AgriVisor Morning Marketwatch

Wednesday, December 06, 2017
   ***Good Morning***

***** Grains are mixed again; soybeans are 3 higher, corn 1-2 higher, with wheat mostly fractionally changed. ***** 

   # Argentine weather continues to be the dominant short term influence in the grain complex, lifting soybeans, and seems to be beginning to have an impact on the corn market too.
   # The 2 week weather outlook for Argentina continues to be mostly dry with only light scattered showers, especially in more southern areas.  This same pattern extends across southern Uruguay and southern Brazil.  But, as Christmas approaches, there is a possibility of a frontal system coming from the south bringing better chances with it.
   # In Argentina, diesel prices were raised 6%, a move that is going to hit ag producers via higher production costs and higher transportation costs.
   # There is some talk this morning about the strength of our stock market and our economy rubbing off on commodity prices.  But, as we have pointed out in FarmWeek and the Spokesman, commodities are getting cheap relative to equities. 
   # There is talk about the steady strengthening of La Nina and the potential for heavier rains in Australia just as harvest is in full swing.  Heavy rains at this time would not only hurt quality of the crop, but if lodging increases, yields could drop a little more, cutting an already small crop.
   # Brazil’s soybean planting is winding down, with 92% of the crop in the ground, a little ahead of normal.  Even the southernmost crop is 86% planted.  Good conditions dominate except for the far south, and so far, that crop is OK, but needs to be watched.
   # The Int. Trade Commission of the US confirmed heavy import tariffs against biodiesel tariffs against both Arg. and Indonesia.  The final duties put in place range from 54 to 70%. 
   # China crush margins have rebounded the past few weeks, a shift that will bolster imports after their usual seasonal slowdown.  The govt. appears to be issuing GMO safety certificates at a normal pace following the recent slow-down.  Nov. imports could hit 10 mmt., with a slight decline possible in December.
   # StatsCanada will issue new production estimates today. Soybean output is expected to be 8.1 mmt., canola 20.2 mmt., and 28. mmt. for wheat.
   # The US EPA will release their weekly petroleum report today, including ethanol output.
   # U.S. FOB corn prices are the lowest of any of the major exporters which should translate into more active export interest in our corn. 
   # There is some talk that the Chinese corn crop this year was smaller than the industry had been expecting.  That in part explains strength in Dalian corn futures; they’ve closed at their highest level in 5 months. 
   # The Dollar is only slightly higher this morning.  Enthusiasm in the wake of the Senate tax passage has faded.  Meanwhile, the anxiety about a possible govt. shutdown is adding a little downward pressure on the Dollar.  Meanwhile, a hiccup in Brexit negotiations is softening the Brit Pound.

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

   # Wholesale beef is slightly higher with choice at $209.08. The industry is more focused on futures weakness than cash market strength.  Buyers do not seem to be as hopeful for cash strength later in the week as they were on Monday.  Still, beef demand ideas should be the key into the holidays, and we see no reason for it not to be good.
   # Wholesale pork is higher at $84.78. Cash hog prices are expected to start the day a little stronger, with hog demand still reasonably robust, in part because of persistent good packer margins.  Still, today’s higher Iowa/Minn weights will not be ignored; they infer hog supplies are abundant.