AgriVisor Morning MarketWatch

Thursday, October 04, 2018
***** Corn futures up 1 1/2 to 2 cents at the break; soybeans up 3 cents; Chicago wheat up 2 to 4 3/4. ***** 

   # Grain futures were mixed overnight on very light trading volume as market participants waited to have a look at the weekly export sales report.  
   # It was a solid weekly export report all around as corn, soy, and wheat sales were all near the upper end of trade estimates.  The actual tallies did not beat analysts guesses by as much as they did last week, though.  
   # Rains and light snow is falling this morning across north-central Nebraska and southern South Dakota.  Showers will make their way into Iowa tonight to kick off a wet weekend.  The heaviest rainfall totals may accumulate within a band that stretches from the Texas Panhandle up through northern Missouri, most of Iowa and across the Great Lakes region.  
   # There hasn’t been much news out of China this week as people there are off work in celebration of the National Day Golden Week.  The holiday observes the founding of the People’s Republic and was implemented by the government in part to encourage domestic tourism.
   # Crude oil price are at their highest level in nearly four years as global supplies tighten in response to U.S. sanctions that are crimping the flow of exports out of Iran.  The rest of the OPEC cartel is only slowly increasing production, despite pressure from President Trump, who sees high oil prices as a detriment to the economy.  
   # Traders are still talking about the revised agreement on NAFTA, now called the U.S.-Mexico-Canada Agreement, or USMCA for short.  Much ado is being made about the clause that requires the USMCA countries to notify the other if they are entering into trade talks with other non-USMCA countries – and it allows the other countries to pull out of the agreement if one tries to negotiate bilateral trade terms on its own.  It is thought that the purpose of the clause is to create a unified front against China.  
   # Bearish fund traders have pared risk but still hold sizable net-short positions in the corn and soybean markets at a time when they are usually starting to build a friendly bet in the space.  Managed money is estimated net-short corn by about 100,000 contracts and net-short soybeans by 50,000 contracts.  
   # December corn futures are finding buying interest above their daily pivot but have not yet touched the 50-day moving average, will provided resistance at $3.67 1/2 today.  Wednesday’s low at $3.64 1/2 lends minor support.  

***** Live cattle futures start with a test of technical support from the December live’s 10-day moving average; hogs look to face follow-through selling pressure at the start. ***** 

   # Cash cattle prices were improved by $2 on the week to around $112 in early trading.  Futures may find strength if cash prices rise further into the end of the week, but futures already hold a strong premium over the cash.  Futures also face some technical pushback with the December live contract up against its lifetime high at $119.75.        
   # Hogs were bull spread again on Wednesday to advance the premium that October futures hold over the December.  Strong export demand and solid domestic consumption support nearby prices while expectations for big production gains later in the year weigh on the deferred futures months.