AgriVisor Morning MarketWatch

Thursday, November 10, 2016
***** Corn futures higher by 3 to 4 cents ahead of the break; soybeans up 16 to 17; Chicago wheat up 2 to 4. ***** 

   # Grains are up on high trading volume, shrugging off the negativity produced by Wednesday’s crop report.  Stronger grain prices in China and firmer palm oil prices in Malaysia helped stir up buying interest for the U.S. ag market overnight.  Broad strength for metals is spilling over to lend support to most commodities.    
   # Funds are back to being buyers after shedding longs on report day.  Money managers were estimated to have started today’s session with a net corn short near 65,000 contracts while remaining net-long beans by about 110,000.
   # The export sales report was mixed this morning with corn sales of 1.23 million tons higher than bean sales of 1 million.  Wheat sales were better than anticipated at 770,000 tons.        
   # A report from Brazil’s crop agency Conab is being priced into the market.  The country’s soybean production estimate was lowered to a range of 101.5 to 103.5 million metric tons.  USDA is within that range with an estimate of 102 mmt.  More of Brazil’s acres went to corn than previously expected, leading many analysts to believe that the USDA’s 83.5 mmt corn output forecast is too low.
   # Ethanol production slipped on the week, but from a very high level.  Corn grind was estimated at a robust 105 million bushels.  USDA upped its 2016/17 ethanol corn usage estimate by 25 million bushels to 5.3 billion on Wednesday’s WASDE report.    
   # Wednesday’s grain price break added to recent technical pessimism, but bulls were still not entirely convinced that weakness as of late was anything but a corrective move.  January soybean futures have probed but not settled below their 200-day moving average in course of several tests this week and last.  December corn futures are bouncing this morning after having completed a 38 percent retracement of the six-week climb that started in September. 
   # A cold front moves into the Midwest at the end of the week, but the region should remain warm and dry for the most part.  The 8-14 day outlook includes better chances for rain in the Plains.  
   # Traders are working to sort out the implications of a Trump election victory, particularly for what it means for interest rates.  Odds of a December Fed funds rate hike are back to more than 75 percent.  Some investors are betting that President-Elect Trump will pursue the types of pro-growth fiscal policy linked with higher inflation potential.   

***** Cattle futures find support from the cash market but wholesale prices remain defensive; December hogs struggling with resistance from 50-day MA. ***** 

   # A better start for cash cattle this week helps lend support to the board.  Packers are working through a lot of product this week, but improving retail demand should help out.    
   # USDA upped slightly its estimate for fourth quarter pork production without taking anything away from first quarter 2017.  Production remains historically high and pork has plenty of competition at the grocery store.  Hog futures should face some pushback in the coming weeks if prices cannot sustain their recent corrective momentum.