AgriVisor Afternoon MarketWatch

Tuesday, February 09, 2016
***** Corn futures down 1 to 1 1/4 cent; soybeans up fractionally; Chicago wheat lower by 1 to 1 3/4. *****

   # Report day came and went with only a few minor adjustments having been made to the balance sheets.  The trade response was muted in the immediate moments after the report’s 11:00 a.m. release.  February crop reports are usually known to be less impactful because U.S. yield and acreage figures have already been set in January.    
   # U.S. corn carryout rose by 35 million bushels as a result of a 50 mbu reduction to the export target, a 10 mbu addition to imports, and a partially-offsetting 25 mbu addition to ethanol use.  A 10 million bushel reduction to soybean crush carried through to add 10 mbu to carryout.  Wheat carryout increased by 25 million bushels as exports dropped by the same amount.        
   # U.S. corn imports were added to account for bushels shipped by the South Americans to feed users in the Southeast.  A string of strong ethanol production reports allowed the final grind total to be revised higher.  The reduction to exports follows many weeks of sluggish sales and shipments reports.  Increased competition from Argentine meal exporters caused the USDA to bring down the soy crush target.   
   # Brazilian soybean production was unchanged from January at 100 million metric tons, but Argentina’s estimate grew by 1.5 mmt to 58.5 mmt.  World soybean carryout was upped by a little more than 1 mmt.  World corn carryout was little changed, despite bigger forecasts for both the Brazilian and Argentine crops.   
   # The report does little to change anyone’s mind about the pressure that large global grain stocks place on grain prices.  Still, large grain surpluses are no form of a new storyline and look to be already priced into the market.       
   # Fund traders do not show a willingness to want to press the short-side by very much more after having renewed bearish grain bets during the last few weeks.  The large speculators had held a net-short corn position totaling more than 75,000 contracts heading into today’s report.         
   # Weak oil and equities are a persistent headwind for the grains.  Anxiety over the health of European banks mounted today to add to overall worries about the state of the global economy.  Wednesday’s weekly stocks report will give the oil market some guidance while late-week testimony from the Federal Reserve chair may lend some direction to U.S. equities.      

***** Live cattle down the $3 limit with feeders also locked-limit, down $4.50; hog futures trade $0.67 lower to $0.12 higher. ***** 

   # Cattle futures stabilized after Monday’s limit losses.  Traders were betting that the cash trade can feature some steady or slightly improved prices when the market develops later in the week.      
   # Hog futures will continue higher as long as cash and wholesale markets continue to show strength.  Midday pork prices were up $1.15 on the carcass average.  A strong uptrend remains intact on the charts.