AgriVisor Afternoon MarketWatch

Tuesday, July 12, 2016
***** Corn futures up 4 to 6 cents; soybeans rally 25 to 32; Chicago wheat up 7 to 8. *****

   # Corn and wheat were pressured lower while beans rallied into the crop report as traders expected to see growing grains supply estimates and tightening soy balance sheets.  The WASDE report featured a few surprises but nothing to produce any overly-dramatic price moves.    
   # The most notable adjustment was a 7 million bushels cut to 2015/16 corn carryout, a move that defied consensus expectations for a 100 million bushel increase.  A bigger export target offset a 25 mbu reduction to ethanol use and 25 mbu reduction to Feed and Residual.  
   # A smaller-than-anticipated beginning stocks estimate and an addition of 100 mbu to export demand helped to allow 2016/17 carryout rise by less than expected, to 2.08 billion bushels versus pre-report guesses near 2.2.  
   # Adjustments made to the U.S. soybean balance sheet were all fully anticipated, with the result being a 20 mbu cut to 2015/16 carryout and a 30 mbu addition to the new-crop number.  Export targets were raised.  
   # USDA analysts increased by 2.7 bushels per acre their U.S. wheat yield estimate and bumped up harvested acres by more than one million.  A silver lining for wheat was the recognition of higher feed potential that allowed total use to rise on tables for both the U.S. and world. 
   # Wheat is expected to be fed in replacement of some corn.  World corn numbers for 2016/17 featured little else but a four million ton reduction to feed use.  The 2015/16 estimates did include an expected cut to Brazil’s corn output, to 70 mmt.  
   # Higher production resulting from the U.S. output addition was the most sizable adjustment made on the world soybean table.  
   # Report day may turn out to have only provided a brief distraction from weather; however, traders should take away a few things from today’s WASDE update.  Corn fundamentals are bearish but less so than the most aggressive estimates have them.  Low wheat prices will be expected to spur greater feed and trade demand.  Strong overall soy demand is a storyline that has staying power.        

***** Live cattle finish fractionally weaker; feeders off $0.70 to $0.92; hogs up $0.32 to down $0.25. *****

   # USDA analysts upped their estimates for red meat production this year.  Total beef production increased 270 million pounds over the June prediction, pork production up 40 million pounds.