AgriVisor Morning MarketWatch

Tuesday, October 11, 2016
***** Corn futures fractionally lower at the break; soybeans up 1 1/4 cent; Chicago wheat fractionally changed. ​*****

   # Market participants have one more full session to adjust positions before the October crop report.  Wednesday’s Crop Production and WASDE updates are expected to feature lower corn yield, higher bean yield, higher corn and bean acres.  Significant revisions to U.S. demand and world corn and soybean production numbers are not anticipated.  
   # Wheat futures hold steady after a sizable move up on Monday.  Dry conditions in the western U.S. winter wheat Belt help to support prices while wet harvest weather in parts Australia does the same. 
   # CBOT ethanol futures start the week higher, helped by improved processing margins and tracking closely with rising crude oil prices.  The most-active November ethanol futures contract is up 10 percent since September 1st.  
   # Index funds have taken greater interest in the grains lately.  CFTC data show the group of traders that includes long-only, passive commodity funds adding about 20,000 corn longs and 6,000 soybean longs over the past 45 days.
   # Investors as a whole have been seen rotating some capital into the commodity space early this fall.  The one-month gain for the CRB Commodity Index is 4 percent.  Better sentiment over energies has supported the space while money managers also desire to hedge risk in what is seen to be a toppy equity market.  
   # Corn futures are in a consolidation phase at the start of the week with the December contract stuck within last Thursday’s trading range ($3.38 1/2 - $3.47 3/4).  Report-day volatility can be expected to shake up the chart and guide December futures toward resistance at $3.50 or back to the lifetime low at $3.14 3/4.
   # A swatch of wet weather stretched from northern Missouri through most of Iowa and up into Wisconsin overnight.  Chances for rain ratchet up for most of the Midwest tomorrow, but forecasts for the weekend look clear.  
   # The euro is taking a beating overnight to trade down to $1.11.  Brexit worries are resurfacing and have the British pound lower this morning as well.  The dollar index is up about two percent since the start of October and approaching a six-month high.  

***** Live cattle futures start with expanded ($4.50) limits; hog futures are starting on what should be a tenuous market correction. ***** 

   # Cattle producers are expected to respond to lower prices by marketing lighter animals over the next several weeks. Recent numbers indeed show cattle weights rising at a slower seasonal pace than they did a year ago.  Market participants will look to see if cash and wholesale prices can stabilize in the coming weeks while production levels off.           
   # Traders are back and forth over whether or not the hog futures curve has already priced in bearish supply-side fundamentals to the fullest extent.  Market-ready hogs are up nearly 3 percent on the year and weights run heavy, but a more aggressive slaughter pace should help rebalance production dynamics some by the start of the new calendar year.