AgriVisor Morning MarketWatch

Friday, October 05, 2018
***** Corn futures fractionally firmer at the break; soybeans up 1 1/2 to 2 1/2 cents; Chicago wheat up 3 1/2. *****

   # Grains are quietly higher overnight.  Volume is mostly light with the exception of an active corn spread trade.  Fundamental drivers include a wet forecast and an approaching crop report.  Technical influences are turning more important with the new-crop corn and soybean contracts trading near resistance from their 50-day moving averages. 
   # December corn futures are up 12 cents so far on the week, soybeans up 16 cents, and December Chicago wheat up 12 1/2. December live cattle are little changed on the week while December hogs are down $2.60.
   # A large storm system is in place this morning over the northern halves of Illinois and Indiana.  Rains stays in the forecast for most of the Midwest through Thursday of next week.  The 6-10 and 8-14 day outlooks also still lean wetter than average and meteorologists have high confidence in the predictions. 
   # Corn and soybeans face upcoming harvest delays due to wet weather and wheat will see a slowdown for winter planting efforts.  Winter wheat seedings were pegged at 43 percent complete through last Sunday.  Planting has been running ahead of pace with help from rapid progress in the Southern Plains, but they are behind in the Northern Plains, where it is about to turn very cold and possibly snowy.   
   # Planting efforts in Brazil are still going well as favorable conditions have allowed the southern state of Parana to reach about 70 percent sown on corn and 30 percent on soybeans, both rates representing about double the normal pace.  A strong start for plantings and extra acreage have analysts looking at record production potential for Brazil this season.
   # The Crop Production and WASDE reports are schedule for release next Thursday at 11:00 am central.  Trade estimates are starting to circulate and most are calling for corn and soybean yields to rise from their September estimates of 181.3 bushels per acre and 52.8 bpa, respectively.  Extra yield would 
   # An Arizona meat packer is recalling 6.5 million pounds of beef after a government inspection agency found the supply contaminated with salmonella bacteria. Infections linked to the tainted meat have been reported in 16 states, including Illinois and Iowa. 
   # It was a mixed jobs report his month with payrolls missing the mark but the unemployment rate dropping unexpectedly.  New payroll additions of 134,000 compared to a consensus estimate of +180,000.  Employment gains may have been disrupted by Hurricane Florence.  The unemployment rate dropped from 3.9 to 3.7 percent.  The trade deficit also widened.  Stock futures dipped slightly upon release of the report.      

***** Live cattle finish fractionally changed; feeders drop $0.87 to $1.02; hogs steady to $1.82 lower. *****

   # Cattle futures are consolidating near their contract highs as traders focus on strong nearby beef demand.  Exports were down slightly this week, but they still stand higher by nearly 18 percent on the year.             
   # More of the same for hogs with this week’s action again featuring an active bull spread trade.  Near-term cash market dynamics are lending support to the nearby futures contract while the forward months are pricing in a starkly bearish outlook for production gains into the end of the year.