AgriVisor Afternoon Marketwatch

Wednesday, April 20, 2016
***** Corn closed 6-10 cents higher; soybeans 22 to 24 higher; Chicago wheat 16 to 18 higher. *****  

   # Fundamentally, the focus is still on Argentina and the heavy rains that have stalled harvest and possibly lowered the quality of their soybean harvest.  That has been building, but it wasn’t until this week that the investment money starting jumping in, fueling the steep surge in soybeans, a move that helped trigger strength in the other grains. 
   # The corn market got some added fuel with indications that Brazil will lift their 10% tax on corn imports from non-Mercosur countries. The tax will be eliminated for 6 months, covering up to 1 mmt.  Given the problems their safrinha crop is having in the northern areas, it is seen as a validation that is going to fall well short of expectations.  But the root of the issue is that they oversold/exported corn from last year’s crop and part of their first crop. 
   # Weather forecasts are starting to shift for Argentina, with the latest forecasts indicating the pattern appears to be in the early stages of turning drier, bringing some relief from the persistent flooding, while allowing harvest to resume and eventually accelerate. For the northern production regions of Brazil, where much of the safrinha crop is located, there’s still little rain in the forecast.
   # To say there has been a big shift in money in grains would be an understatement.  Soybean futures open interest is said to be a new record levels.  Adding in options, it’s at its highest since 2012.  In corn, funds were said to have bought 17,000 contracts by midday.  But like wheat, although to a lesser degree, they have been short.  And for wheat, as of last Tuesday, they were still holding near record short positions in a market that had offered its first good sign Tuesday the bigger trend might be turning.
   # Short term forecasts for much of the Midwest are good into early next week.  But the 6-10 and 8-14 day forecasts point to slightly wetter than normal conditions beyond that.  Temps are a little cool to the north early, but as a whole tends toward normal/warmer than normal across the Midwest.
   # Export sales come tomorrow: the trade looks for; soybeans 200-700,000 tons, corn 1.0-1.4 mmt., and wheat 100-550,000 tons.
   # Crude oil moved up Wednesday with the weekly stocks build coming in slightly less than expected.  U.S. output has been falling, with gasoline demand said to be robust, helping fuel the gains. 
   # The Dollar moved higher today with home sales coming in better than expected.  That and the stronger energy sector helped equity markets move up as well.
**** Live cattle down $0.72 to $1.30, feeders down $0.35 to $0.92 lower; hog futures finish $1.02 to $0.25 higher. ***** 

   # Fear about soft demand and too much supply continue to plague cattle.  Wholesale prices were steady/weak on decent volume.  There was a moderate level of cash cattle trade at slightly lower levels.
   # Hog futures were supported by the persistence of firm cash prices and steady gains in the wholesale market.  Still, the industry is waiting on the indication the seasonal decline in supply has started.