After the Bell: Soybeans Retreat Despite Chinese Purchases; Wheat Breaks Out to the Upside

Posted on 12/13/2018 2:35 PM

 Corn: Corn futures finished steady to a penny lower after a light, two-sided day of trade. Futures settled near midrange. Corn futures tried to stave off pressure from the soybean market, with help from gains in wheat. But corn eventually succumbed to the soybean pressure. Traders showed little willingness to move the market too far in either direction. Weekly corn export sales were below expectations at 903,200 MT. That was down 23% from the previous week and 14% lower than the prior four-week average. While the weekly result was disappointing, total corn export commitments are running 16% of year-ago, whereas USDA forecasts only a 0.5% increase for 2018-19. The export picture is still price-supportive for corn, though that’s doing little more than providing underlying support at the moment.

Soybeans:  Nearby soybean futures prices closed down around 12 cents and near their daily lows. Soybean meal finished just over $3.00 lower in the nearby contracts. Soybean oil closed down around 20 points in the nearbys. The soybean bulls have quickly faded after prices early Wednesday hit a 4.5-month high. After some higher hopes, traders were not impressed by today’s reported Chinese purchases of U.S. soybeans. This morning, USDA announced in its daily reporting service that private exporters sold 1.13 MMT of soybeans to China for delivery in the 2018-19 marketing year. Traders had been talking about sales closer to 2.5 MMT. However, there may be more announcements on Friday. Most would like to see this first round of buying to be closer to 5 MMT to provide a further lift to soybean prices. Traders will be looking for confirmation of additional business. The weekly USDA export sales report this morning showed net new soybean sales last week were 792,300 MT, down 11% from a week earlier, but up 25% from the four-week average. Traders were looking for 700,000 MT to 1.0 MMT. Soybean meal sales fell 82% from a week earlier to 50,500 MT, a marketing-year low.  

Wheat:  Futures rose to eight-week highs and closed in the upper half of today’s ranges. March SRW futures gained 9.5 cents to close at $5.36 and March HRW futures gained 8 ¾ cents to $5.20. Spring wheat futures were up 4 to 5 cents. Wheat futures posted strong gains on further evidence that demand for U.S. wheat is finally showing improvement.  Nearby European futures reached the highest level since the end of August after news that Russia’s ag ministry will meet with grain exporters on Dec. 21. The two sides are expected to discuss Russian grain exports and the market outlook. That meeting may lead to new restrictions on Russian exports amid rising domestic prices. This morning, USDA reported that U.S. exporters sold 754,100 MT of wheat last week, up 6% from a week earlier and 62% above the four-week average. European Union wheat production is expected to rise to 147 MMT, up 16% from this year’s crop and the largest since 2015, according to the first forecast from Strategie Grains.elivery next year.

Cotton:  Cotton futures prices closed down 53 points in the March and off 55 points in the May contract, and near mid-range. Choppy and sideways trading continues in the cotton futures market. Prices were pressured in part today by a higher U.S. dollar index that makes U.S. cotton more expensive on the world market.Weekly USDA export sales data today saw U.S. cotton sales of 47,100 running bales for the 2018-19 marketing year, down 50% from the previous week and down 66% from the four-week average. Net sales for the 2019-20 marketing year were at 33,500 running bales. Shipments of 11,700 running bales were down 29% from last week but up 35% from the four-week average.  

Hogs:  Hog futures were mostly lower and finished in the bottom half of the daily ranges. February hogs fell 87.5 cents to close at $64.825, while April ended down $1.60 at 82.925. Futures followed the lead of the cash hog market, which fell on average 33 cents yesterday in the Iowa/Minnesota direct markets. The 2019 contracts remain at large premiums to the cash index, encouraging further liquidation by funds despite signs of strength in the pork markets. At midday, wholesale pork carcass price rose 32 cents to $72.76, led by gains in butts, bellies and loins. Sales were slow at just 136.33 loads after active movement the prior two sessions, according to USDA data.  Packers margins remain $45.35 in the black, up from $40.35 a week earlier, data from HedgerEdge.com show.This morning, USDA said exporters sold 22,334 metric tons (MT) of pork in the week ended Dec. 6, up 12% from a week earlier and the most since Sept. 20. China bought 1,800 MT last week. Sales for 2019 delivery rose to 11,088 MT from 8,567 a week earlier. Total sales commitments for next year are 52,828 MT, up from 50,218 a year ago.

 Cattle: Live cattle futures finished narrowly mixed, with prices ranging from 10 cents lower to 32 1/2 cents higher through the June contract. Feeder cattle futures posted gains of 40 cents to $1 through the May contract. Price action was choppy and subdued in the cattle market today as traders continued to wait on active cash cattle trade to develop. December live cattle futures ended at $119.45, which is nearly 50 cents above the early indications for where cash trade is expected this week. Deferred contracts hold more premium. As a result, buyer interest will likely be limited Friday unless active trade at $119 or higher comes before futures halt trading tomorrow. Weekly beef export sales of 10,300 MT for 2018 were up noticeably from the previous week and up 19% from the prior four-week average. But export sales weren’t strong enough to entice much buyer interest in futures today.

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