AgriVisor Afternoon MarketWatch

Monday, October 10, 2016
***** Corn futures up 3 1/2 to 3 3/4 cents; soybeans flat to 2 1/4 lower; Chicago wheat rallies 9. ***** 

   # Funds were net-buyers of the grains today, looking to participate in the day’s broad commodity market rally and also working to cover corn and wheat shorts ahead of Wednesday’s crop report.  Managed money is estimated to be net-short corn by 150,000 contracts, net-short wheat by 150,000, and net-long beans by 65,000.      
   # Analysts at Lanworth are at the low end of estimates for U.S. corn production, using satellite imagery to predict yield of 168.5 (USDA September 174.4) and output at 14.8 billion bushels (USDA 15.1).  
   # Egypt, the world’s top wheat importer, is looking to stock up on the grain ahead of the government’s expected currency devaluation.  Last week’s Egypt wheat tender earned a good response from sellers; Black Sea wheat was again shown to be the most competitively-priced.  
   # The weekly export inspections report is delayed by a day due to the Columbus Day holiday.  Recent harvest progress in the Midwest should have supplied shippers with plenty of grain, so robust corn and soybean tallies are expected to be found on tomorrow’s report, both probably above their respective 1.47 and 1.1 billion bushel totals from last week.  
   # The driest areas of Brazil are expected to receive healthy rains through the rest of the week.  Parts of northeast Argentina/southern Brazil still maintain moisture deficits of up to 8 inches over the past 30 days.
   # Improving ethanol margins and a plentiful supply of corn should lead to high production of the fuel in the coming weeks.  USDA is not expected to make any substantial adjustment this Wednesday to their current grind goal of 5.275 billion bushels.  
   # The Nobel Prize in Economic Sciences was awarded to Oliver Hart and Bengt Holmstrom from Harvard and MIT, respectively.  The economists pioneered “contract theory” in an effort to explore the compensation and incentivization of the labor force.  
   # Another big day for the crude oil market helped provide general support to the commodity space.  WTI crude futures were back above $50 per barrel and made a seventh higher close in eight sessions.  Falling U.S. inventories and expectations for OPEC/Russia production cuts encourages buyer enthusiasm.

***** Live cattle futures down by the $3 limit; feeders drop $2.15 to $2.97; hogs flat to $0.27 higher. ***** 

   # Cattle futures started on the defensive because of a negative fundamental bias, but downside momentum accelerated under technical selling.  A limit down move pulled October live cattle back below $100 and within $1.50 from lifetime lows.  
   # Hog futures were mostly flat as wholesale prices were flat and cash on the defensive.  Pork buyers are still not seen being aggressive in forward coverage and likely will not become so until bearish psychology over the supply outlook subsides.