HIGHLIGHTS
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MARKET TREND—Overnight markets lower (4 am): CH, -$.0050; SH, -$.0450 WH, -$.0450; KWH, -$.0575
· MACRO. Markets trying to bounce back from yesterday’s sharp sell-off and ahead of some possible headwinds. Dollar weaker,again. ASIA—Mostly lower: Nikkei, -0.83%; Shanghai, -0.19%; Hang Seng, +0.86%. EUROPE: A little higher: DAX, +.28%; FTSE,+0.00%; CAC, +.18%. WALL STREET—Futures are higher —DOW, +60; S&P, +6.75; NAS,+14.25. EXTERNALS: $ Index: -.234 @ 88.765; Feb Gold: +$6.70 @ $1,342; Mar crude:-$.40 @ $64.10
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T-storm Weather: In Argentina, most areas will be much drier than normal over next 12 days, despite some heavy rain far west / northwest into Thu., & a few thunderstorms in Buenos Aires & La Pampa Sun.-Mon. Heat accompanies dryness on most days as highs often reach the 90s-100s, especially over Feb. 1-10. In Brazil, frequent thunderstorms culminate to produce heavy rain of 5.00"-10.00" over next 10-14 days. Rainfall diminishes with southward extent, leaving much of southern Brazil drier than normal
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CH, down $.0050 @ $3.61; CK, down $.0050 @ $3.61. Déjà vu: South America crop worries again led to the funds buying 7 K
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SH, dn $.0450 @ $9.9525; SK, dn $.0475 @ $10.0650. Fund Buying: 7 SB, 6 SBM, 3 SBO. Board Crush: $1.13, -$.05; LY: $.84
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WH, down $.0450 @ $4.5275; WK, down $.0475 @ $4.66. Big buying on the absence of rain in the Plains—10 K
CORN/SORGHUM
· T-storm Weather: In Argentina, a strong system at least temporarily breaks heat & triggers rain Feb. 10-12, most likely producing ~0.50" most likely across a wide area, but it will take many days to have confidence in atmospheric setup
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Consultant: Brazil corn crop estimate is unch at 88.0 MMT. Full-season corn harvest is underway with 5.3% harvested vs. 3.4% last year & the 5-year average of 4.6%. The full-season crop is estimated at 23.0 MMT v. 30.4 MMT last year
· ATI Research: Bias on near-term U.S. corn exports remains at 30-35 mbu per week, favoring the high end
· Ethanol margins: $0.21 per gallon—up vs. $0.20 last week and equal to the level in 2017. EIA report at 9:30 am CST
SOYBEANS/WHEAT
· T-storm Weather: Soybean areas in Argentina will be much drier than normal and hot into at least next weekend
· Consultant: Argentina soybean crop est. is lowered 1.0 MMT to 51.0 MMT (USDA at 56.0) with a neutral to lower bias
· ATI Research: Bias on near-term U.S. wheat exports is 15-20 mbu per week, favoring the high end
· T-storm Weather: Threat of winterkill for U.S. HRW wheat from colder temps this week to be limited by development of light snowpack in the Dakotas, & areas from Nebraska south will only be glanced by coldness Sunday-Monday
ENERGY
· Weaker: CLH18, -$.40 @ $64.10; EBH, -$.45 @ $68.57; EBH-QCLH, -$.07; RBH, -.0186;NGH, -.133; HOH, -.0104
· EIA Report Estimates (API): crude oil, +1.8 (+3.2); Gasoline, +1.8 (+2.7); Distillates, -0.9 (-4.1). Estimates for ethanol prod. avg. 1.058 mil barrels/day (range 1.050-1.070). Avg. est. for ethanol stocks is 23.7 mil barrels (range 23.3-24.1)
· On Tuesday, cash ethanol markets were mixed: Chicago was quoted at $1.3575, down $0.0085; Basis to Chicago—New York, +12 ¼; Gulf, +10 ¾; Dallas, +3 ¾; Tampa, +18 ¼; and LA, +24 ¼
· On Tue., ethanol RINs were higher: 2016’s added 2 ¼ at 63-67; 2017’s up 2 ¼ at 64-68; & 2018’s gained 2 ¼ to 65-69
· The Feb RBOB/Feb ethanol spread narrowed further on Tuesday, losing $.0345 to+$.5154/gallon
LIVESTOCK/POULTRY ;
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Choice boxed beef values gained 58-cents on Tuesday to $209.69, and are $2.84 higher vs. a week ago
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Light cash cattle trading surfaced on Tuesday with sales pegged at $126, which was $1 lower than last week
· USDA mandatory pork carcass cutout value fell 26-cents on Tue. to $81.34, and is 46-cents lower vs. the prior week
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CME Lean Hog Index gained $0.01 on Tue. to $73.84. February futures firmed $0.05, but are $1.39 below the index
Sources: Bloomberg, Dow Jones, AP, DTN, T-storm Weather