AgriVisor Afternoon Marketwatch

Thursday, January 12, 2017
***** Corn futures ended fractional-1 higher; soybeans 27-29 higher; Chi wheat 6-7 higher. *****  

   The USDA report was the feature of the day.  The soybean numbers led the markets higher after the USDA lowered the output, not increase it.  The trade widely expected a 0.2-0.3 increase in yield; the USDA reported a 0.4 bu. reduction.  That tightened the fundamental structure, dropping ending stocks 60 mln. to 420 mln. bu. 
   Corn numbers were slightly positive too, with the yield dropped 0.7 bu.; the trade was only looking for a 0.1-0.2 bu. drop.  Still, a 78 mln. bu. in output isn’t enough to spark a lot of interest.  Ending stocks were reduced slightly to 2.355 bln. bu.
   The USDA had mixed news for wheat.  The Dec. 1 stocks were higher than anticipated, implying poor feed demand.  That raised the ending stocks nearly 40 mln. bu. to 1.186 bln.  But, for something like the 20th year, winter wheat plantings came in under expectations, with HRW acres expected to be 3.3 mln. less than last year.  The promise of a smaller new crop lifted wheat, with the hard wheat markets leading the way higher.  
   Export sales were neutral/negative, but they covered a holiday week too.  The sales totaled; 348,900 tons of soybeans, 603,300 tons of corn, and 391,000 tons of wheat, the soybeans being the poorest.  
   The passing of the report, and the absence of negative elements, put weather back in the spotlight.  Argentina will be watched most closely, with the weekend bringing more rain to flooded areas.  If extended dryness doesn’t come by next week, it will limit replanting and start dragging production potential lower yet.  Meanwhile, their south remains warm, dry.  Northern areas in Brazil will start to be watched with planting of 2nd crop corn soon to begin.  The dryness in their northeast persists, sustaining a lingering threat to move into the 2nd crop corn area.  
   The wheat trade is watching weather closely.  Short range forecasts have moisture for the Plains, but longer range outlooks have a drier tendency again.  No troublesome cold is in the mix.  So far, Black Sea region wheat has avoided any significant problems too.      
   The US Dollar traded defensively most of the day.  Analysts were somewhat disappointed by the lack of comments on economic policy during Trump’s press conference.  There’s a lot of talk circulating doubting whether the stock market is going to hold up too.  Crude oil prices firmed on more indications of Saudi production cuts. 
***** Live cattle futures ended $1.65 to $0.67 lower; feeders $1.87 to $1.10 lower; hogs $0.35 higher to $0.20 lower. ***** 

   Weak wholesale prices continue to be a drag on cattle futures this week. Packer margins have moved from positive to negative this week, a move that should weigh on cash prices this week and next.   
   Wholesale pork prices quickly retreated after improving yesterday.  That is expected to cap cash strength, especially with a short schedule for slaughter next week.