AgriVisor Afternoon MarketWatch

Thursday, December 28, 2017
***** Corn futures off 1 1/4 to 2 cents; soybeans drop 9 3/4 to 10 3/4; Chicago wheat fractionally weaker. ***** 

   # Trading volume was light, as expected for the penultimate session of 2017.  Sellers took control from the start and ended a six-session winning streak for corn while at the same time pulling soybean futures down to fresh lows. Tomorrow is First Notice Day for January soybean futures, so market participants will look out for delivery totals and their influence on the nearby spread.
   # Soybeans were in part pressured by talk of the U.S. having to adhere to new quality standards established for exports destined for China.  Grain inspectors will start to label all soybean shipments that have more than one percent foreign material (FM) content.  The standard practice had been to allow cargoes with less than two percent FM to go without any certification.
   # No major changes on the weather front.  Farmers throughout much of Brazil will enjoy scattered showers over the next couple of weeks.  The forecast provides rain for a dry Argentina this weekend but leans otherwise hot and dry.  
   # Barge freight rates are creeping higher as cold weather freezes parts of the Mississippi River and slows traffic for shipments of grain headed south for export.  Dry conditions also have the river reaching levels below stage 0 at many points.  
   # Ethanol production was up on the week while stocks of the fuel alcohol drew down.  Estimated corn usage was a strong 110 million bushels, putting U.S. processors firmly on pace to meet USDA’s marketing year target of 5.525 billion bushels in 2017/18.  Ethanol grind is expected to consume 38 percent of last year’s corn crop.
   # Like the ethanol numbers were today, the weekly grain export sales report is delayed by a day due to Monday’s holiday.  Friday morning’s report will be expected to show new corn bookings near 850,000 tons with soybean sales of a little more than one million tons and wheat sales around 400,000 tons.  
   # Another down day for the dollar index failed to spark any buying interest in the grain space.  Recent weakness for the greenback has helped to support commodities like copper and oil.  Forex traders are rotating out of the dollar in response to what they expect to be a slow interest rate hike schedule for 2018.  

***** Live cattle futures gain $0.60 to $1.25; feeders up $0.37 to $0.50; hogs finish higher by $0.17 to $0.52. ***** 

   # Cattle futures turned back higher behind better boxed beef values and expectations for a firmer cash trade.  Cold weather and slow weight gains keeps the supply-side storyline slightly friendly, but the expectation is that cattle will be kept on feed longer than usual and that production will be accelerating into the second quarter of the new year.  
   # Hogs were back and forth as technical traders battled it out.  Buyers were looking at a potential double bottom while sellers were working on a topping formation.  Fundamental guidance was limited with cash markets undeveloped and the pork trade steady.