AgriVisor Afternoon MarketWatch

Thursday, June 30, 2016
***** Corn down 10 to 14; soybean futures up 30 to 40; Chicago wheat steady to up 1 3/4. ***** 

   # Surprised, to put it mildly, were traders to see corn acres rise, not fall, from the seemingly-high March 31 Prospective Plantings report.  The new corn acreage number is 94.12 million.  Acres in Illinois and Ohio hold unchanged from the previous year but gains are considerate in Iowa, Missouri, and Kansas.  
   # The soybean acreage number was closer the expectations at 83.69 million, representing a 1.5 million acre increase over the March estimate.  Still, it wasn’t the 84.5 or 85 that some analysts had been talking up in the few sessions leading up to the report.
   # Analysts missed again on corn in the form of a quarterly stocks count that was well above the top end of pre-report guesses.  USDA says inventories totaled 4.72 billion as of June 1, versus the trade looking for 4.54.  Big stocks may say something about a miss-estimation of last year’s crop size.
   # Soybean futures rallied despite acres being added; bulls also shrugged off a higher-than-anticipated soybean stocks tally.  USDA at 870 million bushels beat the highest trade prediction of 862.  More so than for corn would we expect higher soybean stocks to lead to a production revision.  
   # Wheat acreage was higher than expected on area gains for spring and durum.  The analyst average was on the mark this time for stocks with the USDA estimate coming in at 981 million bushels. 
   # Credit the hedge funds for defending their bullish soy bets well and boosting futures in the face of a report that was unfriendly on paper.  The corn acres number was enough to spark further liquidation of that position.  
   # Traders will likely spend another day digesting the reports, but focus will be back to weather quickly enough.  Another brief break from the weather trade will come on July 12 when the government analysts will fit today’s numbers into the WASDE tables.      
   # Today’s continuation of a two-week sell-off leaves corn futures technically oversold by a couple of measures.  The December contract settled under its lower Bollinger Band and now registers a 29 on the 14-day Relative Strength Index.  November soybeans made a solid technical close above $11.50 but did not reach the one-year high at $11.86 1/4.      

***** Live cattle up $0.57 to $0.70; feeders gain $1.25 to $1.75; hogs down $0.25 to up $0.17. ***** 

   # More weakness for corn provided further encouragement for cattle buyers.  Optimism is growing over cash market potential, but that potential is not helped by a wholesale market that remains in retreat.  August live cattle futures found buyers at the 20-day moving average and sellers at the 50-day.           
   # Hogs face further pressure from softer cash deals.  The cutout average was down $0.71 on the day.  The export sale report indicated some slippage of pace and was devoid of the anticipated hefty China demand.