AgriVisor Morning MarketWatch

Wednesday, October 12, 2016
***** Corn futures up a penny ahead of the break; soybeans up 1 1/4; Chicago wheat down 1 1/4. ​*****

   # The overnight trade had a Crop Progress report to digest.  U.S. corn harvest was estimated to be 35 percent complete versus 38 last year and 38 the five-year average.  Soybean harvest was pegged at 44 percent done as of Sunday versus 56 last year and 47 the average.  Both numbers were lighter than expected.  
   # Also of note from the Crop Progress report, cotton is 22 percent harvested, sorghum 48 percent hauled in.  U.S. winter wheat sowings are at a normal pace at 59 percent.  
   # Report day: Crop Production and WASDE updates are due out at 11:00am central.  The average trade estimates are corn yield 173.5 bushels per acres versus USDA September 174.4, bean yield 51.5 versus 50.6.  A loose consensus has harvested corn acres up 200,000 to 86.75 million, soybeans up 75,000 to 83.11.
   # Not much is anticipated in the way of significant adjustments to USDA usage estimates, so a lower corn yield is expected to bring corn carryout down to near 2.36 billion bushels, while a bigger bean yield brings bean carryout up to 413 million.  
   # Malaysian palm oil futures recovered early losses to end higher on Wednesday and help with overnight strength in the U.S. soyoil complex.  Palm stocks in Malaysia have not quite recovered as well as they have in Indonesia after an El Nino-linked drought last season.  The two countries produce 85-90 percent of the world’s palm oil supply.  
   # Brazil’s decision to allow imports of U.S. GMO corn may have come too late to lead to any substantial purchases this fall.  The country’s livestock industry has already cut back on production.  Some feed users are sourcing corn from Argentina and do not yet see the U.S. as being the more economical origin.   
   # China is expected to show up on the daily sales system over the next few days as a buyer of 15-20 million bushels of soybeans.  The soybean sales pace is currently just ahead of where it needs to be to meet the USDA’s marketing year target of 1.985 billion bushels.  
   # Grain traders are keeping a close eye on the dollar after it rallied sharply against most major currencies on Tuesday.  Investors are suspect the U.S. economy is improving at a fine-enough pace to allow the Federal Reserve to make an interest rate hike this December.  Further dollar strength could put a damper on some of the enthusiasm related to U.S. grain export potential.  

***** Live cattle futures face pressure from technical selling as market participants wait for further fundamental guidance; hogs are showing some bottoming action on the charts. *****

   # The WASDE report will include a look at updated projections for fourth quarter beef production.  Currently, output is expected to fall 1.5 percent on the quarter but rise 4.1 percent over the last quarter in 2015.  
   # Pork production is still accelerating into the fourth quarter, but producers are expected to respond to lower prices by being more aggressive on marketings.  The market will still have a full pipeline of heavy animals to move through in the next several weeks.