AgriVisor Morning MarketWatch

Friday, September 09, 2016
***** Corn futures down 1 to 2 cents ahead of the break; soybeans unchanged; wheat down 1 to 3. *****

   # Very light volume for the grains thus far overnight.  Traders await the weekly export sales report but are otherwise likely to approach the market with patience ahead of Monday’s crop report.
   # A falling open interest tally suggests yesterday’s corn rally was a product of short-covering.  Funds are expected to head into the Monday reports with a net corn short of around 140,000 contracts.  The large speculators remain net-long soybeans by approximately 110,000 contracts.  
   # Export sales are expected to total around 35 million bushels of corn, 45 mbu soybeans, and 15 mbu wheat.  Traders will watch for possible small cancellations for the 2015/16 corn and soybean books. 
   # Not surprising, analysts are in disagreement over what to expect out of USDA’s September corn yield estimate.  Relative to August’s 175.1 bushels per acre, guesses for the new number range from 171–175.6 with the average being 173.4.
   # The average prediction for soybean yield is 49.2 bpa versus USDA August 48.9.  The extreme estimates are 48.1 and 50.1.  
   # USDA’s estimate for Brazilian corn production may face another cut come Monday.  Conab calls the 2015/16 crop around 67 million tons, which compares to the U.S. government’s August forecast of 68.5 mt.  
   # Rain gauges were filled highest in Missouri over the past 24 hours while southern Illinois got their share after staying dry the day before.         
   # The forecast has the Midwest staying wet over the next 36 hours.  Thursday’s run of the two-week maps expand higher precipitation probabilities across the Corn Belt.  
   # Soyoil again enjoys some overnight strength due to higher Asian palm oil prices.  Strong export demand as of late is expected to have pared inventories in that market. 
   # Ethanol production dropped around 2.4 percent on the week but looks to remain robust while gasoline demand remains high.  Corn usage prospects for the new crop year remain good, but a cut to the ethanol estimate for 2015/16 is expected.
   # Amidst the back-and-forth of changing expectations for the Fed’s interest rate guidance, today’s take is that the economy is prepared for a rate hike sooner rather than later.  Still, the dollar chops around to reflect prevailing uncertainty.  

***** Cattle futures look to open flat ahead of cash sales; hogs likely to start with slight follow-through strength. ***** 

   # Beef production remains high with a bearish supply balance also negatively influenced by large import totals.  Sentiment can begin to change if quicker marketings in the summer months allow supplies to adjust lower by more than expected this fall/winter.           
   # The weekly export report is also an important one for hog traders, particularly after market participants have been disappointed by summer sales numbers.  Hog futures are in a better spot technically after having quickly bounced from old lows and closed Tuesday’s down-gap, but most-active October and December contracts are running up against resistance from a converging set of moving averages.