After the Bell: Quiet, Choppy Grain Trading Ahead of U.S./China Trade Talks

Posted on 11/29/2018 2:33 PM

Corn:  Corn futures finished little changed and in the bottom half of the 4-cent trading range.  The market gave back early gains amid uncertainty on this weekend’s outcome of U.S./China trade meetings. USDA said this morning that export sales in the week ended Nov. 22 totaled a net 1.267 million metric tons, up 44% from the prior week and 77% higher than the average of the past four weeks. Twelve weeks into the marketing year, total sales commitments as of last week were up 16% from a year ago. Commitments now are equal to 41% of the USDA projection for the year but behind the prior five-year average of 46% for the date. Shipments this marketing year are equal to 22% of the USDA annual forecast, which is well ahead of the 16% average for the past five years. The upshot is that after more than a month of sluggish new sales, this week’s jump in new business may be the start of stepped-up buying. The U.S. is clearly the low-cost supplier. First-notice day for December corn futures is on Friday. Delivery notices should be light with a firm cash market.  

Soybeans:  Soybean futures settled 3 1/4 to 4 3/4 cents lower through the November 2019 contract. Meal futures settled mostly 80 cents to $1.20 lower. Soyoil finished 5 to9 points lower. Price action was much more reserved than the three previous days this week. After strong gains the past two days, soybean futures pulled back a little today. Basically, it’s just a waiting game now as traders wait to see what will happen at the meeting between President Donald Trump and Chinese President Xi Jinping in Argentine on Saturday. Markets are likely to move with the latest headlines on the situation tomorrow.  Weekly soybean export sales were within the range of pre-report estimates at 628,800 MT. But export commitments are running 32% behind last year, whereas USDA projects exports to fall “only” 10.8% this year. This is the time of year when the market should be supported by export demand. That’s not the case with China a non-factor. Even if there’s a trade deal between the U.S. and China at this weekend’s meeting, it likely won’t come soon enough to have a fundamental impact on 2018-19 exports unless there are guaranteed purchases by China for this year.  

Wheat:  SRW wheat futures ended down 1 to 4 3/4 cents, while HRW contracts were 1/4 cent higher to 1 1/2 cents lower. Spring wheat futures were mostly 2 to 3 cents lower. The world marketplace is watching the rising tensions between Russian and Ukraine, including assessing the potential impact on the world wheat market. Russia is effectively blockading the Ukrainian ports of Berdyansk and Mariupol on the Azov Sea, preventing vessels from entering or leaving the port. President Trump told reporters early today he has not terminated a meeting with Russian President Vladimir Putin at the G20 summit, but then later tweeted his is not going to meet with Putin because Russia has not released Ukrainian sailors. Export disruptions are not being seen yet, but the market will closely monitor this situation as wheat prices rallied sharply in 2014 when Russia annexed Ukraine’s Crimea. Weekly USDA wheat export sales fell 25% below the prior four-week average, with exporters selling just 377,100 MT in the week ended Nov. 22. Export demand needs to improve to attract consistent buyer interest.  

Cotton:  Cotton futures closed 20 to 24 points lower in the March through December 2019 contracts. The front-month December contract, which is in delivery, finished 112 points lower. Cotton futures were weaker through much of the day as traders nervously wait on news from the G20 meeting between President Donald Trump and Chinese President Xi Jinping this weekend. Based on recent price action, traders aren’t willing to make a strong bet in either direction. Unless that changes, a relatively quiet day of trade should be in store tomorrow.  Weekly cotton export sales at 176,800 bales were down 16% from the previous week, but well above the four-week average. With cotton futures hovering near their fall lows, export buyer interest has perked up. But the 800 lb. gorilla for trade is China. Prospects for Chinese demand for U.S. cotton largely hinge on this weekend’s trade meeting.   

Hogs: December lean hog futures gained 77.5 cents today, while the February jumped $2.85 after nearly rising the $3 CME limit. April hogs were up $1.925.  USDA reported that pork export sales in the week ended Nov. 22 rose 7% above the four-week average, with China taking 3,300 metric tons of the 20,900 MT sold last week. That’s about 7.2 million pounds and the first sale in a while. China also bought 9,400 MT of U.S. pork for delivery in 2019 last week. That was China’s first purchase for 2019 and represents 28% of the total sold to all customers for next year.  Midday pork carcass prices rose 55 cents to $68.29. That is the third gain this week and the highest since Nov. 19. It’s also a sign that prices may have made a seasonal low.   

Cattle:  Live cattle futures finished 17 1/2 to 52 1/2 cents lower through the April contract. Feeder cattle ended $1.45 to $1.725 lower through the May contract. Live and feeder cattle futures saw selling pressure today as boxed-beef cutout values are dropping late this week, which gives the packers the upper hand for the rest of this week’s cash cattle trading action. Choice and Select boxed beef values were down 64 cents and 19 cents, respectively, this morning after dropping Wednesday. USDA reported light cash cattle trade Wednesday between $114 and $116. Yesterday’s Fed Cattle Exchange online auction reported some light trade at $116.75. Traders are still waiting on active cash cattle trade. U.S. beef export sales in the week ended Nov. 22 were down 26% from the prior week and 42% below the four-week average. Exports also declined. This helped weigh the futures markets. Cattle traders are monitoring a major snowstorm expected to hit Nebraska and Kansas late Friday and into Saturday. As a result, they could build some premium into the market to finish out the week.  

 

Add new comment