10:30 a.m. Market Snapshot

Posted on Fri, 12/13/2019 - 10:09

Cotton producers: Sell order hit for 2019-crop sales… March cotton futures hit our standing order at 67.50 cents to sell another 10% of 2019-crop in the cash market. You should now have 65% of 2019-crop priced in the cash market.  

Corn futures are up about a penny, which is a retreat from more than 8-cent gains overnight.

  • March futures gapped open above yesterday high but the contract has since pared three-quarters of the strong overnight gain. The rally stopped right at the 40-day moving average.
  • The rally stalled this morning when China confirmed it plans to import more U.S. farm goods, including corn, but did not provide any dollar amounts after the U.S. was talking about $50 billion per year in sales.
  • The market has underlying support from improving export demand from other overseas customers. The weekly USDA sales report topped trader expectation and Mexico bought 1.6 million metric tons of U.S. corn, the fifth biggest single day sale in history.
  • The dollar fell to a new five-month low this morning, lending underlying support to the corn market as U.S. grain becomes cheaper for overseas buyers.   

Soybeans are 5 to 6 cents higher as futures are headed for the seventh gain in eight sessions.

  • March soybeans haven given back much of the strong gains scored earlier this morning. Futures are back below 100- and 200-day moving averages after reaching a three-week high at $9.31 ½.
  • Chinese officials failed to commit to any specific quality or value of higher U.S. farm imports during a press conference earlier this morning.
  • The officials only commit to boosting imports of energy, agricultural, pharmaceutical and financial service products; specifics were scarce.
  • China’s vice agricultural minister was also clear that imports of U.S. farm products will not create shocks to the domestic markets.

Winter wheat futures are mixed to down a penny, with spring wheat up 1 to 5 cents.

  • The March SRW futures extended yesterday’s rally but have turned lower at midsession. 
  • Prices rose on news of a trade deal with China. But details provide few clues to the size of any new purchases.
  • Prices are still higher for the week and if the market can hold the gains into the close that would be a positive development
  • Export demand has been showing signs of improvement but that needs to continue.    

Live cattle are up and making new contract highs, with feeder cattle following to the upside.

  • February and April cattle futures rose to new contract highs earlier in the session, though futures have since backed off the day’s best levels.
  • Packer cutting margins have dropped a lot from recent levels but remain deep in the black.  Choice beef cutouts fell $3 on Wednesday.
  • But slaughter remains very active and that will help to ease concerns about recent gains in market weights.
  • Also, beef cow slaughter has been huge, adding to the beef supply but also signaling herd contraction. That’s bullish longer-term. 

Lean hog futures are lower in the front month and moderately to sharply higher in deferreds.

  • February lean hogs opened higher and pushed to a four-week high this morning before stalling. 
  • The market is supported by news of the new trade deal with China. However, details are lacking on the potential size of new Chinese purchases.
  • Net export sales of pork last week for delivery before Dec. 31 slipped 5% from the prior week to 29,200 MT and were 11% below the prior four-week average, USDA reported this morning. Mexico bought 13,900 MT and China bought 5,600 MT.
  • Shipments last week were 38,200 MT, down 10% from the prior four-week average. China was the top destination, taking 13,900 MT last week.
  • Cash hog bids were mixed yesterday, for a slight drop in the national average cash hog price.