AgriVisor Morning MarketWatch

Monday, February 04, 2019
***** Corn futures flat at the break; soybeans fractionally weaker; Chicago wheat down 3/4 to 1 3/4 cents. *****

   # Grains trade tight ranges on light volume to start the week. Market participants were waiting to see if new export deals would show up on the USDA’s 8:00 am flash sale report. Everyone otherwise awaits the Friday crop reports. 
   # USDA reported a daily sale for 612,000 tons of soybeans sold to China. The deal is just one piece of what was promised to be about 5 million tons purchased by China as a measure of good will offered while trade talks are ongoing. 
   # Last week’s China trade talks went well by most accounts. The meetings between U.S. trade representative Robert Lighthizer and his Chinese counterpart were recapped by an optimistic President Trump, who said dealings have been good for farmers. Talks will resume into mid-February ahead of the March 1st negotiating deadline.
   # Trading with the Chinese will cease again this week while China is on holiday to celebrate their New Year. A busy week of celebrations will boost food consumption to its highest level of the year. This year is fittingly the Year of the Pig; traders are still sorting out an African swine fever problem that has already killed more than one million pigs in China. 
   # USDA will use this Friday to catch up on crop reports that were delayed by the government shutdown in January. Traders expect the annual Crop Production summary report to feature slightly lowered 2018 corn and soybean yields in part because of harvest weather headaches in Iowa and Minnesota. The quarterly Grain Stocks report should show record soybean inventories near 3.725 billion bushels while corn stocks fall about 3.7 percent from a year ago. A Winter Wheat seedings report is expected to show plantings down just marginally from a year ago; acres were initially expected higher but conditions in Plains states like Kansas got in the way of intentions. Finally, the monthly WASDE report will be used to shed light on the government analyst’s views about South American crop potential. 
   # Brazil’s public ag agency CONAB will issue predictions for that country’s crops before the U.S. reports are released. Dry weather in Brazil has taken top-end yield potential away from the soybean crop and many private analysts are calling production potential closer to 112 million tons than the 122 mt last projected by the USDA.
   # Outside markets are mostly quiet to start the week. Stock futures are flat overnight following a strong rally on Friday that was triggered by positive jobs report data. The U.S. economy added 304,000 jobs in January to make for 100 straight months of payroll growth. Oil is down despite elevated political risks involving Venezuela. The dollar index is up a touch as Brexit worries lean on the euro and pound currencies.   

***** Cattle futures open with technical test; hogs locked in a downtrend but registering oversold. *****

   # Cash cattle prices ended last week up by $2 to $124 live, supported by light offerings following recent winter storms. February cattle futures are up testing resistance from their 20-day moving average while trying to maintain support from $124.72, which is last week’s low and a point that aligns with the bottom of an ascending channel that has guided prices higher since early November.     
   # Friendly developments in the China trade situation may start to lend hog futures support as traders up the odds for improved pork export demand. The futures market has been battered again lately as product values drop in response to softening domestic demand.