AgriVisor Afternoon MarketWatch

Friday, March 03, 2017
***** Corn futures up 1/2 to 2; soybeans fractionally firmer; Chicago wheat up 1/4 to 1 3/4. *****
   # It was an “inside day” for corn futures with the session’s ranges falling inside the previous days’.  It was actually sort of an inside day inside of and inside day inside of an inside day because all daily ranges subsequent to Tuesday’s have been further compressed. 
   # Concerns over dry weather in eastern Brazil potentially creeping west into Mato Grosso to be a detriment for the second corn crop have shifted to worries over wet weather being a threat to quality for the soybean crop.  More rain looks to be on the way for central Brazil over the next five days.
   # Brazil’s soybean export program is starting off at a record clip.  Crops were ready early in the season and had been making their way into shipping position without much trouble before heavy rains cut off the flow of trucks headed to ports along the Amazon River.
   # The next update of the Supply and Demand tables will come from the USDA on Thursday of next week.  Estimates for the South American crop will be the main attraction.  Analysts are reaching as high as 108 million tons for Brazil’s soybean crop, which the USDA in January pegged at 104 mt.
   # Most analysts surveyed by Bloomberg do not see it likely that USDA makes any change to the U.S. corn carryout estimate.  The average trade guess looks for soybean ending stocks to drop 5 million bushels to 415 mbu.  
   # The new-crop soybean/corn ratio came in slightly this week as traders begin to do more to price in expectations for acres switch.  The multiple currently stand at 2.55 versus 2.33 this time last year.    
   # Active oil rigs in the U.S. increased by two last week, not a big gain, but the total of 756 rigs is up 267 from the 489 in use this time last year.  Oil futures were trading higher on the last session of the week despite talk of U.S. inventories growing, in part because of rising imports.  
   # The dollar index initially did not budge much from the day’s low after Fed Chair Yellen mentioned that a March Fed funds rate hike was “likely appropriate.”  A notable currency move was the appreciation of the Mexican peso, which was firmer on talk about changes to NAFTA being potentially supportive.      
   # Stocks were mixed with banks the only sector making solid gains.  Money lenders like JPMorgan and Bank of America stand to benefit if interest rates are on their way up. 

***** April live cattle down $0.17 with the deferred contracts fractionally firmer; feeders up $0.47 to $1.02; hogs drop $1.17 to $1.52. *****

   # Better wholesale beef prices and a premium for the cash market help to support cattle futures, but upside looks to be limited by the projections for a rising number of animals slated to come off of feed starting this spring.     
   # Cash hogs turned defensive in reflection of an eroding packer margin.  Most cash trades were made at $1 under Thursday’s levels.  Slaughters are still running high and have the potential to plug the pipeline before demand can catch up, even though consumption is still pacing robustly.