AgriVisor Morning MarketWatch

Thursday, August 09, 2018
***** Corn fractionally firmer at the break; soybeans fractionally mixed; Chicago wheat down 6 to 7 1/2 cents. ***** 

   # News is somewhat thin, so traders should mostly use Thursday’s session to prepare positions for report day.  USDA will issue Crop Production and World Agricultural Supply and Demand reports tomorrow at 11:00 am central.  The former report will feature a first look at yield estimates that have input from the farmer and field.  This will be the first report not to include a ‘lockup’ event whereby newswire services are granted access to the numbers before they are made public.  
   # Analysts are debating whether or not China will eventually return to purchasing U.S. soybeans even if tariffs remain in place.  Some say Chinese soy protein demand is such that South America alone cannot satisfy all of the top importers needs and that China will buy 5-15 million tons of the 35 mt of U.S. soybeans brought in last year.  Others suggest that Chinese importers would purchase U.S. soybeans if they could, but that political directives will keep the total at zero.  It could be a combination of the two – China buys soymeal from South America and South America buys soybeans from the U.S.
   # Brazil’s CONAB crop agency raised slightly its estimate for soybean production to 119 million tons.  Soybean futures seemed to enjoy a little lift on the news as the number, while up, was still below USDA’s 119.5 mt estimate.  Brazil’s corn crop estimate was cut to 82.2 by CONAB to compare with USDA at 83.5 mt in July.
   # Export sales were fair to middling this week.  Corn, bean, and wheat sales all came in on par with pre-report expectations.  Old-crop commitments are running high enough to suggest USDA may up their marketing year projections on Friday.  
   # CZ18 is in a consolidative pattern just under last month’s high at $3.88 1/2.  Clearing that top would put the contract up against a 50 percent retracement target at $3.90 with $3.99 1/4 being the 62 percent take-back objective.  On the way down, December futures find possible support from the 10-, 20-, and 50-day moving averages.    
   # Outside markets were roiled somewhat by news that the U.S. was placing sanctions against Russia in response to recent espionage activity against the United Kingdom.  A former Russian spy living in England and his daughter were attacked in March with a nerve-agent poison known to be a product of Russia.  Tensions between the U.S. and Russia could escalate as U.S. lawmakers call for additional sanctions as punishment for Russian interference in U.S. elections.   

***** Cattle futures biased steady/weaker at the start; hog futures pointed down in approach of a two-year low. ***** 

   # Chart traders are looking to gauge follow-through interest after hog futures gapped lower on Wednesday’s open.  The move stretched October into outside of their lower Bollinger Band while the daily relative strength index dipped to 30, the indicators combining to suggest the market is oversold.  If the contract can recover to $49.87 in the next three sessions, there will be reason to believe that Wednesday’s gap was a gap of exhaustion and a bottom may be in place.                 
   # Cattle futures continue to trade in a sideways pattern that has the October live contract bouncing around near a flat-lined 200-day moving average.  Boxed beef prices were up a touch again on Wednesday and run a percent or two higher than the year-ago values, but traders are reluctant to believe that the cash trade can improve on last week’s $114 benchmark.