AgriVisor Morning MarketWatch

Friday, August 03, 2018
***** Corn unchanged ahead of the break; soybeans down 10 cents; Chicago wheat off 1 3/4 to 3 1/4. *****

   # The latest weather model runs have taken some heat out of the mix.  Above normal temperatures should still prevail across the Western Corn Belt over the next two weeks, but highs are likely to be less extreme than previously feared.  The 6-10 and 8-14 day outlook maps are still biased drier in the West, wetter in the East. 
   # A mostly dry week this week should have crop condition ratings falling by a point or two on Monday’s Progress report.  Through last Sunday, U.S. corn was called 72 percent Good/Excellent versus 61 percent a year ago.  Soybeans at 70 percent G/E compared with a crop that was 59 percent G/E this time last year.  
   # Estimates on U.S. crop yield and production are expected out of the analysts at Informa today.  The handful of predictions offered so far this week are all higher than the USDA trend yield estimates of 174 bushels per acre for corn, 48.5 bpa for soybeans.  High condition ratings show strong crop potential, but some analysts may also be trying to correct for what has been a bias for the USDA to issue high-side surprises in recent August reports.  
   # Hedge funds are heading into report day holding bearish bets on corn and soybeans.  The large speculators are estimated net-short corn by about 75,000 contracts with their soybean position net-short near 60,000 contracts.  They have recently turned friendly the wheat market, now with a net-long estimated at approximately 50,000 contracts.  
   # Dry conditions in Brazil have resulted in a sizable reduction for second crop corn yields and may encourage further cuts to USDA’s production estimate come report day.  Cropland in Brazil is not in favorable shape as the next soybean planting season approaches in September, but there isn’t yet any strong reason to suggest the rainy season won’t successfully develop.  An expected return of El Nino could serve to supply better moisture in the months ahead.         
   # There was confusion on Thursday over possible Ukrainian wheat export quotas.  An initial report suggested that an export ban was forthcoming, but Ukraine’s ag ministry officials later denied that to be the case.  December Chicago wheat climbed by as much as 34 cents before coming back down to close with gains of just 4 cents.
   # Chinese officials have reported incidence of African swine fever found in pigs growing in one of the country’s northeast provinces.  China is the world’s top pig producer and consumer.   

***** Cattle futures may find light buying interest as market participants wait for guidance from the cash trade; hogs look to open steady to better. *****

   # It has been a mostly quiet week for cattle futures so far as traders wait to see how today’s cash market develops.  Last week’s cash trade dropped a little lower to near $111, leaving still a premium over Thursday’s settlement for August futures at $108.60.  
   # Rising supply and flagging demand serve a double whammy to hog market.  The threat of longstanding tariffs against U.S. pork remains a headwind for the meat.  There is optimism that a deal with Mexico may soon be struck to bring down a 20 percent tax on certain pork cuts, but the fight with China does not have a clear end in sight.  Even with lost business from two top customers, U.S. pork exports have been running notably strong in recent weeks and are up on the year as a result of competitive prices into other destinations.