AgriVisor Afternoon Marketwatch

Saturday, October 15, 2016
   *** Good Afternoon ***

***** Grains ended the day mixed; soybeans 5-6 higher, corn 4-5 higher, with wheat mostly 4-5 higher. *****

   # Technical features, along with the weekly export sales report combined to give grain markets a lift to end the week.  But the technical features may have played the bigger role, especially in wheat where it was noted a week ago that hedge funds held a record short position in Chi and KC wheat.  The comments about Thursday’s rally across the grains were that much of the buying came from short covering, when in fact aggregate open interest went up, suggesting new buying was in the mix as well.  The talk Friday was that funds bought 8000 contracts of corn, 7000 soybean, and 4000 soymeal. 
   # Friday’s CFTC traders report showed shorts were liquidated in Chi wheat futures, with nearly as many new longs put in place in KC.  That will make a big swing in the net position of the two, and that was only through last Tuesday.  Hedge funds significantly reduced their short position in corn, while increasing their net long position in soybeans slightly.
   # Export sales for the week were a little better than expected in the soybean complex, 52 million bu.  Corn and wheat sales were good, but about as expected, 34 mln. and 18 mln. bu. respectively.  The totals are: 1.092 bln. bu. of soybeans, 846 mln. bu. of corn, and 548 mln. of wheat.  Buying interest remains generally good across the grain sector, including wheat. 
   # Another Chinese delegation has been in the U.S. this week.  On Friday, they signed “framework” agreements to buy 5 mmt. of soybeans.  The actual business hasn’t been done, but it bodes well for Chinese buying through the winter. 
   # There will be a NOPA crush report Monday.  The trade is expecting the Sept. crush to be 127.7 mln. bu. 
   # Generally weather in South America is getting better, but there’s still reason to watch developments carefully.  Argentina and southern Brazil are seeing showers, and expected to have more based on longer range outlooks.  But so far, the rainy season has been somewhat slow to develop in northern Brazilian states. The long range outlooks have showers in them, but so far, the recent amounts have not lived up to forecasts.
   # Our longer range forecasts tend to project warmer than normal temps across the Midwest the next couple of weeks.  The 6-10 is still on the dry side, but the 8-14 day is tilting toward a slightly wetter pattern.  Some forecasters are talking about November weather turning much colder.  NWS will have new monthly outlooks on Thursday.
   # Harvest numbers should be near 60% for soybeans and 50% for corn on Monday.    # Basis levels are still somewhat choppy on a day-to-day basis, but in general it seems basis levels may be at harvest time lows east of the Mississippi River, with a slightly weaker trend still showing in western locations.  But with the weather, harvest will soon be an afterthought for soybeans, with corn maybe not far behind.
   # The Dollar was broadly higher to end the week, with a good retail sales number behind the strength.  The better than expected sales only strengthen the possibility the Fed will raise rates slightly at their December meeting.

***** Cattle ended the day $1.27-$1.42 higher, feeder cattle $0.92 higher-$0.35 lower, and lean hogs $0.02-$1.92 lower. ***** ​

   # Wholesale beef ended narrowly mixed with choice at $181.86.  Cash cattle ended the week slightly lower with live animals mostly at $98-$99. 
   # Wholesale pork ended slightly higher with the #2 cutout at $73.38.  Cash hog prices were near steady, but with a weak bias.  Hogs in the western Corn Belt averaged $47.23.