After the Bell: Beneficial Weather, Sluggish Export Demand Weigh on Grains, Soybeans

Posted on 10/19/2018 2:18 PM

Corn: Disappointing finish after a promising start to the week. December corn fell another 3 ¾ cents Friday to close at $3.67, capping a weekly drop 6 ¾ cents. After halting a two-week rally to the highest level since Aug. 20 this week, look for more downside pressure to start next week. Key support for the December contract next week is $3.63. A close above $3.70 would negate some of the negative action from this week. The drop in prices this week reflected improving U.S. harvest weather and slowing U.S. export sales. Ethanol production also eased and stockpiles rose to add to the demand concerns. This coming week’s focus will be on actual yield results and any change in recent slowing demand trends.

Soybeans: Futures ended 6 to 7 cents lower today, finishing on their daily and weekly lows. For the week, November soybean futures dropped 10 3/4 cents.  Soybean futures broke down technically this week after firming to their highest level since Aug. 20 on Monday. With the weekly low close and violation of the uptrend from the September low, bears are poised to extend losses early next week. Their next target is the 40-day moving average at $8.50 and the Oct. 11 low at $8.47. Fundamentally, weather is expected to be relatively harvest-friendly and export demand is a concern, which both favors bears.  Brazilian farmers are planting their soybean crop at a record clip. That means some new-crop Brazilian supplies will be ready for harvest by year-end and exports will start sooner than normal. An early harvest in Brazil lowers the odds Chinese buyers will need to import many U.S. soybeans during fall and winter.

Wheat: Winter wheat contracts ended the day steady to a penny higher and near mid-range. Spring wheat contracts were up3 3/4. For the week, December SRW lost 4 cents. December HRW fell 9 cents and December HRS fell 8 ¼ cents. The wheat market held up well late this week, in the face of stronger losses in the corn and soybean futures markets. There are strong technical support levels just under present price levels, which suggest the downside may be limited in wheat futures.Global weather remains mixed for the wheat market. Drier weather will aid final Canadian harvestings next week. Some showers are expected in Ukraine, Russia and surrounding areas, but more rain is needed. Some dry Argentine areas should also see rain. Dry weather continues to hamper winter wheat sowing across central Europe.

Cotton: Cotton prices fell slightly Friday to cap off a lower weekly settlement, with December futures falling 45 points this week to close at 77.92 cents a pound. This week’s high at 79.16 is key short-term resistance. After rising to the highest level since Sept. 26 to start the week, the market closed lower and in the bottom half of the weekly range and halted a two-week advance. The weakness will likely put pressure on the market this coming week. Cotton futures eased as weak demand outweighs crop-damage worries. The market is more worried about demand than shrinking U.S. supplies. Prices have fallen despite bullish factors, such as fresh rainfall in west Texas and the Mississippi delta during harvest, as well as crop damage due to recent hurricanes.

Hogs: December lean hogs closed down 67 1/2 cents, while the February contract lost $1.225. Both contracts hit two-month lows, closed near their daily lows and closed at technically bearish weekly low closes. For the week, December hogs fell $3.30. Look for follow-through selling pressure on Monday, following this week’s technical breakdown in the hog futures market. Daily hog slaughter this week hit 477,000 head on consecutive days, the second-highest ever. Bulls are hoping December hogs’ still-wide discount to the cash hog index will stop the bleeding next week.  Also, pork cutout this week has climbed amid decent movement of the pork product. Softer cash hog prices of late have helped strengthen packer profit margins $6.80 over the past week, to $31.20 a head.

Cattle: Live and feeder cattle futures were lower for most of the day as the market prepared for USDA’s Cattle on feed Report, which was expected to reflect a big 6.4% increase in the number of cattle on feed as of Oct. 1. Live cattle posted losses ranging from 20 to 82 ½ cents, while feeder cattle finished 32 ½ to 97 ½ cents lower for the day. Most live cattle contracts edged out slight gains for the week, while feeder cattle futures notched modest losses. All three categories of today’s Cattle on Feed Report came in lighter than expected, with placements more than five points under the average pre-report trade guess. But at 11.4 million head, that still represented the highest tally on record. The data could give the market a lift early next week, and traders will also have USDA Cold Storage data to work through Monday afternoon.

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