AgriVisor Morning MarketWatch

Friday, August 12, 2016
***** Corn fractionally changed; soybeans down 1 to 3; Chicago wheat steady to 3 cents lower.  ***** 

   # Report day.  Grains are little changed ahead of the numbers.
   # First glance goes to U.S. corn and soybean yield estimates.  The average trade guess is 170.6 bushels per acre corn and 47.6 bpa soybeans.  Corn yield predictions range 168.6 to 175 with soybeans 46.7 to 48.8.  
   # The trade looks for old-crop carryout to creep up just slightly.  Analysts looking for higher ending stocks are divided on whether it come from lower ethanol or exports.  The mean prediction is 2.25 billion bushels for 2016/17 corn carryout.  A bigger export target for the old-crop should help offset most of the expected production increase to leave new-crop soybean carryout up to 315 million bushels.  
   # Analysts do not look for any major adjustments to be made on the U.S. wheat balance sheet.  There should be several changes made to various production estimates from abroad, but output gains and losses are expected to just about offset and leave global wheat carryout nearly unchanged.  
   # Fund traders head into the report with a net corn short of about 100,000 contracts and a net soybean long of about 100,000 contracts.  The large speculators remain short wheat by a near record amount.
   # Corn futures head into the report with points of technical support at $3.18 1/4, $3, $2.96 3/4, and $2.90.  Levels of resistance include the 10- and 20-day moving averages overhead, as well as recent highs at $3.46 and $3.80.  
   # November futures have been struggling with technical resistance from their 20-day moving average over the past few days.  $9.43 is the contract’s 3-month low.  The 6-month low is $8.68 with the lifetime bottom at $8.50.
   # Some attention will be paid to the outlook for crop-finishing weather once the report is out of the way.  The latest runs of the government’s two-week maps lean wet.  
   # Demand will be the key focus post-report.  The trade should by now already have a general understanding that the U.S. will harvest a big pair of corn and soybean crops; the question now turns to how we will use them.  

***** Cattle futures look to open mixed ahead of cash deals/crop report; hogs steady/firmer.   *****  

   # The July WASDE report was bearish for cattle futures as it included an upward revision from the USDA for beef production.  There is not expected to be any big need for another production increase on today’s report, unless first quarter 2017 comes up a little.                             
   # Today’s Supply and Demand report should include a recognition from the USDA that hog slaughters remain higher than expected while weights come down only slightly from a year ago.