AgriVisor Morning Marketwatch

Thursday, September 13, 2018
   ***Good Morning***

***** Grains are mixed/lower to start the day; soybeans are 2 higher, corn fractionally higher, but wheat is 3-4 lower. ***** 

   # The biggest news on tap will be the export sales report. China talk will be a part of the mix, but good weather/harvest will be the other big story.
   # The overnight trade was a lot of follow-up activity from the world trade reacting to the new USDA numbers. Even though corn was a surprise domestically, the world numbers in wheat/soybeans got a little more attention.  Even then, the lower prices for all of the grains tempered action. 
   # Not surprisingly, export sales may have been a little light, but coming the week in front of the USDA report, that should have been expected. Corn sales totaled 774,200 tons.  Soybean sales were 693,500 tons, with soymeal sales of 224,200 tons.  Wheat sales were 387,600 tons. 
   # The U.S. and China are again setting up meetings to engage in discussions about trade issues.  It’s said these will involve higher level officials. Dates/times/places are being worked out, but with higher level officials there’s more optimism than has been the case for prior discussions. So far, the US has also held off implementing the next round of tariffs on $200 bln. of Chinese imports.
   # Even though talks have been “suspended” with Canada, there’s still a lot of dialog going on to work out some of the finer points of the negotiations.  There’s still a general belief that a deal will be worked out relatively quickly. 
   # The crops are maturing fast, arguing for a faster harvest.  The latest long range forecasts are still mostly warm for the Midwest, but have a wetter pattern, suggesting the harvest pace may be restrained even if the crop matures faster than normal. Given some talk about stalk issues, that could add a little to field losses.  The industry will be totaling up loss numbers for the Southeast this week, at least attempting to after they see Monday’s harvest data. 
   # The wheat trade is still focused on Russia and the level of their exports. The 3 mmt increase in their wheat output sparked more talk of a 35 mmt. export campaign, a move some see diminishing the possibility of upside price potential.  Still, others rightly indicate $5 wheat is not high priced. Meanwhile, Australia is expected to remain dry.
   # With planting on the horizon in S. America, there weather will become more important.  
   # China is taking moves to limit the spread of African Swine Fever, including the banning of feeding household waste.  This is a situation to continue to monitor.  
   # There’s still a lot of talk circulating about China’s forecast that soybean imports might only total 85 mmt. this year; that’s 10 mmt. down for their prior estimate and the USDA. They are encouraging producers to feed lower protein feed in lieu of high protein feeds.  But, that will have repercussions on pork/poultry output if they do. 
   # The Dollar was a little softer in the overnight trade, with the B Pound and the Turkish Lira both moving upward.  The latter was supported by a rate increase, while the former was supported by talk of rate increases coming.

***** Cattle should start the day steady/higher; Lean hogs higher. ***** 
   # Wholesale beef is lower with choice at $204.79. Cash cattle trade may be slow to develop today, with the softer beef market likely to cap packer buying interest. Look for the trade to key off futures direction.  Beef export sales were off this week, which might temper enthusiasm.  
   # Wholesale pork is slightly higher at $70.86. Cash hog prices are expected to be steady/firm. Firming wholesale markets should help put a floor under the cash hog market, although narrowing packer margins may curb strength. Export sales were a little off the pace last week.