AgriVisor Afternoon MarketWatch

Thursday, June 02, 2016
***** Corn futures steady to 1 1/2 higher; soybeans rally 13 1/4 to 44 1/2 with relative strength for the nearby contracts; Chicago wheat up 10 1/2 to 11 3/4. *****

*** Check corn and soybean advice.  

   # Improved U.S. export potential continues to be the main fundamental storyline.  A shortage of Brazilian corn makes higher prices there look less attractive compared with U.S. values.  Ideas of a smaller Argentine export program and stronger Chinese demand turn buyers toward U.S. soybeans.   
   # New highs for soybean futures as the old-crop contracts found buyers above $11.  July soybeans settled above their upper Bollinger Band and with a daily relative strength index reading that registers overbought, but technical momentum is also strong.    
   # Fund traders are thought to have upped their net-long soybean futures position to a level above the record high observed in 2012.  Money managers are holding a net corn long nearing 100,000 contracts but are still very short wheat.  
   # Ethanol production was up on the week and therefore so was corn grind.  Stocks of the fuel were lower on the week but remain higher than they were a year ago.  Corn used for ethanol production totaled 100.8 million bushels, which compares to 97.9 million now needed per week to meet the USDA’s target.
   # Market participants will be watching to see the results of China’s reserve auctions tomorrow.  The government plans to send up to 3.42 million metric tons of corn out to market.  The last reserve auction commanded more buying interest than many had anticipated.  
   # The weekly export sales report was delayed until Friday due to the holiday.  New corn sales for 2015/16 are expected to be down on the week to something near 40 million bushels.  Up to 15 million bushels of old-crop beans and 15-20 million new-crop are expected.  
   # As expected, no change was made to OPEC’s oil production targets after the group met in Vienna, Austria today.  The news was shrugged off by market bulls, as was data that showed U.S. crude stocks dropping by less than expected.  Strong demand was indicated by a reading on gasoline inventories that fell 1.5 million barrels on the week.  

***** Live cattle up $0.20 to $0.30 with feeders higher by $0.22 to $0.52; hogs up $0.87 to $1.65. *****

   # Cattle futures bounced backed and forth between area of technical support and resistance.  Fundamental news was somewhat limited without the cash cattle market having yet developed this week.               
   # Some follow-through on the part of buyers after hogs gained yesterday combined with today’s higher cash and wholesale values to lead futures higher.  Direct hogs were quoted $0.58 higher on light volume midday.  The pork cutout average climbed on the back of a sharp move for bellies.