AgriVisor Morning MarketWatch

Monday, August 15, 2016
***** Corn futures up 2 1/2 to 3 1/2 cents; soybeans higher by 16; Chicago wheat up an uneven 1/2 to 3 1/2.  *****

   # Traders will likely take another couple of sessions to digest Friday's crop report and adjust their positions to the new information. Most readers will have already come across the news of USDA's surprise U.S. corn and soybean estimates: 175.1 bushels per acre corn versus an average trade guess of 170.6 and 48.9 bpa soybeans versus 47.6.
   # It is a high start for USDA yield estimates but also an aggressive view being maintained by the government analysts over demand potential. U.S. corn exports for the 2016/17 season are projected higher by 13 percent on the year after trade competitors in Brazil hauled in a smaller second crop. U.S. soybean exports will still face competition from South America in the year ahead, but are expected to increase nearly four percent over 2015 as China has another record year of import demand.
   # Ideas of a big Russia wheat crop have offset some of the market positives that have followed from production cuts for crops across Europe. But, traders are keeping an eye on reports that have Russia's wheat quality faring worse than expected.
   # Weekly numbers on trader positions from the CFTC showed hedge funds holding a big net corn short, one that totaled 137,000 contracts through last Tuesday. Price action for corn futures on report day was suggestive of some long liquidation that was not accompanied by a large amount of new selling. The Commitments of Traders report had funds net-long by 113,000 contracts of soybean futures and options.
   # U.S. government meteorologists have drawn back the chances for a fall/winter development of La Nina in their latest report from last week, from 75 to 55-60 percent likely. Australian meteorologists will issue an update tomorrow on their watch for La Nina.
   # Flooding was an issue Texas and Louisiana over the weekend as a more manageable couple of inches fell in the Eastern Corn Belt. The weekend runs of NOAA's weather maps have cooler temperatures in the forecast for the West while chances have precipitation running higher than average for most of the Midwest.
   # U.S. equity index futures trade a touch higher as market participants wait to have a look at various bits of economic data including domestic housing prices and corporate earnings for the retail sector.  A disappointing retail sales report last week has helped to push odds of a rate hike in 2106 even lower. 

***** Cattle futures look to open steady/weaker; hogs steady/firmer.  ***** 

   # Cattle futures have staged a correction out of mid-July lows but may still have room to run as long as the board maintains a discount to the cash market. But, cash market action disappointed late Friday as a smaller showlist was met only by interest at prices that were steady to $1 lower than the previous week.
   # Hog weights are coming down as we start to wrap up a hot summer and as a production influence should help to offset some of the slaughters that currently run about 2.5 percent ahead of a year ago.