AgriVisor Afternoon MarketWatch

Friday, August 12, 2016
***** Corn up 1 1/4 to 1 1/2; soybeans down 1 1/4 to 2 3/4; Chicago wheat up 1 3/4 to 6 1/4. *****

   # Another shocker of a report with government yield estimates coming in above the top end of trade guesses.  Corn yield: 175.1 bushels per acre versus a 170.6 trade average.  Soybean yield: 48.9 bpa versus 47.6.  
   # State-by-state corn yields: IL 200, IA 197, MN 184, NE 187, MO 166, IN 187, OH 163, MI 152, WI 173.  Soybean yields: IL 57, IA 57, MN 47, NE 59, MO 48, IN 55, OH 52, MI 45, WI 52.
   # The late-season surge for corn shipments convinced USDA to bring the 2015/16 export target up by 25 million bushels.  The pace of ethanol grind was not deemed strong enough and so the old-crop usage estimate was lowered 25 million bushels.  With changes to ethanol and exports offsetting, a 5 million bushel increase to imports had the 2015/16 carryout number go up by that amount.  
   # A big bean yield brought production up 180 million bushels over the July projection.  Better old-crop exports helped bring the new-crop beginning stocks estimate down 95 million bushels, which helped to offset some of the increase to 330 million bushels for 2016/17 ending stocks.  
   # USDA raised their U.S. wheat feed and residual estimate from 300 to 330 million bushels on an outlook for cheap prices leading to higher usage.  The export goal was also revised higher on thoughts that the U.S. will gain business as a result of smaller crops being harvested in Europe.  
   # USDA came down to meet Conab’s estimate for Brazilian corn production at 68.5 million tons.  A smaller Brazilian second crop helped encourage the government analysts to up U.S. exports by 125 million bushels for 2016/17.  
   # The estimate for 2016/17 soybean beginning stocks in China came down a touch while the country’s usage prediction went up.  China is still projected to import a record 87 million metric tons.
   # Maybe almost as surprising as the report numbers turned out was the market reaction.  Corn fell to new contract lows before settling higher on the day.  It may be well be that some stubborn longs had been washed out but that there was also no added pressure from new shorts entering the market.  
   # It should take some time for the market to shake the yield surprises, but it should be expected that focus soon turns to demand nonetheless.  

***** Live cattle down $0.25 to up $0.30; feeders steady to up $0.57; hogs up $0.40 to $1.57. *****

   # Cattle futures erased early gains after the USDA report came out to include small additions to the beef production estimates for both 2016 and 2017.  Beef import projections were also revised higher for both years with the thought that an open
   # The report had nothing positive to say for the hog market with 2016 carryout stocks up 25 million pounds.  Hog futures shrugged off higher production estimates and also ignored further weakness in the cash market to end up higher for the day.