AgriVisor Morning Marketwatch

Tuesday, May 03, 2016
***Good Morning***

***** Grains are slightly higher to start the day; soybeans 8-10 higher, corn 1 higher, and wheat 1-3 higher. *****

   # For the most part, the early strength in grains is coming from Monday’s late strength and from overnight weakness in the Dollar.  The soy complex is still the key upside leader, with soymeal the product still leading the way higher. 
   # 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 that kicks off today 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.  
   # 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. 
   # S. American weather and crops still remain the biggest variables in the grain trade.  There’s still talk today about yesterday’s story suggesting Arg. soy losses could be as much as 15%, 9 mmt., but that story may be starting to “peak.”  Harvest is being watched for quality insight; it was thought to be 24% done last Thursday.  Corn harvest is about the same.  A key S. American analyst over the weekend suggested Brazil’s 2nd crop corn could have already lost 5-10 mmt. productive potential, nearly 10-20% off earlier expectations.  Another private firm yesterday suggested losses are closer to 5.5 mmt. The state agency in the key state in Brazil is thinking yields in that state could be off 17% from last year, which could push potential loss estimates more toward the upper end of the 5-10 mmt. range.
   # A state grain exchange in Arg.(Cordoba) forecast a 31% jump in wheat planting, with some thinking plantings could rise as much as 70%. 
   # It was mostly dry over the weekend in the northern corn areas of Brazil.  That will persist through the week.  Early next weekend there could be some light scattered showers, but overall, rain chances don’t look promising.  For Argentina, Uruguay, and southern Brazil, there are some light showers, but overall, the pattern still looks drier, which will help harvest and improve transportation.
   # Monday’s USDA March soybean crush showed a 166.3 mln. bu. were crushed, just above expectations. 
   # Redeliveries against May futures are starting to slip for soyoil, wheat, KC wheat, and soybeans.  Deliveries against corn and soymeal have still not occurred.

***** Cattle should start higher; lean hogs slightly higher. *****
   # Wholesale beef ended lower again, with pork cuts ending mostly higher.  Cattle prices traded at the lower end of last week’s trade yesterday, but asking prices are said to be moderately higher.  This week’s show lists are a lot smaller than last week..  Hog prices are expected to trade slightly higher again.  
   # 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.