AgriVisor Morning MarketWatch

Thursday, July 21, 2016
***** Corn up fractionally ahead of the morning break; soybean futures up 9 to 10 1/2 cents; Chicago wheat higher by 4 1/4. ***** 

   # Grains traded slightly higher ahead of the export sales report.  As the previous several sessions have indicated, overnight direction is not always a close predictor of closing settlements.
   # Soybean export sales were near the low end of expectations for the old-crop at 325,000 tons, well above guesses for 2016/17 at 1 million tons.  New corn sales were a touch disappointing at 345,100 tons old and 506,300 tons new.  Wheat sales were robust at 478,000 tons.  
   # Corn futures put in fresh contracts lows on Wednesday.  The continuous chart leaves lows at $3.33 and $3.18 1/4 as support for nearby futures.  The Relative Strength Index (RSI) for December futures reads 32.75 indicating the contract is approaching short-run oversold territory.  The RSI has not registered new lows for the move, suggesting less conviction in the latest selling.  
   # Some of the dry pockets of western and southwestern Illinois collected a few tenths of rain over the last 24 hours.  The 6-10 day outlook has temperatures moderating in the Plains but remaining much hotter than average in the Eastern Corn Belt.  Chances are best for normal to above for precipitation throughout the Midwest, turning wetter in the 8-14 day.   
   # Bearish for soybeans on Wednesday was a report from the analysts at Oil World that suggested U.S. soybean exports to China would drop next year due to China’s decision to auction away stocks from the state reserve without replenishing them.  
   # It was huge week for ethanol production with output up 2.5 percent on the week.  Corn grind was an estimated 108 million bushels versus 86.6 needed per week to meet the USDA’s current goal of 5.225 billion bushels for the marketing year.  Somewhat concerning is that the pace of production is outstripping the pace of consumption and leaving ethanol stocks higher.  
   # Wednesday’s sell-off leaves the funds net-short corn by approximately 15,000 contracts.  The net soy long probably holds just above 125,000 contracts.  The large speculators are still accepting some risk for the chance that weather turns unfavorable for the soybean crop late this season and reinvigorates buying interest.  
   # Outside financial markets will digest comments from the European Central Bank president.  Europe’s monetary authority is not expected to change interest rates, but it will be important to hear what the central bankers think about the economy’s prospects in the wake of Britain’s exit.       

***** Live cattle futures look to open steady/stronger in a bid to keep technical support; hog futures look to rebound after 12 straight losing sessions for the October. ***** 

   # Cattle futures were pressured further on Wednesday after an early-week cash trade showed weakness.  Traders are eager to see Friday’s Cattle on Feed report after having been surprised by bearish estimate misses in the last two issues.  Total on-feed is estimated at 101.6 percent of last year, placements at 109.4 percent, and marketings at 109.4 percent.         
   # Cash and wholesale markets were lower on Wednesday and thus pulled down hog futures.  Slaughters continue to run high and add to already-ample supplies.  August futures have very little in the way of technical support from old lows anywhere close but remain oversold in the short-run.