AgriVisor Morning MarketWatch

Monday, December 14, 2015
***** Corn up fractionally as soybeans climb off overnight lows as we trade closer to the break; wheat prices 1 to 2 cents weaker. *****

   # Grains trade quietly mixed overnight.  Corn futures are a touch firmer within a 2 cent range as beans are fractionally weaker with highs and lows about 6 cents apart.   
   # We look first to outside markets lately to assess the trading environment for grains.  Oil prices are falling further overnight with WTI crude futures down nearly another $1 to pressure the commodity space.  Dollar index futures are moderately higher to help keep a lid on buying enthusiasm.      
   # All eyes are on the Fed this week as policymakers are thought likely to raise interest rates upon the close of their December 16 meeting.  Markets are pricing in a 75 percent chance of a rate bump.  Higher interest rates should be friendly the dollar and negative commodities in theory, but many traders suggest that the small anticipated rate increase is already well priced into the market.      
   # The official outline for Arengtina’s new grain export tax schedule was announced on Monday.   Industry players were correct to expect the newly-elected President Macri to eliminate corn and wheat taxes while reducing soy taxes from 35 to 30 percent.  Still no word on how the administration is likely to manage quotas.     
   # USDA issued an update to its baseline crop production estimates last week.  The government suggested we could see a more than 2 million acre increase to corn plantings, putting the tentative 2016 forecast at 90.5 million acres.  USDA pegged soybean acres at 82 million and wheat at 53.   
   # Rainfall has recently relieved growers in Mato Grosso, Brazil of some worry.  But, weather will turn dry again this week for the region.  Traders continue to watch an El Nino that has meant dry conditions for the Northeast and very wet weather for the southern regions of Brazil.  
   # January soybean futures are running up against resistance from their 20-day moving average on Monday morning. The bulls may try to prop the board up now that prices have made a 62 percent retracement of the late-Nov/early-Dec move up.  

***** Cattle futures likely to start steady/weaker; hogs could find pressure from chart resistance at the open. *****  

   # Cattle futures finished out last week without much guidance from a Friday cash trade.  Beef demand is tepid at best, so far a disappointing feature for the market in December.  Futures contracts remain short-run oversold by many technical measures. 
   # Hog slaughters continue to run very high, but expectations are for the pace to begin decelerating from here.  Expectations for improved pork demand are also beginning to develop and lend some support to prices.  February futures have a test of technical resistance from the 50-day moving average just overhead.