Agrivisor Morning Marketwatch

Thursday, February 18, 2016
***** Grains are slightly lower to start the day; soybeans 2-3 lower, corn fractionally lower, and wheat narrowly mixed. *****

   # Given the limited amount of significant news in the grain markets, prices are mostly being impacted by outside events.  But even today they seem to not be having much impact on grains.
   # Crude oil is showing strength again today, with prices approaching $1/barrel gains again.  Iran has stopped short of indicating it would freeze output, but has welcomed talks between various producers about trying to shore up the price structure.  Iraq has said much the same thing.  Last night’s API report indicated stocks fell 3.3 mln. barrels in the U.S. last week.  EIA numbers, along with ethanol numbers, come at 9:30 today.
   # In the wake of the doubts expressed by the Fed in the meeting notes released yesterday, the Dollar held firm.  Officials weren’t certain as to whether world economic conditions would allow them to follow their planned path of rate hikes in 2016.  Minutes from the ECB will come today, potentially adding a little clarity to their plans/attitudes.
   # In the grains, there’s some wonder as to whether the grains can shake off some overnight weakness and close firmer again.  More than anything, traders think it will take some fund short covering to carry prices upward again today.
   # There is persistent talk about the large early ship line-up at Brazilian ports.  It’s said to be 166 ships today, compared to 63 a year ago.  Already there’s some scant evidence the large line-up is diverting some loadings to the U.S.  Some argue the ships are arriving early to get queued up to load for a lack of anything else to do because of the lighter world bulk trade activity.
   # In the corn trade, the talk continues about Chinese plans/intentions to start paring the govt. stockpile.  The latest talk continues to surround the idea of selling the old stocks to domestic ethanol producers.  Some of these old stocks are said to be poor quality, including some said to be moldy.  The idea of exporting corn has been advanced, but at this stage, that appears to be closer to talk than it is to reality.  And only exports would affect the world prices given their low import profile.
   # S. Africa continues to get some attention with the trade sifting through indications as to when, where they will import corn/feedgrains to offset the shortage brought on by this year’s drought.  S. America is expected to benefit most, but with U.S. corn slightly cheaper than Brazilian corn. 
   # Egyptian news continues to be center stage in the wheat trade.  They finally put in writing the new policy of accepting trade amounts of ergot in wheat imparts.  Still, inconsistencies in applying policy remain, keeping some premium in the offering prices. 
   # India remains a part of the wheat trade as well.  There is some doubt about a recent upbeat government forecast.  And rains are finally in the forecast, but will come at an inopportune time with harvest starting.
   # Strategie Grain put out some new estimates for the EU, but changes weren’t significant, with a price outlook that remained negative. 
   # The latest weather forecasts show scattered showers continuing across Brazil and Argentina into next week.  Temps will be near normal, possibly slightly above.  There is a couple of cold waves on tap for the Black Sea region, but nothing cold enough to impact the wheat crop.  Chinese wheat areas will see some rains.  Our S. Plains is turning warmer, with a pattern that looks a little drier.

***** Cattle should start steady/higher; lean hogs steady/firm. *****
   # Wholesale beef w​as steady/slightly lower; pork prices were steady.  
   # Cattle feedyards are asking higher money, and with packers thought to be short bought, it’s possible they could firm a little today.  But margins are pinched and wholesale prices are weak, which should cap cash prices.  Hog prices have a better chance of firming with packer margins still very good and wholesale prices holding firm.