AgriVisor Morning Marketwatch

Wednesday, January 10, 2018
   ***Good Morning***

***** Grains are quietly mixed this morning; soybeans 2 lower, corn fractionally higher, and wheat mostly 1 higher. ***** 

   Mostly the trade is waiting on Friday’s USDA numbers, with some attention to be paid to tomorrow’s CONAB numbers for Brazil.  Check out specific USDA expectations in our commodity commentaries.  Mostly though the corn and soybean yields and the winter wheat plantings will be the first numbers traders look at.  Yields are not expected to change, with winter wheat plantings off 1.2 mln. from last year. 
   Weather is playing a part in this mix, especially for wheat.  The big swings in temperatures after the extreme cold to start the year are not going unnoticed.  No one has loss specifics, but the weather is raising production uncertainty for our winter crop at the moment.  
   # Meanwhile, there is a cold air mass approaching the Russian wheat areas this is being watched.  Their crop looks good, but parts of it have not hardened off, and much of it lacks snow cover.  
   There is some rain coming for the drier areas of Arg, but the longer range forecasts still seem to be stuck in the warm, dry regime.  If weather reverts back to that after early next week’s relief, latent weather concern might elevate in importance with crops entering a more important period. 
   Brazilian weather remains good, but producers in the north are worried the wetter pattern could extend in the short term delaying soybean harvest.  That would delay corn planting of the 2nd crop.  This year’s wetter pattern has also increased disease issues, potentially capping yields for this crop, albeit still good yields.  A private analyst yesterday projected a 111.8 mmt crop for Brazil, high but below last year’s 114 mmt output.
   Across Europe, little of the crop has “hardened off” yet, including the Black Sea region. Temps are not cold enough to be a factor, but the situation does raise the risk to those crops unless snow cover develops before cold air hits the crop.  It’s been a long time since Russia has had a problem with winter kill. 
   Logistic problems are causing some difficulties at Arg. export points.  Wheat may see the biggest problem with that new crop hitting port.  Still, it could undermine soybean/product export shipments.  But, the wait for further currency devaluation and the steady reduction of soy export taxes are limiting producer selling and exports. 
   There’s a lot of discussion in the wheat trade about this week’s Egyptian wheat purchase.  Initially they had no offers, but finally got 7, and purchased 115,000 tons from Russia.  There’s talk the difficulties world merchants are having in dealing with them and their inconsistencies is starting to have an impact, and could raise the offering prices they see.
   World vegoil trade continues to talk about Malaysia’s temporary suspension of palm oil export taxes.  One Far East analyst sees shipments to India, Pakistan, China rising 30-50%. Even though Dec palm stocks were up, prices still rose overnight on the higher export expectations. 
   # The Dollar is edging lower mostly on technical features, but talk about a major shift in the long bond market is helping undermine confidence in the Dollar as well even though higher yields should be supportive.  Talk about reduced China interest in our Treasuries is a part of the mix.

***** Cattle should start the day slightly higher; Lean hogs mixed. *****  

   Wholesale beef is slightly higher with choice at $210.49. Cash cattle may continue to have a weak undertone, but the discount futures have to cash is an upward drag.  Some slaughter plants will be closed for MLK day on Monday.
   Wholesale pork is higher at $79.53. Cash hog prices should be firm despite the smaller slaughter next week as competition to keep packing lines full supports the cash hog market.