AgriVisor Morning MarketWatch

Wednesday, April 10, 2019
***** Corn futures up a penny; soybeans down a penny; Chicago wheat lower by 3 cents. *****
   # It’s a quiet overnight session at the Chicago Board of Trade. Corn futures have minor gains to show for a trade that has so far been dominated by active spreading of the May and July contracts. Wheat remains a drag on the broader market with Chicago futures having closed lower in each of the previous four sessions. 
   # The nearby corn and soybean futures contracts had the rare day of settling unchanged after Monday’s crop report. USDA surprised by hiking the corn ending stocks estimate by a little more than anticipated, to 2.035 billion bushels. The carryout additions were made as a result of cuts to ethanol, exports, and feed and residual usage. Soybean carryout was reduced slightly to 895 million bushels due to a minor cut to the import forecast and minor increase for seed usage.
   # With the crop report in the rearview, traders may be ready to shift their focus more heavily toward weather. All are currently waiting to see the severity and impact of this week’s winter storm. Blizzard warnings are in place for parts of Colorado, Wyoming, Kansas, Nebraska, South Dakota, and Minnesota. A quick warmup could exacerbate flooding issues into a second half of April that already has a wetter bias with its forecast.  
   # Poor export performance continues to pressure wheat prices. Traders had expected U.S. shippers would compete better against supplies in Europe and the Black Sea starting in January or February, but the seasonal uptick in U.S. wheat export business has only been minimal. USDA cut the 2018/19 export target by 20 million bushels on Monday’s WASDE report. Most of the world’s big wheat buyers look well enough stocked that they will be expected to have patience in waiting for the next Northern Hemisphere harvest. 
   # Soybean futures are trading in a phase of congestion as the nearby May works up against resistance from $9.00. Bigger pushback may be found near $9.07 1/4, which is the April high and close to where the 200-day moving average is hovering. Not far below the market is that contract’s 10-day moving average at $8.96 3/4 and its lifetime low at $8.83.  
   # Not much fresh news to report on U.S./China trade negotiations. In-person talks over the previous two weeks have continued by telephone and President Trump says a deal could be reached in the next four weeks. Investors have become a little worried that the president will secure a deal with China and then immediately start a tariff fight with Europe. 
   # The U.S.-Mexico-Canada trade agreement is also being talked about with worry after House Speaker Nancy Pelosi insisted that she be able to make changes to the bill before it is taken up for vote. President Trump has threatened additional tariffs against Mexico due to his allegations of Mexico not helping out with the border crisis. Mexican leaders have also said they won’t ratify the new trade pact until the U.S. removes steel and aluminum tariffs. 

***** June cattle futures working on a test of their 20-day moving average; hogs consolidate near contract highs. ***** 

   # Cattle futures continue to bounce around an area of key technical support from an uptrending channel that has guided prices higher over the past year. Recent action in the beef market has offered support to the board; choice and select wholesale cuts are currently priced about 6-7 percent above year-ago values.          
   # Hog futures face slight selling pressure to start the week on overbought technicals and active hedging. The market maintains underlying fundamental support from ideas of better U.S. pork exports ahead. China’s African swine fever problem is now becoming Asia’s problem in a bigger way and resulting losses to the global hog herd will be impactful to market prices for coming several months and even years.