Agrivisor Morning Marketwatch

Wednesday, October 07, 2015

   ***Good Morning***

***** Grains are higher to start the day; soybeans up 5-6, corn up 1, and wheat up 3. *****
   #From a fundamental perspective the focus seems to be on Friday’s USDA report with the trade expectations having flowed into the trade the last couple of days.  But from a financial perspective, it may be renewed slippage in the Dollar tied to ideas the Fed won’t tighten rates this month that is the key influence.  Across the board, commodities were strong yesterday, and they seemingly are starting that way again today.  Commodity indices offered the first sign yesterday that August might have been an important low.  
   #The corn and energy markets will key off the weekly petroleum report that comes out at 9:30 central time.  Crude might be especially sensitive given this week’s surge in prices.  Indirectly, that could impact soyoil too as it seems to be somewhat tied to crude through the biodiesel link.
   #The Ukrainian indications they are going to cap corn exports at 16 mmt this year(18.5 last year), is bringing some sentimental support to prices.  The also announced a 16.5 mmt. cap on wheat, but it didn’t stir as much interest.
   #Bloomberg estimates for Friday’s USDA report: 166.7 bu. corn yield(-0.8) and a 13.482 bln. bu. crop(-.103), a 47.2 bu. soybean yield(+0.1) and a 3.911 bln. bu. crop(-.016).
   #Bloomberg ending stocks estimates are 1.546 bln. bu. for corn(-.046), 428 mln. bu. of soybeans(-22), and 828 mln. bu. wheat(-47). 
   #China will start to resume more normal business activity with the end of the Golden Week holiday today.  Preliminary trade figures will come the next few days(they like weekend releases); watch for the preliminary Sept. soybean imports.
   #Weather forecasts remain generally good, with both the 6-10 and 8-14 day outlooks calling for warm temps and mostly below normal precipitation across the Midwest. But that same pattern does not bode well for getting the winter wheat crop established.
   #So far, the weather outlook for the Black Sea region remains mostly dry, but the weather models are not in great agreement today, with one calling for better moisture chances.  Temps are still expected to turn colder, limiting growth before the crop hits dormancy.  Southern African areas are seeing a droughty pattern, no rain, hot temps(typical for El Nino).  There is a chance of rain late this week in Mato Grosso, but for the most part, it still looks hot, dry.  Early soybean planting is getting off to a slow start in northern areas because of dry conditions.  Some light showers could occur in southeastern Australia, but amounts are not expected to be enough to offset impact of recent drying. Western Australia will stay dry.
   #U.S. producers are generally storing the crop and holding off sales.  Basis levels are already strengthening in areas from Illinois east where harvest is already starting to wind down.  Soybean basis levels may be the firmest with good crush markets and escalating export activity.
   #The Dollar is slipping lower on expectations the Fed will not increase in interest rates at this month’s meeting.  It did edge higher against the Euro on news that German industrial production fell more than expected.  There are also reports that foreign Central Banks are divesting holdings of U.S. Treasuries at the fastest pace on record; that could bring Dollar selling if they are reinvesting in their own countries. 

***** Cattle should start ​higher; lean hogs mixed/lower. *****  

   #Wholesale beef is steady, volume a little better.  Midday prices may play a part in the live and futures markets.  Wholesale pork is steady, with this week’s volume a less robust.  Cattle futures need to add to small positives from yesterday’s limit gains to help turn the emotional tide in the complex. Pork prices are facing more competition from the collapse in beef prices. Hog numbers are rising a little faster.  Today’s  Iowa/Minn weight implies plenty of market ready supplies
   #Cash hogs should be steady/weak.  Cattle could trade higher this week.