What Traders are Talking About:
* Big report day Friday. USDA will release its monthly Supply & Demand Report, Annual Production Summary, Quarterly Grain Stocks Report and Winter Wheat Seedings Report at 11 a.m. CT Friday. Much of the pre-report focus is on the final 2012-crop corn and soybean production estimates. The corn crop is expected to come in smaller as USDA is seen lowering harvested acres, while the soybean crop is anticipated to be bigger. A smaller corn crop would mean USDA could lower its export projection and not tighten carryover, which is already too tight. A bigger soybean crop would allow USDA to raise its export projection and keep carryover mostly unchanged. While much of the focus is on the corn and soybean crop estimates and the changes they have on the balance sheets, it may be the Dec. 1 stocks, especially corn stocks, which are the market driver. After all, quarterly corn stocks have produced major surprises over the past two-plus years. Winter wheat seedings are likely to be pushed to the back burner, largely due to the heavy volume of data, unless there's a major surprise. Traders are expecting winter wheat acreage to be up as guaranteed insurance prices were strong enough to encourage more acres, especially in SRW country where producers will plant double-crop soybeans.
The long and short of it: The mass volume of report data suggests there will be some surprises tomorrow and Dec. 1 corn stocks are the most likely surprise. This data should set the price tone for the rest of winter.
* Chinese 2012 soy imports record large. China imported a record 58.38 MMT of soybeans last year, which was 11.2% higher than 2011, according to official customs data. In December, Chinese soy imports totaled 5.89 MMT, which was the second highest monthly total ever (behind June 2010) and up 42% from November and 9% higher than year-ago. While Chinese soy imports are expected to dramatically slow for January and February, the outlook for this year is strong. An increasing appetite for edible oils and soybean meal for feed, along with increased crush capacity should led to record Chinese soy imports in the year ahead.
The long and short of it: While the U.S. will face increased competition from South America this year, Chinese demand for U.S. soybeans will remain a strong source of support for the soybean market.
* Chinese trade surplus surges in December. China's trade surplus surprisingly surged to $31.6 billion last month, an increase from a surplus of $19.6 billion in November and well above the average guess of $19.7 billion. Chinese exports swelled 14.1% versus year-ago last month, while imports rose 6.0%. China's customs office says there are uncertainties for the year ahead, but it sees a generally brighter outlook for the country's trade situation. The uncertainties are primarily in Europe, China's top customer, though sluggish U.S. economic growth is also a concern.
The long and short of it: Global markets are responding positively to the Chinese trade data as it signals the world's number two economy continues to strengthen. This is the first real sign of strengthening outside of domestic Chinese numbers.
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