After the Bell: Mixed Trends in Quiet Holiday Trade Amid Global Growth Concerns

Posted on 12/27/2018 2:28 PM

Corn: Futures closed slightly up today on tepid short covering following recent selling pressure. March corn was up 1 1/2 cents and May was up a penny. Prices finished near the middle of the day’s trading ranges. Corn’s price recovery is limited by concerns about the health of the U.S. and global economies. News overnight that US President Trump is likely to sign an executive order in early 2019 that would declare a U.S. National Emergency and bar U.S. companies from using telecommunication equipment from China’s Huawei and ZTE corporations added to market uncertainty. Also, the U.S. stock market had given back about half of Wednesday’s big gains as the grain markets were closing, which squelched most speculator and fund buying interest. This week's USDA weekly export sales report, which was due out Friday, has been cancelled due to the government shutdown. In the week ended Dec. 20, corn inspected for export rose to 996,098 metric tons MT, up from 887,100 a week earlier and about as expected. Shipments need to jump back into the 1.1 MMT to 1.2 MMT range in the first quarter of 2019 to support a rally.

Soybeans: Futures prices closed fractionally lower, below the opening and in the lower half of the daily price ranges. Prices extended this month’s drop to the lowest since Nov. 27. Soybean meal was up around 50 cents and hit four-week lows. Soybean oil futures finished down about 3 points. The weekly USDA export sales report will be delayed indefinitely as the government shutdown has closed most USDA offices. That means the market lacks a new fundamental input that could provide support to the slumping soybean market. Exports are more than 40% behind last year because of Chinese tariffs on U.S. supplies. A U.S. trade team will reportedly to travel to China for trade talks in early January. Deputy U.S. Trade Representative Jeffrey Gerrish will lead a government delegation to Beijing in the week of Jan. 7 to hold trade talks with Chinese officials, according to Bloomberg News, citing two people familiar with the matter. Meanwhile, President Donald Trump is considering an executive order in the new year to declare a national emergency that would bar U.S. companies from using telecommunications equipment made by China's Huawei and ZTE, three sources familiar with the situation told Reuters. South American forecasts show some showers possible in Brazil, where 30-day dryness is increasing stress for about 30% of the crop.  More rain is needed. In Argentina, heavy rains developed overnight and will continue the next 10 days. Rain may curb planting and stunt some early development.    

Wheat: Most winter wheat futures contracts closed right around steady price levels and near mid-ranges, as the bulls are working to stabilize the markets, which fell to multi-week lows earlier today. Spring wheat futures ended 2 ½ to 3 cents lower. The U.S. wheat futures markets continue grind lower on slack demand for U.S. wheat. On Wednesday, USDA reported wheat inspected for export last week fell to 543,125 MT from 684,936 MT a week earlier. Shipments are at the low end of trade estimates calling for 475,000 to 700,000 MT. Shipments were below the 660,000 needed weekly to reach the current USDA annual projection. This week's USDA weekly export sales report, which was due out Friday, has been cancelled due to the government shutdown. Russia harvested 72.068 million metric tons (MMT) of wheat this year, a decline from 86 MMT in 2017, the statistics service said on Thursday. That’s above the official USDA forecast of 70 MMT.  

Cotton: March and May cotton futures prices fell more than 140 points today after opening higher. The resulting “outside day” and close at new 12-month lows sets up renewed selling Friday, with the USDA export sales report delayed indefinitely because of the lack of budget funding. Today’s downside push accelerated amid losses in crude oil futures and new weakness in U.S. stock markets. A U.S. trade team will reportedly travel to China for trade talks in early January. Deputy U.S. Trade Representative Jeffrey Gerrish will lead a government delegation to Beijing in the week of Jan. 7 to hold trade talks with Chinese officials, according to Bloomberg News, citing two people familiar with the matter. Meanwhile, President Donald Trump is considering an executive order in the new year to declare a national emergency that would bar U.S. companies from using telecommunications equipment made by China's Huawei and ZTE, three sources familiar with the situation told Reuters. With USDA closed and no signs a budget deal is imminent, that raises questions whether the Jan. 11 Crop Production Report will be released. That report was expected to show smaller U.S. production and now may be delayed until February.  

Hogs:  February lean hogs closed up 27 1/2 cents today and near mid-range, after dropping to a six-week low early on. The April contract finished down 55 cents, near the session low, and closed at a six-week-low close today. Some mild chart-based selling was featured in the April contract. The nearby February futures contract was supported today by a firmer tone in the cash hog market. According to USDA average cash hog trade firmed 44 cents Wednesday to a weighted average of $44.53. Also, pork product prices rose 31 cents at midday today on gains in loins and bellies. Movement was 167.07 loads. The African swine fever outbreak in China continues to be a supportive underlying element for the hog futures market. Reports today said 20 out of 154 hog farms in China approved for providing live pigs to Hong Kong have been suspended. They are located in an area with restricted movements due to the detection of ASF. Currently, three outbreaks of ASF have been reported in the Guangdong province, which is adjacent to Hong Kong.  

Cattle:  Live cattle futures finished mostly higher and into new highs with prices rising $1.20 to $123.95 and April up 75 cents to $126.00. Feeder cattle futures were up 40 to 90 cents.  A major winter storm is leaving behind a trail of deep snow and heavy rain from Texas to Minnesota and will be followed by sub-zero temperatures. That will create poor travel and harsh feedlot conditions, adding support to an already firm cash cattle market. At least two packing plant shifts were cancelled this morning due to poor visibility as the domino impact of disruptions moves through the supply chain. Demand for beef remains good to excellent and some appears to be for export. Packers only purchased 83,000 head last week, at an average price just below $119. This week cash will top $120 and may challenge the $122.84 average a year ago.  

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