Agrivisor Afternoon Marketwatch: Chinese corn uncertainty

Tuesday, November 03, 2015
***** Corn futures ended Tuesday 3-4 cents higher, soybeans fractionally changed, with Chicago wheat 7-8 higher.    ***** 

   # A story broke overnight indicating late season weather may have cut Chinese corn production sharply.  One analyst suggested this year’s crop could be over 5% lower than last year’s; the USDA has been talking about a 4% increase, as has the prime Chinese govt. tied analyst.
   # Brazil reported October exports today.  Corn exports were a record 5.5 mmt., with soybeans 2.6 mmt., the latter down from September’s 3.7 mmt.    
   # The trade was discussing FC Stone and Informa expectations for the coming USDA report.  FC Stone is looking for a corn crop of 13.543 bln. bu., yielding 168 bu./acre.  Informa is looking for a 13.718 bln. bu. crop with a 170.1 bu. yield.
   # Their soybean estimates were: FC Stone, 3.917 bln. bu. with a 47.5 bu. yield; Informa, 3.952 bln. bu. with a 47.9 bu. yield.  FC Stone’s yield is as big as last year; Informa’s is higher.  Both have a tendency to be higher than the USDA on corn and soybean yields.
   # Weather remains a part of the mix, especially wheat.  The Black Sea area continues to have relatively dry conditions, potentially undermining the 2016 production.  Fall conditions are thought to have cut acreage in Russia and Ukraine.  Temps will be warm, which should improve growth a little before dormancy.  Australia had some weekend showers, with temps moderating from the recent extreme heat, but with harvest starting, rains are not seen as a positive feature.   The latest forecasts do include some showers for the center/west area of Brazil, but the longer range forecasts are said to still be on the dry side.  Southern areas remain good.
   # Financial and equity markets are still primarily focused on the Fed and economic reports.  Traders are uneasy again after the Fed left the door open for a rate hike at year end.  Traders think interest rate futures are hinting at a 50% probability of an increase.  Employment numbers come on Friday, and are seen as a possible swing factor.  Today’s crude oil strength did not go unnoticed, with Dec. futures ending $1.76 higher.

***** Live cattle futures settled $1.45-$.67 lower; feeder cattle $1.62-$0.65 lower, and lean hogs $0.92-$0.57 lower. ***** 

   # Weak pork demand and declining prices drove cash hog prices and lean hog futures lower.  Slaughter numbers are starting to push on capacity limits, keeping packer margins weak, adding to cash hog weakness.  
   # Wholesale beef prices turned lower, pressured by the declining pork and turn in interest to turkeys.  Feedlot show lists are as large as, if not a little larger than last week, with weakening packer margins adding to the weaker bidding for cattle in the cash market.