AgriVisor Afternoon MarketWatch

Monday, August 28, 2017
***** Corn futures drop 2 1/2 to 2 3/4 cents; soybeans lower by 3 to 3 3/4; Chicago wheat futures fall 6 to 9 1/2 cents. ***** 

   # Wheat was the weak link as buyers failed to follow through on last week’s technical rebound.  Sellers stepped in to defend resistance from the December Chicago contract’s 10-day moving average today.  Wheat’s fundamental prospects should be improving after the recent board break leaves U.S. values competitive into big markets like Saudi Arabia and Algeria.  
   # A move lower for the dollar is helping to paint a friendlier picture for wheat export prospects and for exports of corn and soy, too.  Economies abroad are improving to help support most currencies against the dollar while the dollar also slips because of the expectation that U.S. interest rates are staying low for longer.  
   # Harvest may be starting a week or two later in the Midwest this year as weather slows crop finish and producers attempt to avoid drying charges.  Late-planted and replanted corn still needs more sunshine.  A cool current forecast for September brings more frost/freeze talk this week. 
   # USDA announced a flash sale of 160,000 tons of corn for delivery to Mexico in 2017/18.  The deal comes as leaders from the U.S., Canada, and Mexico meet at President Trump’s insistence for the renegotiation of NAFTA terms.
   # Weekly export inspections are finishing the marketing year strong.  Shipments for corn, soybeans, and wheat were all up on the week.  Corn inspections stand 23 percent higher than a year ago, soybeans 13 percent higher, with one week in the marketing year left to go.  
   # Corn continues to lose ground on the soybean market, the new-crop futures ratio having grown to 2.68 after starting June at 2.35.  Traders that were expecting the multiple to tighten up as a result of higher soy acreage and better production prospects may have short-changed the chances for what has proved to be strong export demand in the lead up to harvest.  
   # Ethanol prices are on the defensive as traders sort out the impact of Hurricane Harvey on oil refining activities.  Negative for the market has been news that Brazil will move forward with a 20 percent tax on ethanol imports, an act that will work to taper the supply of U.S. fuel coming into the South American country. 
   # Crude oil prices were down hard but gasoline and diesel prices sharply higher on the refinery disruptions being caused by the hurricane. Grain trade was also disordered by Harvey’s causing the Houston port to shutter.  The Houston port is the country’s second largest, not being much smaller than New Orleans.           

***** Live cattle up $1.45; feeders higher by $2.95 to $3.45; hogs down $1.32 to $1.45. *****

   # Cattle futures did start stronger in response to Friday’s friendly Cattle on Feed report.  Placements were smaller than expected, but the enthusiasm was limited by them still being up on the year and having been so high in all of the previous months this summer.    
   # Technical sellers jumped on the hogs after Friday’s weak intraday reversal for futures.  The October contract is approaching its lifetime low at $57.35 but a quick drop from the August high leaves it registering oversold in the short-run.  Traders largely ignored the cash and wholesale markets firming up just slightly on the day.