Agrivisor Morning Marketwatch

Friday, March 04, 2016
   ***Good Morning***

***** Grains are slightly higher to start the day; soybeans 9-10 higher, corn 3 higher, and wheat 3-4 higher. *****

   # The most notable shift, and one that has gained increasing traction through the week, has been the idea that commodity prices in general may be bottoming.  It started in crude oil with the response to the midweek inventory data, but has spread to other sectors as well.
   # Short covering has dominated the upward movement in grains, especially in wheat where funds held a large short position.  But today, the trade is talking about the warmth and the lack of significant moisture in the S. Plains.  It’s nowhere near threatening, but with El Nino fading, traders are wary.  The industry is also noting other pockets of dryness with India and Morocco noted today. Sov Econ forecast larger Russian crops for this coming year, 105 mmt total, and 62 mmt for wheat, but garnered little attention as the growing season is just ready to begin.
   # There’s also some talk about next Tuesday’s USDA numbers, with corn in particular getting some attention.  Some expect the USDA to lower corn export forecast another 50-100 mln. bu.  On average, the ending stocks are only forecast to rise 17 mln. bu.  The wheat stocks forecast is expected to rise 13 mln. bu. to 975, while the soybean stocks change will be very small with the trade looking for 452 mln. 
   # South American production estimates are expected to be close to last month’s USDA forecasts.  Traders look for: 27.23 mmt corn and 58.85 soybeans for Argentina, 84.50 mmt. corn and 100.13 soybeans for Brazil.  There is some talk about Argentine wetness and flooding and problems in moving the crops from the field which could slow the early harvest. Harvest is slow to start with only 1.9% harvested, slightly behind the normal early pace. Truck shipping costs are said to be up as much as 30% in Brazil this year, cutting into the price producers are being paid.  There is some talk about the 2nd crop corn area in Brazil possibly not being as large as forecast because it is getting late to plant.
   # The Dollar rose slightly in the early trade in the wake of the employment data.  US job numbers rose more than expected, 230,000 in February.  The January data was revised up slightly too.  But the January trade deficit was a little larger than anticipated.  There’s also a drag on the Dollar from yesterday’s soft factory orders report. Equity markets strengthened on the employment numbers, but buying was tempered ta the higher levels.
***** Cattle should start steady/weak; lean hogs narrowly mixed. *****  

   # Wholesale beef is slightly lower; pork prices were steady/lower.  
   # Cattle trade was light this week, even on Thursday, but with downward pressure in wholesale and poor packer margins, we’d expect to see feedlots to be forced into making enough necessary sales to push trades to the lower end of last week’s range, low to mid $130s.  Soft wholesale prices and comfortable hog supplies should put cash hog prices on the defensive too.