AgriVisor Morning Marketwatch

Friday, March 10, 2017
   ***Good Morning***

***** Grains are slightly lower to start the day; soybeans 5-6 lower, corn 1-2 lower, with wheat 1-2 lower. *****

   # Overnight weakness was mostly a function the negative perceptions of yesterday’s new USDA s/d projections, both for the US(soybeans) and for all the grains in the world.  Given the Brazilian estimates, we believe some in the trade are thinking the Brazilian crop sizes will be even larger than forecast yesterday.
   An added downward influence late this week has come from the sharp decline in crude oil prices, a weakening trend that accelerated with Wednesday’s rise in U.S. crude oil inventories.  The $3-$4 break over the last 2-3 days is causing some to rethink their “reflationary” expectations with the break in energy dragging prices in the broad commodity sector lower.  
   Malaysian palm oil prices were down 2% in the overnight trade, with the weakness in crude oil and other vegoil prices pulling prices lower, along with weaker indications for exports and demand in general. Early May Malaysian palm oil shipments were 10% lower than the same period last month. Meanwhile, end of Feb Malaysian palm stocks were the lowest in 6 years.
   # The biggest surprise in yesterday’s numbers might have been the 25 mln. bu. reduction in the U.S. soybean export estimate.  The trade in general was thinking the soybean ending stocks might be reduced slightly; instead they raised them 15 mln. bu. to 435 mln.  
   # The 107.6 and 108 mmt. estimates on the Brazilian soybean crop will likely generate more talk about 109, with some maybe even putting forward ideas 110 is possible.  The same might be said for USDA’s 91.5 mmt. Brazilian corn forecast.  There have already been a couple of projections over 93 mmt. 
   # Corn traders are going to be watching Brazilian weather closely as the northern parts of the growing region is due to start their “dry” season at any time.  Their  crop is in good shape at present, although Parana’s planting lagged the normal pace this year. 
   # Lost in the focus on the supply focus on yesterday’s reports was the fact the USDA boosted world demand estimates for soybeans, with China showing the biggest change with a 1 mmt. increase in the import forecast. Corn and wheat demand forecasts were raised as well. 
   The Dollar weakened slightly after the Labor Dept’s jobs report.  The number of jobs in Feb increased 235,000 vs. expectations of 197,000.  Wage inflation was up 0.2% on the month, a little less than expected, but continuing the track of seeing wages being pressured upward more than the last few years.

***** Cattle should start the day steady/firm; lean hogs steady. *****

   Wholesale beef is higher with choice at $215.56. Cash cattle trade has been reasonably active with the bulk of the late week cash trade in the middle/high $120s.  There was even a report of a pen at $130. Mostly the trade is getting a little anxious about the market’s ability to sustain strength with larger marketings expected to start in April.
   Wholesale pork was higher at $81.75. Cash hog prices should be steady/firm with good margins and firm wholesale prices.  Poultry supplies/prices are exerting some downward pull on the pork complex.