AgriVisor Morning Marketwatch

Tuesday, July 10, 2018
 *** Good Morning *** 

***** Grains are mixed as we start the day; soybeans 7-8 higher, corn 2-3 lower, and wheat 11-13 lower. ****

   # The big story impacting the morning trade was the surprising improvement in the spring wheat crop rating.  USDA raised the spring wheat rating to 80% g/e; the trade had been looking for a small drop to 765.  Meanwhile, harvest is rapidly moving forward at 63% complete.  That is increasing the supply of wheat in the pipeline.  Meanwhile, export demand is soft, with less than 10 mln bu. shipped last week. 
   # Corn and soybean condition numbers last night were little changed. Corn declined 1 point, 75% g/e. Soybeans remained the same at 71% g/e.  Both imply good production potential. 
   # Weather forecasts didn’t change markedly yesterday, nor this morning.  Temps will remain warm this week, with moisture limited.  But, the 6-10 and 8-14 day outlooks show potential for above normal moisture starting early next week.  Temps will be warm, although cooler conditions are expected in the western part of the Great Plains.  
   # SovEcon reduced their forecast for the Russian crop. They expect the total crop to be 113.5 mmt., with the wheat output at 69.6 mmt. Weather forecasts for the Black Sea area continue to trend toward dryness, which could undermine output a little more.
   # The French govt. joined the parade of seeing smaller crops.  They expect this year’s crop to be near 36.1 mmt., down from last year’s 36.6 mmt. crop. That joins last week’s downgrade of the German crop, and recent reductions from private analysts. 
   # Brazil raised its soybean forecast slightly to 118.88 mmt. They lowered the corn harvest to 82.92 from 85 mmt, primarily because of a reduction in the 2nd crop output.
   # Trade issues continue to be a large part of the mix, and will likely be a dampener on prices until the industry sees USDA’s s/d forecasts on Thursday. The difficulty in anticipating their numbers comes from the fact, the current trade impediments re-orient flows more than suppressing demand like an embargo would. 
   # Fund traders are thought to have sold 17000 contracts of corn, 4000 wheat, and 11,000 soybeans. 
   # Exporters reported 113,000 tons of corn was sold to Egypt, a mix of old and new crop delivery.
   # Equity markets are higher in the early trade with 2nd qtr. earnings being focused on.  Analysts expect them to be good, but are wary of implications from the tariff impact. The Dollar is firmer, but mostly because the sentiment on the Euro is a little negative today. 

***** Cattle futures started slightly lower, with lean hogs moderately lower again.  ***** 
   # Wholesale beef prices were lower, with choice at $206.92. The cash cattle trade will be slow, but the softer wholesale market and sliding futures will be downward drag.  Last week though packers were thought to have mostly cleaned up showlists which could soften downward pressure. 
   # Wholesale pork prices were steady/weak with the cutout at $85.39. Cash hog prices are expected to be steady/$1 lower.  Packer demand is expected to be weaker this week, expecting wholesale demand to be on the defensive.  Trade issues have become a part of meats, especially for pork given last week’s softer May exports.  Beef shipments were better, but the trade situation is adding some uncertainty.