a weather market is that volatility increases. The timing of a weather market has a lot to do with how it's shaped. While corn planting delays are a concern, the bulk of this year's corn crop will eventually get planted, though the planting date will likely be later than hoped in many areas of the Corn Belt. With the weather market in corn developing early this year, it will have more twists and turns than last year's rally, which developed mid-summer and was extreme.
The long and short of it: Volatility has increased in the corn market and is likely to remain high as traders closely watch the next weather forecast for price direction.
* Hard proof of tight soybean supplies. Everyone knows soybean supplies are very tight. You need to look no further than very strong basis for proof. But now there's even more evidence. Cargill will idle its Lafayette, Indiana, soy processing facility mid-month amid tight supplies and poor margins. While Cargill gave no specifics on how long the plant will be down, industry sources told Reuters it's not likely to come back online until new-crop supplies are available.
The long and short of it: Given the tight supplies, expect to see other soy crushing plants announce temporary closures. This is part of supply rationing process.
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