AgriVisor Morning MarketWatch

Thursday, February 02, 2017
***** Corn futures down 2 cents overnight; soybeans off 3; Chicago wheat lower by 1 to 3 1/2. ***** 

   # A rally for Asian palm oil prices helps to support soyoil overnight but does not encourage an aggressive buying of bean futures.  Trading volume is a touch stronger for corn futures this morning after an active finish for yesterday’s session.
   # Corn futures are up against technical resistance from their 200-day moving average, a level that the March contract has not settled over since last June.  On the continuous chart, corn futures have $3.71 to contend with, which marks last month’s high and is the half-way point between the high and low from last summer and fall.  
   # The $3.70-$3.75 price zone includes various points of resistance and is also a price zone that likely buys another large chuck of old-crop corn from the farmer.  The U.S. farmer is estimated to be about 55 percent sold on 2016 corn.  A move for old-crop futures to $3.75 brings the new-crop December contract near or above $4, which would trigger a first round of small sales for 2017.
   # Relative price strength has allowed the farmer to be much more aggressive on soybean sales up to this point in the marketing year.  The U.S. farmer is estimated to be nearly 80 percent sold on old beans.   
   # A fresh round of capital from the speculator/investor was injected into the grain market yesterday.  Fund traders hold a net-long corn position for the first time since last summer and are starting to make quick work of paring their bearish wheat bets.  Index funds are building some exposure in the commodity space and find corn and wheat to be bargains after a few years of relative underperformance. 
   # The forecast has scattered showers predicted for much of Brazil over the next 7 days.  Moisture is welcomed by growers planning to plant a second corn crop, but the rains will get in the way of the start of soybean harvest.  Hot, dry conditions in southern Argentina are a worry for farmers there, but better weather has been observed throughout the rest of that country.  
   # The dollar is lower against most currencies after this week’s FOMC meeting ended without any aggressive interest rate comments coming from the central bankers.  Most observers are now convinced that 2017 will include only two rate hikes.          

***** Cattle futures face negativity from the fundamental and technical seller; hog futures pause after reaching into overbought territory on the charts.   ***** 

   # A resilient boxed beef market supports the cattle futures market against pressure that would otherwise come from a couple of negative supply reports and a bearish turn for the technicals.        
   # Hog futures are consolidating near recent highs in a chart-driven trade.  The fundamentals look market-neutral in the short-term.  Some uncertainty about export demand is offset by seasonable strength for domestic consumption.  Hog numbers are still high but pork stocks are not overly burdensome.