AgriVisor Morning MarketWatch

Friday, October 12, 2018
***** Corn futures fractionally weaker at the break; soybeans up a nickel; Chicago wheat up 2 1/4 to 3 3/4 cents. ***** 

   # Grain futures trade mostly firmer overnight in follow up of a friendly crop report and with help from a stock market rebound.  Harvest delays remain source of support for the market along with news that U.S. and Chinese leadership will meet again before the calendar year is up.  
   # The September crop report featured a few bullish surprises.  Corn yield was reduced by 1/2 bushel to 180.7 bushels per acre.  The consensus estimate called for it to rise by 1/2 bushel.  Soybean yield grew by less than expected to 53.3 bpa and a big 600,000 acre cut to harvested area helped carryout to come in lower than anticipated at 885 million bushels. 
   # Stock sellers are taking a break.  Markets in Asia and Europe were able to rebound into the end of the week and U.S. futures point to a better open for our major indices.  Investors are so far using the break as an opportunity to ‘buy the dip.’ Recent data on growth, employment, and inflation all paint a positive picture of the economy, but there is growing fear about the impact of rising interest rates.   
   # President Trump has reportedly agreed to meet with Chinese President Xi Jinping when the two leaders are in Buenos Aires, Argentina for the G-20 Summit in late November.  The plan to meet comes in contrast of recent disagreements on trade which have increased tensions between the two top economies and spooked investors lately.
   # Export sales were disappointing this week.  Corn sales of 1 million tons were at the low end of estimates. Soybean sales were much weaker than anticipated at 440,000 tons.  Wheat sales – also poor at 339,000 tons.  
   # Russia still dominates the headlines for wheat.  Part of the drag on wheat prices after the Thursday report was due to USDA leaving their projection for Russian wheat exports unchanged at 35 million tons.  The bulls argue that the number needs to come down to reflect the likelihood of Russia’s government putting a cap on trade.  That government has recently placed heavier scrutiny on export quality to put to question the overall status of available stocks.  
   # December corn futures surged to a new one-month high on Thursday and benefit from positive momentum indications.  Up ahead to serve resistance is the 100-day moving average at $3.73 1/2 and three-month top at $3.88 1/2. Key support was established on Thursday’s low at $3.60 1/4. 
   # The dollar index has weakened this week despite usually-friendly bond yield gains.  The euro and pound currencies are showing strength on news that Britain and the European Union are closer to a deal on Brexit.  Grain traders are watching the dollar slip lower against currencies like the Russian ruble and Brazilian real, thinking that a continuation of that trend would be supportive to U.S. export potential.  

***** Livestock futures look to start steady/firmer on support from technical buying and better influences from outside markets. *****

   # Cattle futures are finding small buyer interest after the December contract fell back against its lower Bollinger Band.  Weak action in the wholesale beef trade has put a ding in expectations for cash market performance.   
   # The government analysts cut one percent from year’s pork production estimate, but they still see a whopping 12 percent gain in output from quarter three to quarter four.  Pork exports will need to turn strong again to help clear the market of excess supply.