AgriVisor Morning Marketwatch

Tuesday, July 26, 2016
   ***Good Morning***

***** Grains are mixed to start the day; soybeans 4-9 higher, corn 1 lower, with wheat 4-5 lower. *****

   # Much of the overnight trade is a reaction to yesterday’s moves and the late afternoon crop condition ratings.  Hence, wheat/corn are a little softer, with soybeans a little stronger.  Adding into the somewhat defensive nature in the early going is the softer overall look to commodity markets in general.
   # The corn and soybean good/excellent ratings were unchanged at 76% and 71% respectively.  The spring wheat rating was down 1 point to 68%.  Winter wheat harvest is winding down at 83% complete.  While there is no official number for spring wheat harvest it’s said to have started in S. Dakota.  The Wheat Quality Council is making a tour of spring wheat areas this week which should put a better perspective on potential for that crop.
   # Notable in the mix of data is the fact that corn and soybean progress are ahead of normal and ahead of last year. Corn silking is 79% complete, compared to 71% last year and 70% on averaged.  13% of the crop is in the dough stage.  We’ve heard reports of corn denting in western Illinois.  35% of the soybeans are setting pods, compared to 29% last year and a 26% average.
   # There was a subtle shift in the long range forecasts Monday, with the 6-10 and 8-14 day outlooks now pointing to above normal temps in much of the eastern two-thirds of the U.S.  Precip is still mostly expected to be above normal in key areas, but the longer range outlook tends to suggest the possibility might be eroding.
   # There is an emerging discussion about whether wheat prices might have finally found a low.  Most believe prices are certainly low enough.  The changing situation with the French crop and prices has been the ingredient that seems to be shifting optimism, while the trade seems to be discounting the large Russian and U.S. crops.  The large fund short position in Chicago futures/options leaves the market vulnerable to sharp short covering rallies. 
   # Even though the French wheat crop is going to be smaller than previously believed, the EU crop as a whole could be a little better.  Better crops in Eastern European countries and Spain are expected to make up for issues in France and parts of Germany. 
   # Wet conditions have been slowing the harvest of corn in Argentina. It’s 61% complete compared to a more normal 84%.  Brazil’s 2nd corn crop harvest is only 56% complete. 
   # The Fed watch will remain a focus this week, with the FOMC meeting today/tomorrow.  Analysts will be watching their post-meeting comments for clues about changes coming in Fed policy.  BOJ meets at week’s end as well, with eyes shifting to them as the week concludes for policy clues. The Dollar held near steady at the higher levels of last week in the overnight/early morning trade. 

***** Cattle should start slightly higher; lean hogs mixed/firm. *****
   # Wholesale beef was slightly lower at week’s end.  Cash cattle haven’t traded yet this week, but could be near steady when they do trade.  Live cattle and feeder cattle futures have expanded limits today, a move that typically stalls short term rallies. 
   # Wholesale pork was slightly stronger to start the week, but cash hog prices were still a little softer, following the usual seasonal trend for weakness well into August.