AgriVisor Morning Marketwatch

Tuesday, August 08, 2017
   ***Good Morning***

***** Grains were mostly higher in the overnight trade; soybeans are 7-8 higher, corn fractionally higher, with wheat mostly 1-3 higher. ***** 

   # The bigger story overnight seemed to be the Chinese trade data.  Even though the primary data was a little negative as far as the general economies are concerned, the 10 mmt. ton soybean import number gave a boost to the soybean market.   That fit with the story that last month’s smaller number was mostly because of implementation of new import approval guidelines, and a cut in VAT in July. And, the surge indicates why there is talk about port congestion at the moment.  Despite talk about crush margins, it confirms the demand base for proteins remains robust.
   # The weekly crop ratings were the other big story.  The soybean rating increased 1 point to 60% g/e.  If you look though, the big increase was mostly in lower yielding states, while the rating was steady/lower in key yielding states.  The corn rating dropped a point to 60% g/e; again weakness showing in high yielding states. The spring wheat rating rose 1 point to 32% g/e, but with 24% of the crop harvested, rains now are a moot point.  94% of the winter wheat harvest is complete. 
   # The trade is mostly looking ahead to Thursday’s USDA numbers. No matter the corn yield the USDA puts out, the trade seems geared up to think the subsequent yield estimates will be lower when the USDA has a chance to include ear weights into their equations. Wire services indicate many analysts are looking for something near 166 for corn.  
   # Because soybeans are a later crop, the discussion isn’t the same regarding subsequent estimates; Aug/Sept weather could still swing those either way.  As it is, they are mostly looking for a yield in the 47.0-47.5 bu. range. 
   # The wheat output will be revised down again, with the trade looking for the total crop to be near 1.711 bln. bu. and the spring crop near 393 mln. bu. Ultimately some see the Sept. 30 spring estimate closer to 350 mln. when acreage abandonment can be built in.
   # Smaller crops bring smaller stocks, with the trade looking for” 2003 mln. bu. of corn, 424 mln. soybeans, and 903 mln. wheat.
   # Some are still talking about the implications of Friday’s Monthly Census export numbers for soybeans, especially after yesterday’s 25 mln. bu. weekly inspections.  The 66 mln. bu. June exports were higher than the weekly inspections or shipment numbers implied, further indicating the USDA will raise old-crop exports on this week’s s/d report.  Some think the increase could be as much as 50 mln. bu. 
   # So far, the Russian harvest has totaled 52 mmt. The pace is behind last year, but yields are significantly higher. Of that, 43 mmt. has been wheat, and 6 mmt. barley.  Meanwhile, they seem to be pushing grains aggressively into the export pipeline.
   # Argentina reports over 50% of this year’s potential corn exports have been sold.  Brazilian soy producers are thought to only have sold 74% of the crop, compared to 84% last year.  New crop sales are only 7.6%, compared to last year’s 15%. 
   # The Dollar is slightly lower again today. Traders are waiting for the inflation data late week to see if they support potential for the Fed to start liquidating their portfolio of long bonds. The Euro held small gains even though the German exports were less than expected. Their imports were the poorest since 2009. As indicated above China’s overall trade data were not as good as hoped for.

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

   # Wholesale beef is slightly lower with choice at $202.72. The cash cattle trade may still be quiet; bids are expected at $115, with offers thought to be at $120-$121.  Still, the premium cash has to futures and supply of market ready animals will be a downward drag, along with the weak futures. 
   # Wholesale pork is higher at $97.56. Cash hog prices should start near steady, but could slip with higher numbers coming into the pipeline.  Hog futures will be supported by the discount to cash.