AgriVisor Afternoon MarketWatch

Monday, September 12, 2016
***** Corn down 1 1/2; soybeans drop 12 3/4 to 16 cents; Chicago wheat up 5 1/4 to 7 1/4. ****​*

   # USDA adjust corn yield down 7/10 of a bushel to 174.4 bushels per acre versus an average trade guess of 173.4.  The government analysts held unchanged its 200 bpa estimate for Illinois while backing off by one point to 196 bpa for Iowa.  Missouri – 165; Indiana – 185; Ohio – 162.
   # Also 7/10 of a bushel, this time an addition made by that amount to the soybean yield estimate.  The September prediction is 50.6 bpa, which compares to a pre-report guess of 49.1.  IL – 61; IA – 58; MO – 49, IN – 58, OH – 53.
   # A 10 million bushel cut to 2015/16 exports and 25 mbu cut from 16/17 Feed and Residual worked to offset much of the 60 mbu corn production decline and left 16/17 carryout at 2.384 billion bushels.
   # The soybean output addition was more than enough to offset better old- and new-crop usage projections.  New-crop carryout increased from 330 to 365 million bushels.  
   # No changes were made to the U.S. wheat balance sheet.  Higher output estimates for Australia and Canada were outstripped by a 2 million ton cut to Europe’s crop.  Global ending stocks came down 3.75 mt as a result of higher trade and feed expectations. 
   # Adjustments made to the world corn tables were few.  Of note was a 1.5 million ton cut to Brazil’s 2015/16 crop to reflect a final drought downgrade and a 2 mt addition to the country’s 16/17 crop to account for bigger planted acreage.
   # Of note for world soybean supply and demand adjustments were a 2 million ton cut to Brazil’s output forecast for 16/17 and a 1 mt cut to the record China import estimate.
   # The trade’s yield misses were immediately priced into the market after the report’s release.  Corn action implied that downside may be limited now that the yield number is at least headed in the same direction of market expectations.  Soybean losses could be viewed as somewhat moderate relative to the size of traders’ yield miss and action may follow a feeling that the high water mark for supply has now been put in place.  
   # Reaction to the report changed little from a technical perspective.  December corn futures held above Friday’s low while the contract’s 50-day moving average drifts lower from $3.40.  November soybeans fell back below their 200-day moving average while still holding comfortable room above key support from $9.43.  
   # Stocks rebounded and the dollar retreated as a Fed official spoke more hawkishley about rake hike odds.  Equities took a substantial hit on Friday in response to the Boston Fed president’s comments that suggested he was potentially supportive of a rate increase this month.  The next FOMC meeting runs September 20-21.

***** Live cattle futures trade higher by $1.30 as feeders have mixed, moderate gains across the curve; October hogs up $0.27 with December down $0.87. *****

   # Live cattle futures were up by as much as $2 before leveling off into the afternoon.  The WASDE report included a 20 million pound reduction to third quarter beef production that combined with a 10 mlbs addition to the export target to bring 2016 ending stocks down by the combined 30 mlbs.   
   # October hog futures gained while bull spreading pushed the December lower.  Pork supply and demand estimates were little changed on today’s USDA report.