AgriVisor Morning MarketWatch

Wednesday, May 18, 2016
***** Corn down 2 to 2 1/2 cents; soybeans off 8 to 10; Chicago wheat lower by 2 to 4. *****

   # Higher open interest and an uptick in volume was observed for corn and soybean futures on Tuesday.  Corn open interest is about even with where it started the year at 1.35 million contracts.  Soybean open interest is a whopping 850,000 contracts, which compares to 650,000 at the start of the year.  While still substantial, trading volume in May has not matched that of a record April. 
   # July corn has turned lower from a test of yesterday’s high at $3.98.  $4.00 and $4.07 1/4 serve resistance as $3.86 lends potential support.  The report day high of $10.91 1/2 still stands to resist nearby soybean futures with the bulls working to hold technical support from $10.55.        
   # Worry about stock market performance may be sending some investment money into the commodity space.  Metals and energies can attribute some of their recent gains to such money flow.  CFTC data shows investment funds having added considerable length to their soybean position since the beginning of the calendar year.
   # It is a mostly dry day expected for the Midwest today.  An active weather pattern should remain for the western Midwest next week while some ridging could allow respite from wet conditions in the eastern Midwest, where planting delays have been noted.       
   # Corn and soybean futures were higher on China’s Dalian Exchange Wednesday.  Traders still have much uncertainty over how and when changes to the country’s grain stockpiling programs will be implemented.  Massive inventories of corn and wheat are held by the state; observers have questions about the quality of those holdings.  
   # The Dow Jones wire reports an increase in Malaysian palm oil export taxes.  The country’s increase in the tax from 5 to 5.5 percent is likely made in an effort to regulate the size of surplus after drought has cut production.  The news pressured palm oil prices on Wednesday.
   # Economists will deliberate further on the likelihood of a June interest rate increase after minutes from the Federal Reserve’s April meeting are released this afternoon.  Strong U.S. economic data yesterday had traders pricing in a slightly higher chance for rates to rise after the next FOMC meeting. 
   # Improved odds of a June rate hike had dollar index futures higher overnight, which dampened commodity market enthusiasm.  The index still hovers near the bottom end of its year-and-a-half trading range.          

***** Cattle and hog futures look to open steady to firmer with spreading actively featured again.​ *****

   # Wholesale beef has made sharp gains at the start of the week but traders are reluctant to think the strength will be sustained, expecting that holiday buying will soon end.  There is also little optimism for cash market potential after last week’s jump in prices.                      
   # Traders do have optimism over cash potential for hogs.  Despite the fact that pork is entering the grilling season with greater than expected competition from beef, the prospects for summer demand remain strong.  Still, the market faces the headwind of stubbornly high production.