AgriVisor Afternoon MarketWatch

Wednesday, February 07, 2018
***** Corn futures up 1 to 1 3/4 cents; soybeans drop 3 1/4 to 4; Chicago wheat rallies 13 1/4 to 14 1/4. ***** 

   # Chicago wheat futures surged to a new three-month high on persisting worries over dryness in the Southern Plains.  Production estimates for the U.S. winter crop are being marked lower.  A look at the government’s supply and demand projections will come out of tomorrow’s WASDE report.
   # The Thursday WASDE report is expected to feature a small cut to corn ending stocks and a moderate addition to soybean carryout.  The average trade guess for 2017/18 corn carryout is 2.468 billion bushels versus 2.477 last month, soybeans 486 million bushels versus 470 mbu on the January report.  
   # The most important numbers on the report may likely be found from revisions made to South American production estimates.  Argentina’s corn crop is expected lower by 1 to 2 million tons from the 42 mt projection served up last report.  Soybean production in Argentina is anticipated to fall to near 54 mt versus 56 mt last go around.  For Brazil, traders peg this year’s crops at 97 mt corn and 111 mt soybeans.  
   # Fund traders were seen covering more of their bearish corn bets today.  The managed money net corn short is estimated near 100,000 contracts after reaching a record 230,000 + contracts held short at the beginning of the year.  The large speculators are thought net-short soybeans by about 50,000 contracts and still hold a net short wheat position of approximately 85,000 contracts.
   # Export sales will be reported tomorrow morning with traders looking for new corn commitments to total something near 1.5 million tons, with help from the numerous daily sales announced last week.  New soybean bookings are expected near 550,000 tons, wheat sales near 400,000 tons.  
   # Ethanol production was up 1.6 percent on the week but inventories were higher by 1.9 percent.  Corn usage was estimated at 107 million bushels to keep U.S. processors well on track to meet USDA’s marketing year target for total ethanol grind.  
   # Stocks were moving mostly higher but enhanced volatility remained present as investors priced in the impact of strong gyrations for the bond market.  Oil was weaker after the weekly inventory report showed rising crude and product stocks.  

***** Live cattle futures finish steady to $0.60 lower; feeders down $0.42 to up $0.22; hogs drop $0.90 to $2.20. ***** 

   # Fund traders were seen taking some profit on cattle longs, but they remain net bullish the market.  The front of the futures curve keeps support from strong nearby demand, but the thought is that production levels will begin accelerating at a faster pace than domestic consumption and exports can keep up with.  
   # Early-week pressure on the pork market combined with a weaker cash trade to put hog futures on the defensive today.  The carcass cutout average is off about $3 since February 1st.