AgriVisor Morning MarketWatch

Thursday, March 02, 2017
***** Corn futures down 2 1/2 cents at the break; soybeans lower by 6 1/2 to 8; Chicago wheat off 3 to 4 1/2. ***** 

   # Grain futures are giving back a small portion of previous two days’ rally.  Traders wait for the other shoe to drop as far as any potential action on proposed changes to Renewable Fuel Standards is concerned.
   # The White House may have initially denied there being an impending executive order that would shift the point of obligation for RFS compliance, but the firestorm that was sparked by the rumors has required that the Trump administration involve itself in several meetings on the subject this week. Billionaire activist investor Carl Icahn is defending his change proposal while executives and lobbyists from the ethanol industry are also at the discussion table.  The ethanol industry does not maintain a clear consensus position on the issue.  
   # U.S. biodiesel producers are in agreement that they would like to see the proposed implementation of a U.S.-only tax credit.  The old incentive was applied to the biodiesel blender, who could source biodiesel product by way of import.  Biodiesel imports in 2016 grew nearly 10-fold over five years to almost 700 million gallons.  Soyoil futures are up six percent since Tuesday.
   # Funds are sometimes expected to going on buying sprees in spurts of three days at a time, but they make take pause after adding considerable length over the course of two sessions.  Money managers now hold a net corn long near 100,000 contracts after having been net-short only six weeks ago.  The net soybean long continues to hover just north of 150,000 contracts.
   # Corn futures looked vulnerable technically after Monday’s break from the uptrend.  May futures have Tuesday’s range of $3.68 1/2 - $3.86 1/4 to lend near-term chart guidance.  The contract’s six-month high was put in last month at $3.87 1/4.
   # Farmers were an active seller of old-crop corn on Tuesday but movement slowed on Wednesday.  Average sales of the 2016 corn harvest are near 65 percent while soybean marketings are still likely just short of 85 percent.  
   # Traders are becoming more convinced of a Fed funds rate hike coming this month. The next FOMC meeting is scheduled for March 14-15.           

***** Cattle futures vulnerable if cash and wholesale moves sputter today; cash fundamentals turning much less friendly for hogs. *****

   # Strength for the boxed beef market continues to surprise, but rising prices are not going along with high volume.  Better wholesale prices help to keep cash sentiment cheery and futures have followed higher behind.  April live cattle futures are starting to reach into overbought territory on the charts after a quick rebound, but there is room yet before the contract tests its old high at $120.32.  
   # The pork belly rally looks to have stalled and packer margins are trending down to combine with expectations for the slaughter pace to remain high anyway.