AgriVisor Morning MarketWatch

Monday, October 08, 2018
***** Corn futures down 2 cents at the break; soybeans off 1 to 1 3/4; Chicago wheat lower by 3 1/4 to 4. ***** ​

   # Grains have tried both sides of Friday’s settlement and currently sit a little weaker at the morning break.  Today is Columbus Day; most markets are open, but mail and banking services will be closed.  The government holiday will also leave USDA shuttered, so no grain inspection or harvest progress reports today.     
   # Rain totals of four inches or more were widespread across the Midwest this weekend.  More water is on its way with another 4-5 inches for the Western Corn Belt over the next seven days.  The weekend runs of the 6-10 and 8-14 forecasts have conditions turning drier across the bulk of the country.  
   # Weather is mostly favorable in South America at the moment.  Both Brazil and Argentina should see showers fall with wide coverage over the next five days. The latest from Brazil has farmers in the top producing state of Mato Grosso approaching 10 percent planted on their soybean crop, or about double as fast as the normal pace.  
   # Brazil held its presidential election on Sunday.  As expected, no candidate received more than 50 percent of the popular vote, so a runoff election will be held on October 28th between the two with the highest votes.  In the lead is hardliner Jair Bolsonaro, facing up against Fernando Haddad from the liberal incumbent party.  The Brazilian agriculture lobby has recently coalesced behind Bolsonaro with the expectation of him being less of an interventionist than his opponent.
   # The Brazilian real is up sharply on the outcome of the weekend election.  Investors are showing signs of comfort with the prospect of Bolsonaro taking the presidency.  A strengthening real currency could serve to trigger more grain sales from the Brazilian producer who has otherwise held commodities as a hedge against falling exchange rate terms and rising inflation.
   # December corn futures are trading ahead of their 50-day moving average but haven’t yet found a buyer above Friday’s high at $3.69 1/2. The bulls are working with some newfound momentum after CZ18 made a bullish zero-line crossover on the MACD last week. Continued strength would face technical tests from the 100-day moving average currently dipping lower from $3.75 and the mid-August high at $3.82 1/2. A first major point of support comes from the 20-day moving average at $3.59.  
   # Friday’s Commitments of Traders report showed the hedge funds were not bearishly positioned in the corn market as had been expected.  The large speculators are now estimated net-short corn by about 50,000 contracts.  They are thought to be net-short soybeans by about 45,000 contracts.  Money managers may turn friendly the grains if they think that futures have already priced in the size of the crop.  The arrival of a new South American growing season also presents market risks that may attract a fresh round of bullish bets.
   # Stock futures are weaker this morning after last week’s Treasury yield rally leaves investors a little skittish.  If anything, there is some profit-taking evident while the major indices are near all-time highs.             

***** Livestock futures look to start stead/weaker with light pressure coming in from outside markets. ***** 

   # Live cattle futures reached new highs last Monday and then traded quietly lower into the end of the week.  The December’s lifetime top is $119.75.  Futures traders will re-position relative to cash market direction as the October contract enters delivery this week.     
   # Hog futures are helped by a cash trade that has found recent support to stem a several-month selloff.  Futures hold a wide discount to cash prices and would be expected to tag along higher if the cash continues to firm up.