AgriVisor Morning MarketWatch

Friday, March 31, 2017
***** Corn futures up a penny ahead of the break; soybeans down fractionally; Chicago wheat higher by one-fifth of a nickel. *****

   # Finally, report day.  USDA releases estimates on Prospective Plantings and Grain Stocks at 11:00 am central.  First glance goes to the acres numbers.  The average trade guesses are 90.9 million acres corn, 88.3 million soybeans.  Grain inventories as of March 1 are expected to run 8.543 billion bushels of corn, 1.676 billion soybeans, 1.627 billion wheat.  
   # News overnight includes further pressure on Asian palm oil futures and a small rebound for soybean futures in China.  Action in those two markets has been extra influential for U.S. soy prices lately, but today their effects are offsetting and ignored because of the pending report, anyway.
   # The direction of palm oil prices will return to being a key influence for the soy market as traders watch palm stocks recover from a severe 2015 drought in top-producing Malaysia and Indonesia.  Supplies are being replenished for now, but a possible development of El Nino this winter could turn traders bullish again.  
   # U.S. soy prices do not enjoy the same support from bullish speculative buying that was spilling over from the Chinese market just a few months ago.  Chinese traders were funneling record amounts of capital into commodities on the Dalian exchange at the start of the calendar year to bet on rising inflation.
   # If today’s reports provide more fuel for the sellers, the fund traders will likely head into the U.S. planting season with what would be for this time of year a near-record net-short position on the grains.  Money managers go into the reports net-short corn by about 100,000 contracts with a soybean net-long that is down to nearly 35,000.
   # A big report can change the technical landscape quickly.  For now, nearby corn futures maintain support from $3.50.  May corn has a fall low at $3.32 1/2 to watch.  The contract is well removed from key resistance at the February high of $3.87 1/4.  May soybeans are trending toward a test of their $9.37 1/4 fall low.  A move to the upside would not likely find strong chart resistance before $10.    
   # Overnight rains were light but coverage was broad east of the Mississippi River.  Yesterday afternoon’s run of the 6-10 maps pulled some warmth away from the eastern Midwest and turned the South drier.  
   # Stock traders mostly shrugged off a strong GDP number yesterday.  Growth in the fourth quarter was revised higher to 2.1 percent.   A reading on personal consumption also beat expectations.     

***** Live cattle futures drop $0.82 to $1.35; feeders down $1.80 to $2; April hogs gain $0.32 with June rallying $1.50. ***** 

   # The fundamental bias for cattle looks to be taking a negative turn as traders see boxed beef prices coming down in a way that pinches packer margins and eventually weighs on the cash.                 
   # The Hogs and Pigs report was mostly neutral on paper, a little bearish if only because it served to confirm that the herd is getting bigger.  All hogs were up 4.2 percent on last year’s count.