After the Bell: Grains, Soy Seen Firming on South American Weather, Export Hopes

Posted on 01/17/2019 7:55 AM

Grain Calls

Corn:  Up 1-2 cents
Soybeans: Up 2 to 4 cents 
Wheat: Up 1 to 3 cents

General Comment: European stocks are lower, and Wall Street is seen on the defensive to start this morning on lingering concerns about slowing Chinese economic growth and possible U.S. tariffs on European cars. U.S. Senate Finance Committee Chairman Charles Grassley said he thought Donald Trump was "inclined" to impose tariffs on European cars to win better terms on agriculture. 

Chinese Premier Li Keqiang promised increased government investment this year and the country's central bank injected more cash into the financial system to stimulate growth. Stoking additional caution however were reports that U.S. authorities may soon indict Chinese technology giant Huawei Technologies for allegedly stealing trade secrets from American partner companies like T-Mobile.   Grain and soy markets were bolstered after Beijing's confirmation that Vice Premier Liu He, China’s chief trade negotiator, will travel to the United States on Jan. 30 for more negotiations with Washington.    

The economic impact of the 27-day government shutdown are mounting but little sign of a deal from Washington. The continue lack of USDA data with offices close is reducing market participation allowing the computer traders to push prices with little opposition.  

 Weather remains slightly positive for grain prices this morning. In Brazil, scattered storms affect some fields in the south, but driest areas of the central and north likely remain drier and warmer than normal over the next two weeks where corn and soybeans would benefit from heavy totals. About 55% of the Brazilian soybean belt has been drier than normal the past 30 days. In Argentina, storms end over the next 12 hours, followed by five to six days of drying, and then another stormy period to maintain wet conditions.

Corn is seen higher on further consolidation of recent losses amid uncertainty about the South American weather impact on crops. Two South Korean feed mills bought 129,000 metric tons (MT) of optional corn in private deals overnight. It would have been more positive if the sales were only U.S. origin.

Soybeans seen rising for a second session on crop threatening weather in South America.  Brazil consultant Celeres cut its soy production outlook nearly 5 million MT to 117.2 MMT.

Wheat futures are seen firming on expectations for improving U.S. exports. However, the lack of weekly export data again today limits the buying interest.  France-based consulting firm Strategie Grains said rising EU wheat supplies into 2019 despite slightly lowering its crop forecast to 146.4 MMT from 147.0 MMT previously. That would still represent a 15% increase from the 2018 wheat crop.

Livestock Calls

Cattle: Steady-weak

Hogs: Steady-mixed

Cattle futures seen steady to weaker in consolidation of two days of setting new contract highs. Market is looking for high cash bids this week, which is already factored into current values and warrants some consolidation. Wholesale beef prices rose 19 cents for Choice and up 41 cents for Select. Movement was strong for a second straight day, a strong incentive for packer demand.

Hog called steady to firmer after tumbling to new six-week lows. Also, cash hogs were marked higher on Wednesday. However, wholesale pork trade was weaker, and movement was subdued after strong sales on Tuesday.

 

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