AgriVisor Afternoon Marketwatch

Monday, July 25, 2016
***** Corn futures ended fractionally lower, soybeans 22-23 lower, and Chicago wheat 4-8 higher. ***** 

   Talk in the wheat trade continues to revolve around the French crop, both quality and quantity.  There is some talk output could fall under 30 mmt.; just a month ago, the industry was expecting 35 mmt.  Last year’s output was 41 mmt. French wheat futures started the week strong, and their premium to Chi. is the largest since 2003. 
   Weather influences continued to weigh on the soybean market, with the overhang of the large hedge fund long position most responsible for the extent of the decline.  As prices move down, they continue to run into more stops and more liquidation. The end of the break will come when they choose to pull in their orders.  But subsequent rallies could be stifled by liquidation.
   Corn prices were caught between the forces of wheat and soybeans, but corn prices have already dropped back near levels that may provide good long term support.  And this market doesn’t have the problem with hedge funds holding significant long or short positions.   
   The longer range weather forecasts are shifting again, with the 6-10 and 8-14 day outlooks starting to turn warm again.  In the South/Southeast, it could get hot.  Moisture is still expected to be normal/slightly above normal, but the above normal amounts seem to be slipping away. Still, generally good weather for this time of year, although this year’s warmth is different than the last 2 years.
   Export inspections were robust, with 51.4 mln. bu. of corn shipped, 25.7 mln. of soybeans and 20.2 mln. bu. of wheat.  
   The weekly crop ratings were unchanged for corn and soybeans, 76% and 71% respectively.  The spring wheat rating dropped 1 point to 68% good/excellent.  Both corn and soybean progress is ahead of last year and average, which could be a plus for soybeans, but a minor negative for corn.  
   Truckers ended their strike in Argentina, fitting with the usual pattern of strikes not lasting long. Weather is still “bogging down” corn harvest, which could help our export campaign in the short term.  Wheat planting is being delayed somewhat as well. 
   Financial/forex/equity markets are waiting for Fed comments when their meeting wraps up Wednesday.  The Bank of Japan holds their meeting at week’s end, which could continue to subdue activity in the short term.

***** Live cattle finished $3.00 higher(limit); feeders ended $4.50 higher(limit), and lean hogs $0.40 to $0.77 higher. ***** 

   Friday’s COF report was the factor that triggered the limit surge in cattle futures to start the week.  Placements were under expectations, with marketings every bit as good as anticipated. Wholesale beef ended the day lower again, but prices have a seasonal tendency to bottom at the beginning of August.  Cash trade was non-existent, with activity to come at week’s end.
   Hog futures followed cattle higher.  Wholesale prices ended the day firmer, but cash hog prices were softer.  Seasonals tend to be a little soft into early August.