10:30 a.m. Market Snapshot

Posted on Thu, 12/05/2019 - 10:40

Corn futures are narrowly mixed but trading near session highs.

  • After testing short-term support near $3.77 this morning, the March contract is clawing back into the green. Futures touched $3.79 ½ this morning but remain well below key short-term resistance at this week’s high at $3.84 ¾. A close above $3.81 tonight may set up a test of that high.
  • Strong soybean are providing spillover support.
  • S. corn is competitive on the world market, but exports need to ramp up significantly to sustain any rally into the new year.
  • Today’s weekly USDA Export Sales Report for the holiday week ended Nov. 28 failed to provide a lift. USDA reported sales fell 32% to 546,100 metric tons (MT) from a week earlier, down 18% from the four-week average. New-crop sales were just 2,400 MT, despite the recent price drop.
  • Crude oil prices rose to a 10-week high this morning and a measure of the dollar against six currencies extended its decline to a four-week low. Strong oil and weaker dollar are bullish factors contributing to fund short covering activities.

Soybean futures are 6 to 7 cents higher and trading in the upper 25% of today’s range.

  • After falling back to test the August and September lows on Monday, soybean futures are bouncing higher for a third straight session on fund short covering.
  • Soymeal bounced away from new contract lows on Monday and nearby contracts are trading back above the 20-day moving average this morning. The rally in meal prices pushed the CBOT futures crush margin to $1.16 per bushel, the highest since August.  
  • A Chinese Ministry of Commerce spokesperson told reporters today that officials remain in close contact with their U.S. counterparts, reiterating that tariffs should be reduced proportionally as part of a Phase 1 trade deal.
  • Speaking in London yesterday President Donald Trump said discussions with China are going very well. “We will make a lot of progress,” he said.
  • The U.S. sold 683,800 MT of old-crop soybeans for export the week ending Nov. 28, a 55% drop from the prior four-week average. Exports stood at 1.498 MMT.
  • While Brazilian bean development continues to improve, the return of rains to Argentina to relieve dry conditions remains uncertain. If widespread showers and rains fail to develop by Christmas, the market may have a significant weather story to add weather premium back into the market.

SRW wheat futures are down about 2 to 3 cents, HRW wheat futures are mixed and most spring wheat futures are up about 2 cents.

  • March SRW wheat futures opened steady last night and rallied, but the contract failed to take out Wednesday’s highs. March HRW futures opened lower and are back in the green at midsession after Wednesday testing and holding the 40-day and 100-day moving averages.
  • The market has been pausing to refresh after a strong, two-week rally to cap the third straight monthly gain amid tightening global supplies.
  • Weekly wheat export sales fell to 228,100 metric ton (MT), down 45% from the prior four-week average. Shipments fell to a marketing year low, pressuring prices earlier today. However, world demand continues to surface with global prices still climbing.
  • Algeria’s state grains agency purchased around 500,000 MT of milling wheat in an international tender, reportedly from France and Argentina.
  • Japan purchased 91,220 MT of food-quality wheat from the U.S. as well as 69,420 MT of the grain from Canada in a regular tender.
  • For the first 10 months of 2019, Russia exported roughly 26.4 MMT of wheat, down 10.4 MMT (28%) from last year during that period, according to official customs data. This year’s crop is smaller. In addition, Russian wheat prices have recently climbed.

Live cattle futures are slightly to moderately higher, with feeders posting similar losses.

  • February cattle extended Wednesday’s retreat before uncovering new buying interest this morning. Prices are back near session highs.
  • Cash cattle calls are still seen steady to slightly higher, but futures traders are worried lower beef may hurt packer bids.
  • Beef prices slumped Wednesday, with Choice boxed beef tumbling $3.20 and Select declining $2.00; 153 loads changed hands.
  • The spread between the two is narrowing at a time when that gap typically widens—a worrisome signal that marketings are not as current as suspected. 
  • USDA’s weekly export sales report showed beef sales plunged to 500 MT for 2019 with 2020 sales limited at 11,700 MT. Shipments fell 27% below the prior four-week average.

Lean hog futures are moderately lower, but off session lows.  

  • Cash hog bids rose an average of 71 cents nationally yesterday.
  • The pork cutout value rose 39 cents, led by gains in bellies and hams.
  • USDA reported net sales of 30,600 MT in the week ended Nov. 28, up 20% from the prior week and 5% better than the four-week average. Mexico bought 10,900 MT and China purchased 10,300 MT. However, shipments slowed 22% from big exports the past four weeks.
  • Also, for 2020, USDA reported net sales reductions of 1,400 MT after China cancelled 8,500 MT.
  • Average hog weights in the Iowa/southern Minnesota market edged another 0.1 lb. lower the week ending Nov. 30 to 287.0 lbs., still up 5.5 lbs. from year-ago despite record kills.
  • The abundance of pork coming to market has made it tough for lean hog futures to put together a lasting rally and emphasized the importance of strong pork exports.