AgriVisor Afternoon Marketwatch

Monday, May 02, 2016
***** Grains ended the day mixed, with soybeans leading the strength; they closed 13-14 cents higher, corn steady/fractionally higher, but wheat mostly 1 lower. ***** 

   # Soymeal led the way higher in the soybean complex.  Ongoing talk about Argentine problems has energized the meal trade.  Late today, there was a story out of Argentina suggesting the flooding could have “wiped out” 9 mmt. of production.  That was another forecast at what was assumed to be the extreme for losses.  It may be closer to reality, but it also opens the door for the Argentine problem to be mostly built into prices.  Oil be contrast was sharply lower behind both weaker energy and persistent product spreading.
   # Corn, nor wheat, followed the soy complex higher, but neither was weak either despite the drag of expected better weather, for both corn planting, and wheat yield enhancement. 
   # The afternoon progress numbers were not much of a surprise, coming close to expectations. The USDA reported corn planting at 45%, soybean planting at 8%, and spring wheat planting at 54%, although the latter was a little less than expected.  It’s also notable that corn planting is lagging in the N. Plains states.  The winter wheat condition, 61% good/excellent was 1 point higher than anticipated. 
   # The trade will be watching this week’s annual Kansas winter wheat tour for insight into the hard red crop.  In the wake of scattered reports of some freeze damage, “on ground” observations should offer better insight into yield potential than the weekly crop ratings.  
   # China is expected to announce their “official” reserve policy for corn soon.  Within that, they should announce upcoming sales to end users, a practice that normally starts in April/May each year.  There’s also a lot of speculation(some wild) about the size of inventory the govt. owns.  Some have put it as large as 250 mmt., but that’s likely a “mid-year” number, with the USDA’s current 111 mmt. ending stocks number is likely closer to reality. It’s not likely they’ll divulge the actual size. 
   # Export inspections were good for corn, 45.6 mln. bu., but a little soft for soybeans(5.5 mln. bu.) and wheat(13.1 mln. bu.).
   # Warm, dry conditions are expected to dominate the Midwest starting midweek, through the weekend.  The new 6-10 day outlook tended to be cool, wet except for the N. Plains(war, dry).  The 8-10 stayed cool to normal, but showed a drier streak in the mid-section.   Argentina continues to have a drier look, but Brazil’s pattern(north in particular) points to continued dryness too. 

***** Live cattle ended $0.87-$1.30 higher, feeders $0.92-$1.40 higher, and lean hogs $1.35-$0.65 higher. ***** 

   # Wholesale beef ended the day lower again, with pork cuts ending mostly higher.  Cattle prices ended at the lower end of last week’s trade on a very small volume.  Hog prices were up slightly on the day.  
   # Packers continue to make money slaughtering hogs, and now appear to be making money on cattle, in part thanks to better hide/offal values. The hog industry will watch slaughter closely this week for confirmation of last week’s downturn in numbers.