AgriVisor Morning MarketWatch

Tuesday, February 20, 2018
***** Corn futures up 1 to 1 1/2 cents ahead of the break; soybeans higher by 4 3/4 to 13 3/4; Chicago wheat up 3. *****

   # Grains rally at the start of trading after a long weekend.  Weekend rain in Argentina was limited in coverage and the forecast stays dry.  
   # Soymeal futures continue higher at a breakneck pace.  The product is moving up on Argentina crop troubles.  The nearby March Chicago meal contract is up almost 15 percent since February 1st.  
   # Wheat is so far shrugging off healthy rains that fell on Monday.  The forecast stays wet today and tomorrow while odds for above-normal precipitation also stick around in the 6-10 day outlook.  The two-week outlook is biased warmer than normal for the Midwest.
   # March soybeans gapped higher on the open and leave the overnight low at $10.29 in place as a point of potential support.  This morning’s move puts the contract into overbought territory as measured by the Relative Strength Index reaching above 70.  The lifetime high for SH18 at $10.50 1/2 stands as a next objective on the upside.  
   # Hedge funds are estimated net-short corn still by about 45,000 contracts. The managed money position is back to being net-long, now at about 25,000 contracts.  
   # Grain traders will have a look at new projections for the 2018 crops this week.  USDA meets for the annual Agricultural Outlook Forum in Washington on February 22-23 to discuss, among other items, predictions for U.S. row crop acreage this spring.  More corn-to-soy switching is expected this year, potentially bringing soybean acres ahead of corn area.     
   # Stock index futures are trading lower as treasury yields and the dollar rise. Investors have their eye on a government bond issuance scheduled for this week as they work to adjust expectations for interest rate direction.  New Federal Reserve leadership is thought likely to preside over at least three rate hikes in 2018.   

***** Cattle futures look to start steady/weaker; hogs vulnerable to follow-through selling. ***** 

   # Cattle futures rested at fresh three-month highs on Friday as they chased the cash market higher.  $130 live was paid after the boxed beef market firmed up.  Bears still point to a high slaughter pace and heavy weights to say that the longer-term fundamentals support lower prices.        
   # Big hog slaughters have cash and wholesale markets defensive.  Speculators have been hurrying to liquidate long positions.  The board is vulnerable to follow-through selling after Friday’s gap lower ended a short correction to the upside.