AgriVisor Morning MarketWatch

Tuesday, December 22, 2015
***** Corn fractionally changed at the break; soybeans up a penny; Chicago wheat up 2 cents.​ *****

   # Grains trade with a slightly firmer bias overnight.  Volumes are light and should continue to be so throughout this shortened holiday week.  
   # Traders are watching to see the extent of which forecasted storms roll through Mato Grosso, Brazil today. It has been only scattered showers in recent weeks for the center-west and northeast regions of the country.  Parts of Brazil are up to 10 inches short from normal rainfall totals in the past 30 days.                  
   # Palm oil prices were higher on Monday as Malaysia’s ringgit currency fell.  Edible oil markets in Asia are also benefiting lately from expectations for El Nino to hurt production.  U.S. soy oil has enjoyed support from the palm oil move with futures prices up 10 percent over the last 30 days.  
   # El Nino ideas have triggered a soy oil buying spree by the fund traders.  Managed money is estimated to hold a net-long in the order of 75,000 contracts or more.  The large speculators are net-short corn and wheat by about 50,000 contracts apiece and net-short about 15,000 soybeans. 
   # Australian meteorologists reported that some cooling has been observed in waters of the equatorial Pacific, signaling the beginning of the end for El Nino.  Still, El Nino will remain strong into the early months of 2016 and likely holds as a major threat for growers abroad.   
   # Ongoing political and economic developments in Argentina still serve as a significant headwind for U.S. grain markets.  Argentine farmers are becoming more willing sellers of long-hoarded grain inventories after the new president’s administration cut export taxes and devalued the peso.    
   # There has been a slight uptick in U.S. producer selling ahead of the new calendar year.  We will look to see if marketings pick up even more when the next tax year rolls around.  A recent five-year average observation from the USDA has farmers making more than 14 percent of corn sales in January, more than any other month.    
   # A few bits of economic data were released this morning.  The final 3rd quarter GDP number was revised to 2 percent, down a tenth of a point from the preliminary figure but up from the 1.9 percent consensus estimate.  The consumer spending estimate was unchanged from the preliminary at +3 percent on the quarter.   

***** Cattle futures likely to make a moderate retreat at the open but have the potential to eventually resume move up; hogs to start fractionally mixed with a likely lack of direction for the early part of the session. *****   

   # Cattle futures enjoy newfound momentum from the Friday/Monday rally, but the same bearish fundamentals still hang over the market.  Slaughters remain high and leave the market with plenty of beef to chew through.  The bulls are hoping the repeal of country-of-origin labeling (COOL) will help exports long-term.      
   # Hog futures continue to face pressure from a pork production pace that has not leveled off in December as expected.  Traders will get a look at inventory counts with this afternoon’s Cold Storage report.