AgriVisor Morning MarketWatch

Thursday, March 17, 2016
***** Corn up 2 cents ahead of the export sales report; soybeans up 4; Chicago wheat higher by 3 1/2. ***** 

   # Commodities trade broadly higher overnight as a result of sharply lower dollar.  Wheat leads the way for the grains.  Oil builds on strong gains achieved Wednesday.  Metals are the best performer in the commodity space with gold futures up by more than $40 an ounce.  
   # The dollar is weaker after the Federal Reserve announced interest rates would likely stay lower for longer.  The consensus of the FOMC group that had previously called for four rate hikes in 2106 now looks for only two.              
   # Major currencies like the yen and euro are not the only ones gaining on the dollar; emerging market currencies like the Brazilian real are up strongly as well.  A continued recovery for the South American currencies would be a favorable development for U.S. exporters.
   # Improved strength for commodity currencies is a partial product of oil’s recent rebound.  News was negative early in the week with Iran announcing its intention to increase production, but sentiment shifted when OPEC agreed to meet with non-OPEC members next month to discuss changes to output targets.      
   # Weekly export sales will be reported this morning at 7:30 central.  Traders look for corn sales to drop on the week with an average guess near 35 million bushels.  Soybean sales are expected near 20 million with wheat around 10-12 million.  
   # Wheat futures had a rough session on Wednesday as traders priced in some renewed pessimism U.S. supply and demand imbalance.  Domestic inventories remain large and exports continue to struggle.  Egypt’s latest tender showed that U.S. traders are still underpriced by those in France and the Black Sea.                
   # The wheat market faces some pressure on a report that Argentine wheat would be headed for the U.S. Southeast.  Unfavorable currency terms still leave U.S. exporters facing stiff trade competition from growers abroad.                 
   # Technical buying helps wheat to bounce back overnight.  Chicago May futures are looking to keep support from their 50-day moving average.  Corn futures made a new high for the week with the May having a technical test at $3.73 1/2 just overhead.  Soybeans are working on key chart resistance with the nearby reaching an overnight high of $9-even.    
   # Strength in metals and energies should help mining stocks rebound today.  Bank shares are having a tough time due to central bank uncertainty and the general pressure that low interest rates have on profitability.  U.S. stock traders will continue to react to the Fed comments and will also have data on trade and labor to digest this morning.                     

***** Cattle futures likely to enjoy some follow-through buying interest at the start, but gains could be limited by technical resistance; hogs look to start steady/firmer with some support from outside markets. ***** 

   # April live cattle futures are up $1.75 so far on the week behind good gains in the wholesale market.  Some profit-taking on an overbought technical picture may limit strength early in the session as trader wait to see how the cash market develops.  A Cattle on Feed report will give further guidance on Friday afternoon.               
   # Hog futures made a bullish reversal on Wednesday to maintain technical support.  There is still some overall caution on the part of buyers as they anticipate some cash and wholesale weakness during the time in between Easter and Memorial Day.