AgriVisor Morning Marketwatch

Tuesday, February 12, 2019
***** Corn futures are 2-3 higher; soybeans 4-5 higher; Chicago wheat off 1-3. *****  

   # Probably the most important feature across the investment spectrum is the apparent agreement reached by the House/Senate committee on government funding.  Reports indicate the agreement only includes $1.37 bln. for 55 miles of new border walls.  And although details are still lacking there is some thought it also could reduce the number of detention beds ICE will have available. No one is certain whether Pres. Trump will sign off on it.
   # The other big news to start the day was CONAB’s new estimates for the Brazilian crops. CONAB reduced their estimate for the soybean crop to 115.3 mmt. from 118.8, with the adjustment coming in yield.  Parana had the biggest adjustment with that state’s crop reduced 1.9 mmt. They raised the overall size of the corn crop 0.4 mmt. to 91.6 mmt. The 1st crop output was reduced 1 mmt., with the overall increase accounted by a big increase in the 2nd crop estimate to 65.2 mmt. The soybean estimate tends to validate AgRural’s number released yesterday at 112.9 mmt. CONAB, like USDA, tends to have subsequent estimates continue to trend higher/lower. The 2nd crop corn estimate will be dependent on how the late season rains develop. 
   # Talks between China and U.S. continue in Beijing this week. Trade Chief Lighthizer and Treas. Sec. Mnuchin are leading the delegation. Everyone is a little concerned they won’t wrap up by the self-imposed March 1 deadline, but if progress is being made, the prevailing wisdom is tariff changes will be delayed beyond that date. Last week, it became apparent Presidents Trump and Xi won’t be able to meet by March 1, with both sides believing they need to sign off on whatever deal is completed.  
   # EPA is considering releasing a draft proposal to expand sales of higher ethanol blends.  It would help the agency lift a summer ban of sales on E15 gasoline by the summer driving season. They aren’t expected to have in place measures to curb biofuel credit speculation they had promised the oil industry. 
   # Weather is becoming increasingly important to the U.S. wheat crop. The long range outlooks have another outbreak of cold weather coming with 0 degree temps as far south as Kansas.  Corn Belt states could see the same. The key will be whether there’s snow cover before temps get cold, especially for a crop that is poorly established.  44% of the Kansas crop was rated poor/very poor on Jan 31. Illinois did not release a report on Feb. 1, but the growth is variable this year. 
   # South American forecasts didn’t change overnight, with near/above normal rains across central/northern areas of Brazil, and more sunny/dry weather across much of Argentina. Longer range forecasts include moisture for Arg., but the confidence is low. 
   # Funds were said to have sold 19,000 corn, bought 2,000 soybeans and 6,000 wheat yesterday. 

***** Live cattle opened $.25-$.50 lower, with lean hogs trading $1.60-$1.95 higher. ***** 

   # Wholesale beef ended the day higher yesterday, with choice at $216.88. Cash prices are typically elusive to start the week.  Packers don’t seem to want to push coverage forward yet. Weather has reduced rates of gain, pushing slaughter back 1-2 weeks.  A small curtailment in slaughter Monday might play a part in buying interest; hogs as well.     
   # Wholesale pork closed slightly higher yesterday with the #2 cutout at $65.46. Cash hog prices are expected to be steady/$1 lower, but deteriorating weather the next couple of weeks should be supportive. The pork industry continues to see potential for business from potential for Chinese business. Seasonally, supplies will be moderately abundant into spring, before seasonally declining into summer.