Agrivisor Morning Marketwatch

Thursday, January 28, 2016
***** Grains are slightly lower to start the day; soybeans 2 lower, corn 1 1/2 higher, and wheat 1 lower. *****

   # South American potential continues to be the bigger focus of the grain trade other than the day-to-day actions in equity/financial/energy markets.  Early yield reports from Mato Grosso continue to be highly variable, with the bias to the downside.  A state report Monday indicated 30% of crop was deemed poor/terrible. A team touring the state is still only projecting a 3% drop in the avg. yield this year. 
   # Reports out of one of the key grain exchanges this week have put a lot of focus on the Argentine crop too, especially the corn crop.  Early season weather hasn’t been universally good, with pockets of dryness hitting corn potential hard.  Some of these same locations are still seeing some moisture stress. 
   # The first estimate of the S. African corn crop pointed to a potential 7.44 mmt. crop, down 25% on the year, but better than some had been thinking given their weather this year.  There had been some private forecasts at 6 mmt.
   # There’s still some talk of Chinese interest in buying corn, but most of the activity is centered on business with Ukraine.  It’s said they have bought 1.2 mmt. of corn.  A couple of cargoes are thought to be from the US.
   # USDA typically reports export sales today, but it was postponed until Friday because of lingering issues from the blizzard to start the week in Washington.
   # The world grain trade, soybeans in particular, is going to start feeling the effects of the normal lull in business during the Chinese Lunar New Year; Feb. 8-13. 
   # The oil markets are still talking about rumors that Russia is talking with OPEC about cutting output to shore up prices.  There aren’t any details, but the talk is limiting downside risk; at least creating the perception that risk has been curtailed. 
   # Equity/forex traders generally perceived Wednesday’s post meeting Fed comments as somewhat dovish.  But even though the Fed acknowledged the ongoing weak global environment, the lack of any comment about monetary policy made some a little uneasy. Equity traders are bracing for a number of earnings statements the next few days. Chinese stocks were down again too.  Reports coming today: durable goods, jobless claims, and pending home sales.
   # The Dollar lost some ground late yesterday in the wake of the Fed meeting, but mostly drifted sideways in the overnight trade.  They will be watching the Bank of Japan meeting Friday, along with the US economic reports.
   # The latest weather forecasts show scattered showers continuing across the center/west area of Brazil.  Temps will trend a little warmer, but don’t look hot.  Scattered showers will prevail through the weekend in southern Brazil/Argentina, with temps mostly near normal.  Meanwhile, very cold temperatures will remain across northern China.  Their winter wheat crop doesn’t have good snow cover.

***** Cattle should start slightly higher; lean hogs steady/firm. *****
   # Wholesale beef is slightly lower; pork prices were slightly lower.  
   # Cattle feedyards are said to be asking higher money, but with sagging beef prices, they aren’t likely to get much more than steady.  Pork packers have been more aggressive, buying hogs to keep lines full because of good margins.  But they too could temper their actions with wholesale prices starting to “flatten.”