AgriVisor Morning MarketWatch

Monday, July 09, 2018
***** Corn down 3 1/4 to 4 3/4 cents at the break; soybeans off 9 to 9 3/4; Chicago wheat lower by 3 1/4 to 5 3/4. ***** 

   # Bilateral U.S./China tariffs went into effect on Friday.  The U.S. will charge a 25 percent tax on imports of Chinese goods like hydraulic turbines and medical pacemakers.  The Chinese government will collect 25 percent on a list of U.S. goods that includes whiskey and soybeans.  President Trump has not commented specifically on the tariffs since they were implemented, but he is said to be ready to stick to his promise of responding immediately to any Chinese retaliation.  
   # Brazil is set to supply a significantly-expanded share of China’s soybean needs over the next several months, but the South American shippers could run into trouble if logistical issues do not clear up.  Ports are still left a mess as the government works with the transportation industry to establish a new freight rate scheme.  Political turmoil also jeopardizes Brazil’s ability to move product; one of the front-runners for the upcoming presidential election, former President Lula, is currently in jail on corruption charges.  
   # The next Supply and Demand report is due for issue on Thursday at 11:00 am central.  USDA will fit estimates from the June 29 Stocks and Acreage report into the balance sheets.  Projections for the South American crops will be fine-tuned. Of greatest interest will be how the government treats U.S. export forecasts in the face of new tariffs. 
   # Environmental Protection Agency head Scott Pruitt resigned his post on Friday amid allegations of improper conduct.  Many in the ag industry are happy to see Pruitt go because of their disagreement with the former EPA chief’s unprecedented granting of ethanol blending exemptions to fuel refiners.
   # More rain in Minnesota where they didn’t need it; otherwise coverage was mostly limited to the South this weekend.  There is disagreement among the major weather models on how long the current ridging pattern will hold in place, but most meteorologists look for conditions to run hot and dry through at least the end of next week. 
   # Hedge funds took money on soybean shorts Friday, but they remain net-bearish the oilseed by about 50,000 contracts.  That group of speculators is estimated net-short corn by approximately 60,000 contracts while being about evenly split on their wheat bets.    
   # Outside financial markets are mostly shrugging off trade war worries this morning. U.S. stock futures are higher with help from firmer markets in China, Japan, and Europe.  Oil is holding strength and the dollar index is weaker to help lend some support to commodities.  

***** Cattle look to start steady/better; hogs open with a test of technical support from the major moving averages. *****

   # Cattle futures start with support from a cash market that improved by $5-$6 last week.  August live cattle find technical support from their 100-day moving average while facing possible pushback from last week’s high at $108.45.                
   # The hog market is put vulnerable by trade war fears with Mexico and China already having levied tariffs on U.S. pork and with the European Union possibly next.  Expectations for swelling third quarter production are helping to turn fundamental leanings negative as well.