AgriVisor Morning Marketwatch

Tuesday, December 06, 2016
   ***Good Morning***

***** Grains are steady/higher this morning; soybeans 7-8 higher, corn fractionally changed, with wheat steady-2 higher. *****

   # Soybeans continued to move upward on the heels of further gains in the palm oil market.  Malaysian palm was up 1.5% overnight, hitting a 4 year high.  Palm oil stocks are expected to be up on a report next week, but the rumor is that production numbers continue to disappoint.
   # New production data will be out from Canada later today, with canola output expected to jump to 18.8 mmt. from August’s forecast of 17 mmt. Yesterday, ABARE  downgraded the Australian canola crop slightly.  Stats Canada is expected to raise their wheat estimate just slightly to 30.7 mmt.  That’s still well over last year’s 27.6 mmt. crop
   # The trade is still buzzing about yesterday’s 426,000 ton Chinese soybean purchase.  They are still active in the Brazilian market, but the U.S. purchase was a big surprise.  Crush margins remain very good in China, as does soymeal demand. 
   # Albeit conditions are a little dry in spots in Argentina, the drier pattern is beneficial for planting.  Still, yesterday’s forecast elevated concern about a possible shift to sustained dryness.  After last year’s miss, traders are going to be very sensitive to the whims of S. American weather forecasts this year.
   # The current talk around the trade is they are looking for soybean and wheat stocks to be revised down slightly Friday, with corn stocks revised up slightly.  The USDA doesn’t have a history of making big changes in December. But, take note of soyoil and the soy crush in the wake of the surprising EPA announcement at Thanksgiving.
   # AgRural is expecting Brazil to have harvested 7 mmt. of soybeans by the end of January.  That fits with some talk that Jan exports could hit 1 mmt., with 5 mmt. shipped in Feb. 
   # An Argentina freight association estimates that truck freight costs have risen 36% since the first of the year.
   # The Dollar is stronger in the early trade, with the Euro being the weakest against it in the early trade.  The focus is turning to this week’s European Central Bank meeting.  But, looming on the horizon is the Fed meeting on Dec 13-14. The weekend failure of the Italian referendum is weighing on the Euro as well.

***** Cattle should start the day mixed/lower; lean hogs steady/firm. *****
   # Wholesale beef is slightly higher with choice at $191.39. The attitude regarding cash cattle prices is a little defensive with the numbers entering the pipeline a little higher than expected.
   # Wholesale pork was slightly higher at $74.06. Cash hog prices are holding firm on good packer margins, and subtle signs numbers are flattening out.