AgriVisor Afternoon MarketWatch

Tuesday, May 10, 2016
***** Corn futures settle higher by 10 1/4 to 12 cents; soybeans rally 51 3/4 to 57 1/4; Chicago wheat up 4 1/2 to 5. *****

   ***Check soybean advice

   # U.S. new-crop carryout estimates came in below trade expectations, corn by a little, soybeans by a lot.  Corn carryout was projected at 2.153 billion bushels versus an average estimate from analysts of 2.294 billion.  Number of the day was 305 million, the 2016/17 soybean ending stocks estimate that compares to an average trade guess of 405 million.
   # The bullish carryout estimates were not a product of lower-than-anticipated supply estimates; USDA used the March 31 acres numbers along with trend line yields.  Instead, the friendly corn and soybean ending stocks estimates were a result of aggressive demand forecasts.
   # Total corn usage is expected to grow by 535 million bushels from 2016 to 2017, so the burden of proof will be on demand from here on out.  USDA also forecasted record soybean crush and export usage.
   # South American production estimates were cut, but only conservatively as far as many analysts are concerned.  Brazilian corn went from 84 to 81 million metric tons.  Conab, Brazil’s crop agency released an 80 mmt corn output estimate this morning.  Brazilian soybeans moved lower from 100 to 99 mmt compared to Conab’s 96.9 mmt estimate.  Argentine corn and soybean estimates were lowered, but not by as much as anticipated.  
   # Wheat mostly tagged along, without having much in the way of bullish report numbers of its own.  A large old-crop carryout will pad U.S. supplies in the 2016/17 season.  Exports should grow to help siphon off some of the surplus inventory. World ending stocks in 2105/16 jumped 1.5 percent over the April estimate.        
   # July corn futures hurdled over the 100-day moving average but were turned away by the 200-day.  Highs at $3.95 and $4.07 1/4 should serve resistance.  Soybean futures made new one-year highs on the move.  A settlement outside of the upper Bollinger Band and a relative strength index (RSI) registering 73 point to the market being overbought in the short-run.
   # Traders will spend some time digesting the new numbers, but the focus will soon enough return to planting progress and production season weather.           

***** Live cattle settle $0.02 weaker to $0.22 stronger; feeders down $0.12 to $0.60; hog futures up $0.45 to $0.65. *****

   # The report did not cause the same excitement in the livestock markets as it did the grains.  The first look at 2014 numbers had higher beef production being offset by better exports and domestic consumption to leave ending stocks lower on the year.     
   # USDA made a friendly adjustment to pork balances with an addition made to total usage that cut endings stocks by 25 million pounds.  Offsetting that bullish carryout cut, the government analysts have pork production rising by 4 percent next year.