AgriVisor Afternoon MarketWatch

Wednesday, May 11, 2016
***** Corn futures down 2 1/4 to 4 1/2; soybeans off 1 1/2 to 6 1/4; Chicago wheat settles lower by 2 to 3 1/4. *****

   # Traders are drawing out the retracement levels in order to gauge possible downside risk for soybeans.  A 38 percent retracement would bring the July contract down for a test of $10 while the 50 and 62 percent retracement targets coincide with $9.75 and $9.50.
   # Meal futures have been the leader of the soy complex lately, having gained 33 percent since April 1st.  Soyoil futures, the darling of March, are down 3 percent since the start of April.  Soybean futures are up 18 percent over that timeframe.   
   # Down days for soybeans have rarely been followed up by further weakness lately.  Since March 1, only one time have there been two consecutive down days for soybean futures (April 4 and 5).  
   # Ethanol production turned up sharply out of its seasonal dip.  Output totaled 962,000 barrels per day last week, up 4.2 percent on the previous period.  Corn grind was a robust 101 million bushels.  Use needs to average 98.3 million per week to meet the USDA’s 2015/16 target of 5.25 billion bushels.  
   # USDA analysts expect China to continue holding the bulk of world grain stocks.  By the end of the 2016/17 marketing year, China is projected to carry 101.5 million metric tons, or 49 percent of the world total.  It is estimated that Chinese wheat ending stocks will build to 118 of the world’s 257 million metric tons.  
   # After Tuesday’s upward revisions to the USDA’s 2015/16 corn and soybean export targets, traders will be eager to see tomorrow morning’s sales report.  New corn bookings are expected to come in near 1 million metric tons. Soybean sales should tally around 350,000-400,000 mt for both the old and new-crop ledgers.   
   # More severe weather could be in store for the Plains this afternoon/evening.  Mid-week storms kick of a period of cold weather.  Frost/freeze threatens the North.  
   # U.S. crude oil inventories declined by 3.4 million barrels last week.  Traders were looking for an increase of 400,000 barrels.  Gasoline inventories were also down.  Futures prices responded by rallying 3.5 percent. 
   # A couple of disappointing corporate earnings reports pressured U.S. stock markets.  Services were the hardest hit sector.  That segment of the market will receive further guidance on Friday when the April retail sales report is issued.   

***** Live cattle settle $0.45 weaker; feeders down $0.85 to $1.20; hog futures up $1.42 to $2.02. *****

   # Solid beef gains helped support cattle futures early.  Choice cuts were up $3.33, select +$4.04.  First cash bids are popping up near $124 live against $132 - $134 offers.  Futures turned lower as technical selling picked up.            
   # Hog futures started with support from follow-through cash and wholesale optimism.  Gains grew after technical buying picked up.  Buyers are still going to be cautious until they can see slaughter numbers come down.