AgriVisor Morning MarketWatch

Tuesday, February 09, 2016
***** Corn futures down 1 to 2 cents ahead of the break; soybeans down fractionally; Chicago wheat up fractionally. *****
   # Commodities start on the defensive as the global equities rout continues.  Action in the bond markets signal worry about the state of the economy.   
   # It is report day.  The grains are likely to decouple from outside market influences long enough to digest revisions to the USDA’s balance sheets.  Analysts could be in for a surprise as they head into the numbers looking for little change to U.S. and world carryout figures. 
   # USDA estimates for corn and soybean production in South America will be given plenty of attention today.  Analysts see little change coming to Brazilian corn output but look for a slight reduction to the soybean number, on average.  It is simply too early to do much fine-tuning to the corn estimate with much left unknown about the eventual size of the second crop.  Brazil’s soybean harvest is 10-15 percent complete. 
   # Chart action has turned negative for the grains with corn, soybeans, and wheat all trading below their major moving averages.  March corn lost gap support on Monday and settled below support from $3.65 while nearby soybeans re-approach an old low at $8.52.  Futures do show some signs of being oversold in the short-run after suffering significant losses over 4-5 straight sessions.   
   # The U.S. two-week weather outlook calls for a cold spell early and warmer than average temperatures later in the period. Weather in South America is mostly favorable but for some rain disrupting harvest efforts in parts of Brazil.  Conditions are good for winter wheat in Russia and Ukraine. South Africa remains hot and dry.       
   # Fund traders are anteing back up on their bearish corn bet.  After cutting the net-short by about a third during the last reporting week, managed money is back holding about 75,000 more shorts than longs.        
   # U.S. stock index futures suggest we could have another ugly day in the market.  Shares are lower as markets in Japan and Europe tumble.  Traders will have some guidance later in the week as Fed Chair Yellen gives testimony to Congress.       

***** Livestock futures likely to open with pressure from weak outside markets. ***** 

   # Cattle futures will open with expanded limits today after they closed limit down on Monday.  A disappointing round of cash sales late on Friday weigh on the board at the start of the week.  
   # The landscape remains bullish for hog futures, both fundamentally and technically.  But, hogs will struggle to gain additional headway as long as outside market influences remain so negative.