AgriVisor Morning MarketWatch

Tuesday, February 05, 2019
***** Corn futures fractionally firmer at the break; soybeans up fractionally; Chicago wheat fractionally weaker. ***** 

   # It’s another quiet overnight session as activity slows ahead of crop report day. Today traders will keep a close eye on the 8:00 am export report and price in the latest South American weather forecast. Markets may find influence tonight from President Trump’s State of the Union address.
   # USDA confirmed more recent soybean purchases from China. 2,603,000 tons were sold to China for 2018/19 delivery along with another 274,000 tons reported sold to an unknown buyer.  
   # Trade will surely be on the agenda for tonight’s State of the Union. President Trump’s comments on negotiations with the Chinese have been positive as of late, but his last tweet on the subject was stern: “Looking for China to open their Markets not only to Financial Services, which they are now doing, but also to our Manufacturing, Farmers and other U.S. business and industries. Without this a deal would be unacceptable!” 
   # Infrastructure could be a topic of the address and would certainly have implications for the commodity markets. President Trump has floated the idea of a $1 trillion infrastructure program since he was elected in 2016, but it has taken a backseat to other items like trade and immigration policy reforms. Infrastructure spending could be a tide that lifts all ships in the commodity space, especially if oil prices are boosted by the building projects. 
   # Analysts at the United Nations say that escalation of the trade war would be “significantly negative” for the global economy. Their recent study suggests that U.S. exporters would not gain substantial business from additional tariffs against the Chinese, but rather firms in Europe would benefit from extra trade demand. Countries that make up the Trans-Pacific Partnership – like Canada, Mexico, and Japan – would also benefit.   
   # USDA caught up on releasing the November Fats and Oils report, which showed soybean crush at 178 million bushels for the month versus expectations near 177 mbu. The government tallied a significant 7 percent decline for crude soybean oil stocks from October to November. 
   # March corn futures are trading tight ranges within a wedge formation that includes topside resistance at $3.87 3/4. The market trades ahead of its major moving averages and above a first point of key support at $3.75 3/4.
   # Stats Canada released an important stocks report this morning, finding that the country’s wheat stocks were 23.2 million tons, as anticipated. The number is almost exactly even with stocks from a year ago. Canola stocks were slightly lower than anticipated at 14.6 mt, but still at a record high.

***** Cattle futures vulnerable to technical pressure after suffering intraday reversal on Monday; hogs look to consolidate near recent lows. *****

   # Cattle futures went higher along with hogs early Monday but faced fundamental selling pressure late in the session. Traders were not convinced that cash prices would be able to keep up after gaining $2 last week. The cash trade is supported by recent weather disruptions to feeding and marketing activities.  
   # Hogs finally enjoyed a technical bounce after February futures fell a quick 13 percent from their January highs. The market is abundantly supplied and facing seasonally-weak domestic demand, but there remains hope that a Chinese trade deal will spark a big pickup in export business.