Agrivisor Afternoon Marketwatch: fund short covering

Wednesday, November 04, 2015
***** Corn futures ended Wednesday fractionally lower, soybeans 3-5 cents higher, with Chicago wheat 8-10 higher.  ***** 

   # The stronger Dollar early in the day based on comments Fed Chairman Yellen made put the grains on the defensive.  But weather issues for wheat turned it higher, carrying the other grains with it.  Fund buying(likely liquidation) was the ingredient responsible for the extent of gains.  Funds were said to have bought 4000 contracts of wheat, 3000 each of soybeans and corn.
   # The weekly ethanol output, 966,000 bpd was higher than expected(about 101 mln. bu./week) adding to corn’s early lift. 
   # Talk of Chinese buying remains a persistent supportive influence in the soybean complex.  
   # Export sales are out tomorrow.  The trade is looking for: 1.4-1.8 mmt. soybeans, 150-350,000 soymeal, 300-500,000 tons of wheat, 450-650,000 tons of corn. 
   # Brazilian and Argentine farmers are not making many cash sales.  Brazilian farmers think they already have enough new crop on the books.  Argentine farmers are waiting on the late month election outcomes, hoping a new regime will lower/eliminate export taxes. 
   # Trade estimates are out for next week’s USDA report.  Corn expectations are up slightly, 13.564 bln. bu. crop with a 168.2 bu. yield.  Soybeans are expected to increase slightly too; 3.914 bln. bu. crop at a 47.5 bu. yield
   # Weather remains a part of the mix, especially wheat.  The Black Sea area is still experiencing relatively dry conditions, potentially undermining the 2016 production.  25% of the Russian crop and 30% of the Ukraine crop are thought to be in poor condition. Australia is having some showers in the east, but aren’t welcome with harvest starting.   The center/west area in Brazil is having some showers, but not enough to suggest the rainy season has started.  But they are stimulating planting activity.  Still, Mato Grosso plantings are the slowest in 5 years. Southern areas remain good.
   # Fed Chairman Yellen hinted a rate increase is reasonably likely when they meet in December, although new economic data will guide their actions.  The latest employment data will be released Friday. 

***** Live cattle futures settled mostly $3.00 lower; feeder cattle mostly $4.50 lower, and lean hogs $0.82-$0.62 lower. ***** 

   # Weak pork demand and declining prices are driving 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.  The discount futures have to cash prices is the key limiting weakness.
   # Talk of softer cash markets dropped cattle futures through minor supports, allowing futures to have a limit decline.  Slightly negative packer margins are adding to pressure on the live market.  Futures premium to cash is adding to weakness.