After the Bell: Soybeans Rebound on Fund Short Covering Before Trump/Xi Meeting This Weekend

Posted on 11/27/2018 2:50 PM

Corn:  Corn futures finished narrowly mixed today. The December and March contracts finished 1/2 cent higher, May corn was unchanged and the July through December 2019 contracts ended 1/4 cent lower. Corn futures settled in the lower portion of today’s narrow trading range. The corn market was caught between spillover support from soybeans and pressure from the wheat market – just the opposite of Monday. A stronger U.S. dollar limited corrective buyer interest. Today marked a pause day in the downtrend from the Nov. 8 high. To restore buyer interest, the market likely needs a signal from the demand side of the market that prices have fallen far enough. While there has been some recent buying of corn by global end-users on the price pullback, there hasn’t been enough to entice active buying in futures. Traders want to see strong evidence that global end-users are actively buying again after being relatively quiet the past month-plus.

Soybeans:  Soybean futures got back most of Monday’s declines today, with gains of 11 to 13 1/4 cents through the November 2019 contract. Futures ended nearer their daily highs. Soybean meal ended up $1.90 to $2.40, with soybean oil futures up 20 to 24 points. Uncertainty remains high and ideas are mixed whether U.S./China trade delegations can come together and produce an acceptable framework for a successful meeting between Presidents Trump and Xi this coming weekend. Chief U.S. economic advisor Larry Kudlow said at midday today Trump is hopeful a deal can be reached this weekend, but added significant hurdles need to be cleared for such to occur. While, the sense is that the U.S. is setting the stage for little progress at the meeting between Trump and Xi, corrective buying was seen today, suggesting traders don’t know what to do. That suggests more choppy (potentially volatile) trade the remainder of the week.  

Wheat:  Winter wheat futures fell 5 ½ to 9 ½ cents, closing near session lows. HRW futures fell to new contract lows. Spring wheat was down 1 ½ to 2 cents. Significant warming in the southern U.S. Plains over the next few days will raise soil temperatures and should induce some new wheat emergence. Texas and Oklahoma will get warm enough in the next few days to stimulate not only some emergence and establishment, but may stimulate some additional planting, despite the lateness of the season. Sowing of U.S. winter wheat was 95% completed as of Sunday, behind the prior five-year average of 99% and the fourth slowest since 1982, USDA data show. Crop emergence was further behind with just 86% of plants sprouted. Russian consultant Sovecon raised its wheat export forecast 500,000 MT to 34.7 MMT from its previous estimate. Global trade is paying close attention to the rising tensions between Russia and Ukraine, with few signs that grain exports have been slowed since Russia fired on three Ukraine ships. Wheat prices rallied sharply in 2014 when Russia annexed Ukraine’s Crimea. Russia’s new aggression against Ukraine shows how little President Putin worries about pushback from both Europe and the U.S.

Cotton:  Cotton futures closed down 63 to 70 points through the July contract. The “outside markets” were bearish for cotton futures most of the session today, as the U.S. dollar index posted good gains, while Nymex crude oil prices were lower much of the day before climbing to near steady by the close. Unlike Monday, the dollar price activity influenced cotton today. There continues to be weather/crop uncertainty with the U.S. cotton crop. The longer harvest drags on, the greater the odds USDA’s cotton crop estimate will decline further in the Dec. 11 Crop Production Report. USDA reported cotton harvest at only 70% complete as of Nov. 25, seven points behind normal.

 

Hogs: December lean hog futures settled 47 1/2 cents higher on the day. The February through June contracts ended 50 cents to $1.175 lower. Traders worked to align the December contract with the cash market today. The combination of strength in the lead contract and a drop in the cash index accomplished that. In fact, December lean hog futures finished 70 1/2 cents above where the cash index is projected tomorrow (for Nov. 26). With the cash index continuing to fall, the upside is likely limited for December hogs until the cash market firms. The average national direct cash hog price slipped 23 cents this morning. Deferred lean hog futures continued their pullback from last week’s contract highs. With contracts respecting key support levels, the move lower still appears corrective in nature, though the premium deferred contracts hold to the cash index is price-negative until the cash market signals a seasonal low is in place the cash market is ready to strengthen.

Cattle:  Live cattle closed down 5 cents to 30 cents and in the upper half of today’s ranges. Feeder cattle futures were down 22.5 to 65 cents and in the lower half of the daily price range. Cattle may be trapped in a sideways trend the remainder of the year, with strong demand offset by growth in cattle supplies. The Choice premium to Select reached a peak about three weeks ago and may indicate that supply is poised to top demand into year end. At midday, Choice beef carcass prices fell 66 cents and Select rose $1.48. on modest sales. Packers have a couple more weeks to fill grocer coolers ahead of the year-end push for turkey and hams. The U.S. and Argentina are within days of signing a deal that would allow two-way trade of fresh beef between the countries for the first time in nearly two decades, Argentina’s international trade secretary told Reuters.

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