AgriVisor Morning Marketwatch

Tuesday, December 12, 2017
   ***Good Morning***

***** Grains are quietly mixed in the overnight trade; soybeans are 1 lower, corn fractionally higher, with wheat fractionally higher. ***** 

   # The trade is awaiting the outcome of the USDA numbers coming at 11 am central time.  While no one is expecting a notable surprise, at these prices no one wants to bet against it.  CONAB released their latest estimates of the Brazilian crop, with the numbers not much of a shock.
   # The CONAB corn forecasts changed very little for both acreage and yield.  The 92.22 mmt. estimate was only 0.1 mmt down from last month.  The soybean production was increased 1.6 mmt. to 109.18 mmt, with a slight increase in the yield forecast.
   # USDA numbers will only be on supply/demand for the US and the world.  The US corn ending stocks is expected to be reduced slightly with some thinking the ethanol grind could be increased; something near a 15 mln. bu. change is generally expected.  There’s been constant talk about a downward adjustment in soybean exports and upward adjustment in ending stocks, with the shift in the 10-15 mln. bu. area.  That would lift ending stocks to 435-440, but 450 probably wouldn’t shock many.  Wheat ending stocks are expected to be near unchanged.
   # There isn’t a lot of excitement about the world numbers either, but the trade will note the Russian wheat number(could be raised), the Chinese corn number, and the South American estimates.  Brazil’s soybeans could be raised and Argentina’s lowered, but because it is early in their cycle, there’s still uncertainty.  Changes in the respective corn numbers will be small, with a chance Brazil’s could be reduced slightly.  With wheat, stocks could be trimmed slightly with Aust crop cut and world consumption raised.
   # Argentine sources report the weekend rains weren’t that beneficial, with temps getting hot in the core region.  Still forecasters want to talk up better chances of rain starting next week. 
   # Weakness in the Brazilian Real is boosting internal prices, and prompting some increased cash sales, especially with the crop prospects improving some.  The Arg. Peso is about 17.25, with some talk it could drop to 18.0 this year. 
   # Malaysian palm oil futures snapped a 7 day losing streak, with shorts covering positions.  That came with Nov palm oil stocks reported to be up 16% on the month and at a 2 yr. high.  Some believe negative fundamentals have been fully priced in. 
   # There’s a lot of talk about NAFTA, and with Ag. Sec. Perdue scheduled to meet with Trump look for more news on this front.  Yesterday, there was a story that Trump might indicate he’s willing to withdraw from NAFTA.  That could be a negotiating ploy with another round of talks still scheduled.
   # The Dollar is holding small gains ahead of this week’s Fed meeting, with everyone expecting them to raise rates slightly.  Generally though analysts expect the Dollar to remain weak, with renewed personal challenges against Trump possibly adding to that. 

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

   # Wholesale beef is slightly lower with choice at $205.53. Persistent weakness in the wholesale sector are likely to keep the cattle market on the defensive.  The industry seems to want to talk up the large supply of meat coming to market.  Cattle slaughter margins are not great either.  There’s talk about big placements again on this month’s COF report.
   # Wholesale pork is sharply lower at $81.69. Cash hog prices are expected to start the day a little lower with the weak wholesale market and indications numbers are abundant.