After the Bell: Wheat Posts Weekly Losses After Negative USDA Data

Posted on 01/12/2018 2:55 PM

Corn: Corn futures ended the day around 2 cents lower, which was midrange after a two-sided day of price action. For the week, March corn posted a 5-cent loss and December corn posted a 4-cent loss. If the move well off session lows is a sign of what’s to come early next week, then we can build an argument the market has found value around the December lows. The ability of the market to recover from session lows in the face of negative report data is a sign prices have dropped low enough. But corn needs a bullish catalyst to move higher. Recent weakness in the U.S. dollar index could attract more export business.

Soybeans: January soybean futures expired 3 1/2 cents higher. The March through November contracts finished 10 1/2 to 12 cents higher in reaction to USDA’s report data. USDA’s January crop reports were friendlier than anticipated as the 2017 crop estimate, Dec. 1 stocks and 2017-18 carryover all came in lower than anticipated. While that encouraged traders to cover short positions to close out the week, we doubt there will be enough lasting support to spark an extended price recovery unless Argentine weather concerns build. That will make the forecast rains for much of Argentina this weekend a key price driver next week.

Wheat: Wheat futures dropped sharply following the release of USDA’s report data that was clearly on the bearish side of expectations. Futures ended at their lowest level in nearly a month, with SRW wheat down 10 1/4 to 12 3/4 cents, HRW wheat down roughly 14 cents and HRS wheat 6 1/2 to 16 1/4 cents lower. Traders were highly disappointed by USDA’s Winter Wheat Seedings Report that showed winter wheat plantings down just 88,000 acres from the year prior, about 1.3 million acres above the average pre-report trade estimate. The huge miss leaves a lot of uncertainty in the market. Wheat futures could very well see followthrough selling next week, unless the market discounts USDA’s numbers.

Cotton: Cotton futures surged to the upside in early trade, taking prices to new contract highs, which swiftly gave way to profit-taking. The market extended losses immediately following the release of USDA’s report data, but traders quickly shifted gears to paring losses into the close. Futures ended well off session lows with losses of 61 to 100 points through the October contract. Futures still posted strong gains for the week, with the front-month up 367 points. While USDA cut its cotton crop estimate a bit more than expected to 21.263 million bales, it shocked the market by leaving its cotton export forecast at 14.80 million bales.

Cattle: Live cattle futures benefited from short-covering to end the week, but still posted sharp weekly losses. For the week, February live cattle posted a loss of $1.875. Feeder futures posted slight to moderate gains today to end the week just above week-ago levels for most contracts. February live cattle futures ended the week at around a $3 discount to the cash market, which reflects traders’ bearish bias toward the cash market next week. A 2-lb. uptick in dressed cattle weights from week-ago signals marketings are not current, which doesn’t bode well for the market next week. An increase in market-ready supplies gives packers more bargaining power, so it’s very important to keep marketings current.

  1. Lean hog futures posted gains of 12 1/2 to 60 cents through the July contract today. For the week, February lean hog futures firmed 15 cents, while the April contract dropped $1.75. Hog futures are signaling a short-term top is in place, which could lead to additional selling next week. But we anticipate any downturn in price would likely be short-lived, as the cash hog market continues to strengthen. The premium February lean hog futures hold to the cash index is down to $1.775, which should limit seller interest in the lead contract.


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