AgriVisor Morning Marketwatch

Monday, January 07, 2019
   ***Good Morning***

***** Grains are starting the day mixed; soybeans 5 higher, corn fractionally changed, and wheat 1 lower. ***** 

   # The trade will keep a close eye on the US/China talks today.  In a surprise move, Chinese Pres. Xi’s top negotiator, Liu He attended the first day of talks, suggesting just how important these discussions may be to the Chinese. Various economic numbers have started to highlight the negative repercussions the trade issues have had on the Chinese economy. We also hear high level discussions are going on with EU and Japan this week.
   # South American weather will be the other factor that weighs heavily on the grain trade. Central/north central parts of Brazil are going to experience temps 5-10 degrees above normal.  This same region will get some rain, but a broad swath will see less than 1/2 inch.  Rains will be better in Rio Grande do Sul, and in northern Mato Grosso. Paraguay will have better rain chances, with generally good moisture possibilities. 
   # Argentina will continue to see a schizophrenic weather pattern, with rains in the north, but a dry pattern persisting in the south. Temps are expected to be cooler than normal. Wheat harvest is said to be 90% complete.
   # Production forecasts continue to decline for Brazil. The latest, FC Stone’s, put the crop just over 116. Mmt. CONAB is due to release their latest estimate Thurs., but they have a habit of lagging changes that take place(similar to USDA). One producer org. in Brazil dropped their forecast to 110-115 mmt, but that’s probably lower than reality if weather would improve.
   # USDA was originally slated to release their final numbers on Friday, but will now be delayed indefinitely as long as the govt. remains partially closed.  Once govt. re-opens, they should be able to produce their forecasts in about a week.  As a reminder, those reports include; crop production, Dec. 1 grain stocks, winter wheat plantings, and s/d forecasts.
   # Export inspections will be out mid-morning. The industry is looking for: 24-29 mln. soy, 34-38 mln. bu. of corn, and 14-18 mln. wheat.
   # The wheat trade is watching the situation with Algeria. They rejected a cargo of Argentine wheat over the weekend as it did not meet quality standards. Given some of Arg.’s late harvest weather that could be an issue going forward. Algeria also has another buying tender slated for tomorrow; the results of that could be interesting given the rejection of the Arg. cargo. 
   # Index fund rebalancing is slated to start for most on Tuesday. That will have some repercussions in the movement of various markets over the next week, especially if other news is limited. 
   # Funds were said to have bought 6,500 soybeans and 9,000 corn, and 3,000 wheat.
   # Equity markets are still holding firm behind Friday’s job numbers, but the trade is going to be looking at ISM manufacturing orders coming later today for clues as to what the govt. factory orders report might have said. The Dollar was slipping lower in the overnight trade in a cautious atmosphere with the lack of govt. data coming.

***** Cattle should start the day lower; Lean hogs mixed/lower. *****  

   # Wholesale beef is lower with choice at $214.51. The cash cattle trade will not only be at a standoff as it usually is on a Monday, but the lower futures will make packer buyers more conservative with their early week bids. Showlists could be a little smaller in the wake of last week’s cash strength. 
   # Wholesale pork is steady/weak at $69.70. Packer bids are expected to be steady/firm. Good packer margins should be a supportive element in the cash hog market going forward. Supplies should have seasonally peaked.  In lieu of govt. being partially closed, the industry will be watching the Iowa/Minn weekly weights to see how current marketings are.