After the Bell: Wheat Leads Grain Markets Higher on Demand Optimism

Posted on 01/17/2019 3:35 PM

Corn: Futures staged a strong midday rally, following wheat to the upside.  March corn gained 6 cents to close at $3.80, while December was up 4 to $4.03 ¼. The market found its bullish enthusiasm today as wheat prices led the grains markets out of their recent bearish trends. Prices rose on growing optimism that the recent drop in prices will encourage new U.S. export business. Export bids at Pacific export terminals firmed about 4 cents this week, suggesting improving demand. 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. That followed sales of 260,000 MT sold to South Korea a day earlier. USDA’s closure means no daily or weekly export data is available again today. After tumbling Tuesday on comments that U.S. Trade Representative Robert Lighthizer did not see any progress made on structural issues during trade talks with China last week, the market found some support from Beijing's confirmation that Vice Premier Liu He, China’s chief trade negotiator, will travel to the United States on Jan. 30-31 for more negotiations with Washington. After the close, there were reports that the U.S. is considering lifting tariffs on Chinese imports according to the Wall Street Journal. That may give the market fresh support later tonight depending on any additional details from Washington.  

Soybeans: Soybean futures finished up mostly 10 to 13 cents and nearer their daily highs. Soybean meal was up around $2.00, while soybean oil futures were up just over 50 points. Short-covering from recent selling pressure was featured in all three futures markets The soybean market saw some support from confirmation from China that Vice Premier Liu He, China’s chief trade negotiator, will travel to the U.S. Jan. 30-31 for more trade negotiations. There was some speculation China may be shopping around for more U.S. soybeans, though such talk may have been more of an “after the move” excuse. There were also newswire reports the U.S. was considering lifting China trade tariffs.  Weather forecasts are slightly drier for Brazil as fewer organized storms are likely to develop in central and northern regions this weekend and next week. Argentina’s soybean crop remains in generally fair to good condition, but the Buenos Aires Grain Exchange cut its soybean planted acreage by 200,000 hectares due to ongoing heavy rains.

Wheat: Futures posted sharp gains, led to the upside by the HRW market. March HRW gained 8 ½ cents to close at $5.04, while SRW March futures rose to 5 ¼ cents to $5.17 3/4. Spring wheat was up about 7 cents. The wheat markets rallied on news the Russian government has asked grain shippers to shift back their export plans to curb the decline in domestic inventories and rising prices, according to Bloomberg News. Russia grain companies have been aggressively selling this year and supplies have tightened to levels that may be raising new concerns in the government.  Basis levels for HRW continued to strengthen today, extending this week’s firming at export terminals. Trade sources report possible new business for U.S. supplies with Morocco, Nigeria and Egypt. Some rumors of Chinese buying interest were mostly ignored. Without USDA export data each week with the ongoing partial government shutdown, traders jumped on the cash market signals of new export demand. Colder temperature outlooks for the U.S. the next 10 days were slightly supportive, with many areas likely to have at least a small blanket of snow for protection.

Cotton: Cotton futures finished 76 to 112 points higher through the December contract and settled high-range.  Cotton futures were higher for much of the day, but a late surge in the row crop markets fueled additional gains into the close. With the high-range close and potential breakout from the three-week consolidation range, cotton is set up for follow-through buying. But the lack of substantive news given the government shutdown may keep traders from buying again Friday. Much of today’s price strength came from chart-based buying following the move above resistance at the top of the sideways range. Follow through buying tomorrow would set the stage for a stronger price recovery. But with USDA offices closed by the government shutdown, demand news remains lacking.  

Hogs: Lean hog futures finished widely mixed, with prices ranging from 45 cents lower to 80 cents higher. February hogs rebounded from recent sharp losses amid ideas the downside was overdone. Traders added a little premium back into the lead contract after narrowing it to just over $2 during Wednesday’s session. Still, February hogs finished at $60.85, only $2.67 above where the cash index will be quoted tomorrow (for Jan. 16). That’s a very narrow premium even with hog slaughter remaining hefty. Buyer interest was muted in deferred contracts, signaling traders are hesitant to put much more premium into the market until they know more on the demand front. Specifically, they would like to see China lift hefty tariffs on U.S. pork and see some confirmed Chinese purchases before they push summer-month contracts much higher.

Cattle: Live cattle futures closed down 67 1/2 to 82 1/2 cents and near mid-range. Feeder cattle futures were down $2.35 in the January contract, which hit a seven-month low. The March feeder cattle contract closed down $1.775. A major storm pushing across the U.S. is likely to leave in its wake difficult transportation of animals to market and muddy feedlot conditions in the near term, from Kansas to Iowa. However, the market has factored into futures prices the feedlot performance adversity.  Traders are looking for higher cash cattle bids this week, which is also already factored into current futures values. As of Thursday afternoon, there were no reports of significant cash cattle trade taking place. follow-through selling is possible Friday as traders await active cash cattle trade. Wholesale beef prices rose 61 cents for Choice and were up $1.00 for Select cuts this morning. Movement was 75 loads. Solid packer demand for beef has been seen this week.  

Add new comment