10:30 a.m. Market Snapshot - Dec. 12, 2019

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

Corn futures are up more than a nickel at midsession as a drop to three-month lows spurred demand.

  • March futures opened steady last night and hovered just above the three-month lows set on Wednesday. Prices slowly began to rebound as the overnight session ended. Futures jumped after USDA announced large new sales to Mexico this morning.
  • This morning’s USDA’s export sales report for the week ended Dec. 5 was a positive, with net sales of corn rising 28% from the four-week average to 873,500 MT.
  • Before the reopening, USDA’s daily export service said private U.S. exporters sold more than 1.6 million metric tons (MMT) of corn to Mexico, including 1.074 MMT for delivery in 2019-20 and 525,780 MT for delivery in 2020-21. In addition, USDA said 110,744 MT of corn were sold to unknown destination for delivery in 2019-20.
  • That followed Wednesday’s news that U.S. ethanol production rose 1,200 barrels per day (BPD) to 1.072 million BPD last week. That was the 10th straight weekly increase.  
  • December 2020 futures fell to new contract low yesterday morning and rallied above last week’s highs this morning. A close above $3.96 tomorrow would be a bullish signal.  

Soybeans are 4 to 5 cents higher as futures follow corn and are headed for the seventh gain in eight sessions.

  • March soybeans are back there this week’s high but still below the 100-day and 200-day moving averages near $9.19 3/4 and $9.22 1/2 respectively, key overhead barriers.  
  • USDA’s daily export reporting service did not announce any new sales to China this morning after yesterday reporting that private U.S. exporters sold 585,000 MT of soybeans sold to China and another 140,000 MT sold to unknown destinations, both for 2019-20 delivery.
  • The report confirmed rumored business earlier this week after China announced tariff cuts on soy and pork last Friday as a goodwill measure toward securing a trade deal with the U.S.   
  • Soybean export sales last week rose 54% to 1.05 MMT from a week earlier but down 17% from the prior four-week average. USDA said 251,400 MT sold to unknown destination and another 241,600 sold China.
  • President Donald Trump this morning said the he was “very close” to nailing down a trade deal with China, just days for the next U.S. tariffs are threatened.
  • The Wall Street Journal reported that U.S. negotiators offered China to cut existing tariff rates by up to 50% and cancel new tariffs set to be imposed on Dec. 15.
  • Trump is expected to meet with his top trade advisers today to discuss the details of the plan the two sides are negotiating.  

Winter wheat futures are up 9 to 11 cents at midsession, with spring wheat up about 7 cents.

Live and feeder cattle futures are mixed, with a downside bias.

  • February cattle opened steady to weaker and then rallied to test Monday’s highs. Failing to break that short-term resistance level triggered fresh selling and prices retreated into the red. Monday’s high at $125.80, which needs to be cleared soon for a run at contract highs.
  • Packer cutting margins have dropped a lot from recent levels but remain deep in the black.  Choice beef cutouts fell $2.84 on Wednesday to the lowest since Oct. 18 and narrowing the premium to select cutouts to $14.93 from almost $30 earlier this fall.
  • Beef sales remains active this week, supporting a strong slaughter pace this week.
  • Choice cutouts remain the second highest ever for mid-December and support strong packer margins. Beef export sales last week were 9,900 MT, up sharply from just 528 MT a week ago but down 36% from the four-week average. Shipments were down 13% from the prior four-week average.

Lean hog futures are mixed to mostly higher.

  • February lean hogs opened steady to lower and rallied to a new high for the week.  
  • Hog traders will be loath to expand their risk profile ahead of the Dec. 15 deadline for Trump to slap on an additional $156 billion of Chinese goods.  
  • 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.
  • The national average cash hog prices rose 21 cents on Wednesday, continuing the rebound and suggesting a seasonal low has been established in the cash market.
  • Slaughter this week is down 12,000 head from last week.
  • Pork cutout values rose 7 cents yesterday, led by strength in bellies and hams. Sales were light to moderate.