AgriVisor Morning MarketWatch

Thursday, October 20, 2016
***** Corn futures fractionally higher ahead of the break; soybeans up 4 cents; Chicago wheat unchanged.*****

   # Grain futures show follow-thru strength overnight with December corn clearing key technical resistance.  Recent gains are attributed to short-covering that has followed an exhaustion of fundamental selling; they have been sustained by fresh interest from buyers looking for ownership in the commodity space.
   # Open interest was up a notable 11,000 contracts for corn on Wednesday and climbed 3,000 for beans, 2,500 for Chicago wheat.  Rising open interest supports the observation of new buyers stepping into the market at a pace that is keeping up or exceeding the rate at which short sellers are stepping out.  
   # Index funds are seen becoming a more active participant in the grains this fall.  Turning to commodities as a hedge, investors may be developing some hesitancy about opening new positions in U.S. stocks and bonds ahead of the election and the Fed’s December interest rate decision.
   # An improving technical outlook helps grain futures.  December corn futures had been stuck inside last Friday’s range for three sessions before this morning’s momentum pushed the contract past that mark and also above its 100-day moving average.  Points of potential resistance include a retracement target at $3.65 3/4 and the July high at $3.80.
   # Strong export sales this week; 1.02 million tons corn, 2.01 mt soybeans, 514,000 wheat.  
   # The southeast half of the Corn Belt collected rainfall totals of up to four inches last night.  Wet weather sticks around in the far eastern Belt today before most of the Midwest has a dry weekend.  The western half of the region is expected to receive a fair share of rainfall starting next Wednesday.
   # Rains picked up in Brazil this week, as expected.  Some areas in the northeast remain hot and dry while areas southeast may have had too much rain, but the coming of wetter weather is seen as a favorable development for growers there.  

***** Live cattle futures trade in anticipation of the Friday feed report; hogs open with a test of support from contract lows. ***** 

   # Traders will use today’s session to start positioning themselves for the Cattle on Feed report.  The average estimate for total on-feed is 101.3 percent of the year-ago figure, with the consensus looking for 103.6 percent for placements and 106.2 percent for marketings.       
   # Bearish fundamentals have gotten in the way of a brief corrective move for hog futures.  Hog slaughters are running ahead of last week and about 8 percent ahead of last year.