AgriVisor Morning MarketWatch

Wednesday, February 06, 2019
***** Corn, soybean, wheat futures all down by just more than a penny at the morning break. ***** 

   # Call the overnight quiet for a third session in a row this week. Fresh news is limited as traders wait for report day. Outside markets are little changed and don’t offer any strong guidance to grains so far this morning. 
   # Investors are reacting to President Trump’s Tuesday night State of the Union address. He pushed for comprehensive immigration reform but did not go so far as to declare a national emergency so that a border wall could be built without Congressional approval. Lawmakers will take up the issue again as the February 15 expiration of the current temporary funding bill approaches. President Trump stuck to the same talking points when bringing up trade policy, expressing optimism over the potential for a Chinese deal that would benefit U.S. farming and manufacturing industry while also urging Congress to approve the newly-minted U.S.-Mexico-Canada Agreement. 
   # Lead U.S. Trade Representative Robert Lighthizer will head to China next week for another round of trade negotiations, this time with U.S. Treasury Secretary Steven Mnuchin in tow. If the meeting goes well, President Trump will likely schedule a summit with Chinese President Xi to finalize an agreement before the March 1st deadline.  
   # On the subject of the U.S.-Mexico-Canada Trade Agreement, executive leaders of the three countries have signed the deal, but Congress still has yet to ratify it. Lawmakers in Mexico and Canada have also yet to fully approve the new pact, waiting instead for the U.S. to first take down steel and aluminum tariffs against them. 
   # Freezing rain will be an issue across parts of the Midwest today and tomorrow before winds pick up and temperatures drop sharply on Friday. Snow is in the forecast again starting Sunday. A colder bias is expected to remain through the month of February while precipitation leans wetter than normal. 
   # The five-day forecast for South America is mostly favorable for crops. Dry weather in Brazil has been a yield drag for soybeans, but conditions are conducive to easy harvest progress. Brazil’s soybean crop is somewhere near 25 percent cut while plantings of the second corn crop reach about the same mark. 
   # The CFTC released another batch of data on trader positions that was delayed in January due to the government shutdown. While the official numbers are not up to date just yet, private estimates have managed money net-long corn by approximately 70,000 contracts. The fund traders are thought net-short wheat by about 10,000 contracts and net-long soybeans by about 10,000 contracts. 

***** February live cattle futures re-test $127/cwt; hogs are still locked in a downtrend but registering oversold. *****

   # Cattle futures are finding support from firmer cash markets, but there is some doubt that the cash trade can improve much further this week. Strength in the cash market is seen more a product of weather-restricted supply than it is robust demand.   
   # Hogs finally enjoyed a technical bounce on Monday after February futures fell a quick 13 percent from their January highs, but selling resumed quickly on Tuesday. 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.