AgriVisor Morning Marketwatch

Monday, October 24, 2016
***** Grains are mixed to start the day mixed; soybeans 11-14 higher, corn fractionally lower, with wheat mostly fractionally changed. *****

   # Soybeans are the leader as we start the trading week, with prices getting some leadership from harvest winding down along with strength in the soyoil market.  Corn is more of a laggard with a lot of harvest still in front of it, with wheat still needing leadership from the other grains. 
   # Soyoil is the strong product in the soybean complex at the moment, with its strength coming from the Chinese situation.  Port stocks of palm oil in particular in China are low, helping palm oil drive world vegoil prices higher.  Rapeseed oil supplies are tight following a trade dispute with Canada too.  And Malaysia/Indonesia are still recovering from last winter’s weather problems. Recent strength in crude oil prices are supportive too because of vegoil supplies going to biodiesel.  Palm oil futures are starting the day stronger.
   # Rabobank is also pushing a modestly positive outlook for soybean prices because of a number of fundamental features in the U.S., South America, and China.  
   # Rain in northern areas of Brazil are a part of the picture.  The rainy season has yet to start in earnest.  Over the last 30 days, rains have only been 50-80% of normal.  The latest forecasts have some showers into midweek, but dry beyond.  Rains have been good in southern Brazil; to a point that some drying would be beneficial.  Argentina will also have showers into midweek, with drier weather to follow. Wetness in southern Brazil and Argentina may undermine the quality of their crops and could necessitate imports of HRW from the US to boost proteins in the flour mixes.
   # Although trade estimates won’t be out until later, the trade will likely be looking for soybean harvest in the low 70s, with corn harvest in the low 60s.
   # The Monday inspections report has become important to soybeans, especially after last week’s 92.2 mln. bu. inspections number.  They need to stay at or above that level over the next number of weeks to keep the US positioned to reach the USDA target.
   # Ukraine grain harvest is thought to be 84% done, with 50.5 mmt. collected. 11.6 mmt. of corn have been collected, but its harvest is only 47% complete.  Yields are better than last year. 
   # The wheat trade is keeping a wary eye on weather in parts of Russia and Ukraine.  There are dry areas in both countries, getting the new crop off to a less than optimum start.  And, forecasters don’t see much chance of rain over the next week. 
   # On Friday’s CFTC report, funds reduced their Chi. Wheat short positions significantly.  They cut their short corn position nearly in half.  They added slightly to their long soybean position.
   # The Dollar is trending steady to a little softer today, but is really searching for direction.  Equity markets are a bit higher.  Crude oil prices slipped a little with comments from the Middle East hinting some countries will not cut output. 

***** Cattle should start the day higher; lean hogs steady/weak. *****  

   # Wholesale beef is higher with choice at $179.78. Friday’s COF report was friendly with feedlot placements coming in under expectations.  Marketings were not optimal though, which could keep cash prices near steady at just under $100.  
   # Wholesale pork was slightly lower at $72.07. The midweek weather system could soften cash hog prices starting midweek.  Numbers are still larger than expected, keeping packers well supplied.