Agrivisor Afternoon Marketwatch

Tuesday, January 05, 2016
***** Corn futures ended 1-2 higher; soybeans 1-3 higher; and Chicago wheat 2-3 higher.  ***** 

   # Today, the focus was on the weekly CFTC report released late yesterday showing trading funds had sold more wheat, corn, and soybeans, with the wheat and corn positions pretty big on the short side by modern historical standards.  With the major USDA reports coming in a week, and with early day softness in the Dollar, there was a modest wave of short covering.  Prices were lifted enough to allow prices to close higher even though they sold off the early highs. 
   # Overnight, Chinese leaders acted on several fronts to calm investors in their markets.  The most important might have been talk of new guidelines about they will handle large scales selling after a ban on selling by large stakeholders expires on Friday.  The Central Bank also injected money into their financial system and intervened in the forex market to support their Yuan. 
   # Weather remains a dampening influence in the grains with the forecasts form more rains in the center/west areas of Brazil into mid-month.  And there was more talk about light snow showers still occurring in Russia, enough to limit winter kill from the current cold.  
   # There wasn’t any export news for the trade today, with business possibly remaining tepid until after the Jan. 12 reports.  But for the first time, there was talk about quality issues with the Argentine crop, a situation that shouldn’t be a big surprise given the heavy rains over the last month. 
   # One surprising note.  The Argentine govt. was lamenting producers had not sold old crop grains as willingly as they had anticipated given the lower tax and the devaluation of the Peso.  But sales the last 3 days of 2015 were significantly more robust, hinting the move to liquidate old-crop inventories, soybeans in particular, might have started.
   # Colder weather is forecast for the Midwest and eastern parts of the U.S., but moisture amounts aren’t expected to be troublesome, and that’s mostly good.  The Miss River has peaked at Cape Girardeau, Mo. and is peaking at Cairo, Il. on the Ohio, so transportation issues may not be extremely long lasting on the river system. 
   # Monthly condition reports indicated the winter wheat was 58% good/excellent in Illinois and 54% g/e in Kansas.  They were good enough to cap buying other than the previously mentioned short covering.
   # Tomorrow, the weekly ethanol and crude oil numbers will be released, with the crude stocks potentially important to the minor trend of oil.
   # We’d expect to see trade estimates for next week’s USDA reports out tomorrow too.    

***** Live cattle futures ended the day $0.35 higher to $0.07 lower, feeder futures were $0.15-$0.27 higher, with lean hogs $1.67-$0.02 higher. ***** 

   # In the cattle trade there was talk of grocers buying steaks/roasts for post-Christmas business, but that would be counter to the tradition of going with lower priced cuts at this time.  Still, wholesale prices were sharply higher, with choice moving $10 higher the last 2 days.  The cash cattle trade was thin, with feedlot showlists larger and packers still generally short bought.
   # Lean hogs may have been the strongest, with the nearby futures anticipating weather issues later in the month, although not necessarily anything severe.  Feb. futures have an over $8 premium to the cash index, a price with cash prices struggling to move up.  Wholesale prices were a little firmer, but volume was modest at best. Packer margins are still reasonably strong.