AgriVisor Morning Marketwatch

Monday, June 26, 2017
   ***Good Morning***

***** Grains are mixed to start the day, with Minn wheat 5 higher; soybeans 3-4 higher, corn 2 higher, but Chi wheat is 6-7 lower and KC 7-8 lower. *****

   # Weather may be the most notable thing to start the trading week, along with the looming USDA reports coming Friday.  On the weather front, reports of scattered frost across the Dakotas, Montana, and northern Minnesota may be the most notable feature, although some early indications that above normal temps are possible later in July will not go un-noticed.  Meanwhile, the warmer, drier weather across parts of the EU and into the Balkans is stressing those crops. Hot, dry weather across parts of northeastern China is not going unnoticed either.
   # Trade estimates are out for Friday’s USDA reports on grain stocks and acreage. June 1 stocks estimates are 5123 mln. bu. corn, 983 mln. soybeans and 1137 mln. wheat. The planting numbers are the numbers the trade is mostly looking ahead to.  The trade expects, 89.9 mln. acres of corn, 89.75 mln. soybeans, and 11.2 mln. acres of spring wheat. 
   # Crop conditions come in the afternoon.  The trade is expected to look for the corn and soybean ratings to be 1-2 points higher.  Spring wheat rating could drop another point, but they are already so low, they may simply remain steady.  Winter wheat harvest should be 35-40% done, although late rains may temporarily impede activity. 
   # Maybe the bigger news in the overnight trade was that quick break in gold; it was down $20/oz. at one point, with the collapse coming in a very tight time window.  Rumors floating early this morning suggest it may have been a “fat finger” mistake, creating an unusually large sell order. 
   # Reports out of Brazil indicate the 2nd crop corn harvest is just over 9% complete.  Wheat harvest is said to be just starting in France.  Early reports show variable wheat yields, but the quality seems to be looking good. 
   # The EPA is expected to unveil their biofuel mandates for 2018 and 2019 this week.  Given that ethanol has been lurking around the long term target, the key element in these new numbers could have more implications for biodiesel/soyoil. 
   # Argentine producers are thought to have only priced 12 mmt. of this year’s soybean harvest, 21% of the crop.  Over the past 5 years, they have priced 18% by now.  This fits with the general thought that producers would be strong holders of soy, expecting another export tax reduction later this year. 
   # Weather will continue to be the big variable.  Of late it looks like the GFS(US) model has been doing a better job of forecasting weather than the other models.  Heat is expected to return to the Midwest, but no one still calls for any extended problems.  
   # The positions as of last Tuesday showed funds were long 49433 contracts of wheat, short 43358 contracts of corn and 4534 contracts of soybeans.
   # Financial and forex traders are looking ahead to speeches by Fed Reserve and other financial officials.  The Dollar edged higher, but was somewhat defensive given the uncertainty about future Fed policy changes. Stock markets generally started the week a little higher.

***** Cattle should start the day slightly lower; lean hogs steady. *****  

   # Wholesale beef is sharply lower with choice at $239.75. The cash cattle market ended the week slightly lower, with most of the trade around $119-$120 live. Expect the cash trade to start defensive this week. Friday’s COF was bearish with higher placements and on feed numbers. 
   # Wholesale pork was higher at $101.15. Packer margins remain good thanks to rising wholesale prices.  Cash should start the week slightly lower; western Corn Belt prices were off slightly on Friday. The USDA will issue a quarterly hog report Thursday.