AgriVisor Afternoon MarketWatch

Tuesday, April 12, 2016
***** Corn futures up 5 to 6 cents; soybeans up 7 to 8; Chicago wheat up 3 1/2 to 5 1/4. *****

   # Report day didn’t feature any major surprises, but the trading session was eventful nonetheless.  The grains gave a bit of a head-fake, coming off session highs after the report was released but rallying back into the close.  Trading volume was substantial with new contracts likely added to open interest.  
   # U.S. 2015/16 corn carryout was revised higher by 25 million bushels as an addition to the ethanol grind target was more than offset by a lower Feed and Residual estimate.  
   # U.S. 2105/16 soybean carryout dropped 15 million bushels on a like increase to the export estimate.  No changes were made to Crushings or Residual.  No changes were made to the U.S. soy product tables.  
   # USDA upped the world corn carryout estimate by 2 million metric tons, partly due to a 1 mmt increase in the Argentine corn production forecast.  The Brazilian corn output estimate was left unchanged at 84 mmt, despite expectations of a reduction.
   # World soybean ending stocks were adjusted marginally higher on a bigger crop in Argentina.  Brazilian output was left flat at 100 mmt.  
   # A 10 million bushel addition was made to U.S. wheat carryout due to a lower Feed and Residual estimate and a higher world carryout number was found to be a partial result of better production prospects for the European crop.
   # Corn futures closed in the upper half of the day’s trading range but faced some technical resistance from the 50-day moving average.  Resistance from the March 31 high of $3.67 1/4 sits about a nickel ahead of the settlement for May futures.  
   # Nearby soybeans are trading in the middle of a gap opened on the continuous chart last August.  The bottom of the gap coincides with psychological resistance at $9.50.  Volatility and relative strength indicators suggest futures to be overbought in the short-term.   
   # With report day out of the way, its back to focusing on weather.  U.S. forecasts are garnering more attention as planting season kicks off in the Midwest.  Dry weather is still a concern for winter wheat in the U.S. Plains.  Dry weather also spells potential trouble for Brazil’s second corn crop.

***** Live cattle settle lower by $0.37 to $0.60 as feeders drop $0.27 to $0.97; hog futures finish $0.30 to $0.42 weaker. *****

   # Cattle futures could not hold gains achieved mid-session and turned lower into the close.  USDA revised the 2016 beef production estimate up by about one percent over the March number.  The market should hold support into mid-week from a strong couple of days for the wholesale trade.       
   # The report had little to say for the hog market.  Pork production was lowered slightly and the export target was bumped up, but imports were higher and domestic consumption down to leave 2016 ending stocks unchanged.