AgriVisor Afternoon Marketwatch

Thursday, December 01, 2016
***** Corn futures closed 5-6 lower; soybeans 2-3 lower; Chicago wheat 7-9 lower. *****  

   The need for strength in the soybean complex was on full display today.  Without strength there, both the wheat and corn markets slipped lower.  And even the weaker Dollar, nor the stronger crude oil market were able to offer any support. 
   Export sales were ok Thursday, but didn’t contain anything to bring buying interest into any of the grains, soybeans included.  Sales totaled, 1.4 mm.t of soybeans, 761,600 tons of corn, 483,500 tons of wheat, and 150,400 tons of soymeal.  Chinese business accounted for the bulk of the soybean sales.  But talk in the trade suggests they are aggressively shifting their sourcing to South America.  Talk had them buying 22-23 cargoes out of Brazil yesterday, and just 1 out of the U.S.
   Deliveries played a part in the weakness in wheat Thursday.  901 notices were issued against Chi futures.  810 were issued against K.C., but those were redeliveries.  No corn has yet been tendered, with soyoil and soymeal deliveries still light.
   There’s persistent talk about the Australian wheat crop, with widely divergent opinions.  The difficulty in coming up with a consensus is that the western and eastern crops are drastically different.  Talk ranges from less than 28 mmt. to over 31 mmt. for the country as a whole.
   The fate of Russian wheat exports is not as clear-cut as it once was.  Since bird flu was discovered, there’s a possibility that wheat shipments from the Krasnodar region might have to be curtailed for phytosanitary reasons.  That would pinch their exports shifting business elsewhere.
   The new drought monitor shows dryness expanding in the Great Plains, even in parts of the N. Plains.  But with winter setting in, there’s not much concern.  The bigger issue will be the amount of snow cover and the depth of temperatures later in the winter.  The same could be said for the Russian crop. 
   Crude oil continued to rise in the wake of an apparent OPEC deal, one that could also include participation by Russia, an outsider. It’s the first attempt to cut output since 2008. The bigger unknown is whether all parties hold up their end of the bargain; OPEC is notorious for cheating.
   The Dollar turned down Thursday, with the strength in crude the dominant reason.  An increase in rates by the Fed has already been “baked in,” but rising inflation indications could more than offset any increase.  The B Pound was the stronger currency, guided higher by some issues tied to Brexit. 

***** Live cattle futures ended $0.17-$0.57 lower; feeders were $0.65-$0.10 lower; hogs were $0.80-$1.15  lower. ***** 

   # Wholesale beef ended mixed/higher for the day with choice at $190.51.  Cash cattle are less robust today, with a live trade in the $110-$113 range.  This week’s higher cash market is attracting more feedlot selling interest, undermining both cash and futures.  Feeders followed.  
   Wholesale pork prices were slightly higher Thursday, with the #2 cutout at $74.31.  Cash hog prices strengthened with the week coming to an end, but futures softened because of their premium to cash and weak cattle futures.