After the Bell: Beans, Cattle & Hogs Up on China Buying Speculation; Grains Slide

Posted on Thu, 02/13/2020 - 15:10

Corn:  Futures end the day near session lows with March sliding 3 ½ to $3.79 ½ and December falling 1 cent to $3.92.  Corn futures drifted lower on light fund selling amid a lack of fresh news. This morning’s weekly USDA export sales report held few surprises with private exporters reporting net new sales fell 22% to 968,800 MT from a week earlier and were 9% below the prior four-week average. Current crop-year sales reached 935 million bu., down 336 million bu. from a year ago or 26%. The market remains concerned about Chinese demand for U.S. corn after USDA failed to make any changes in China’s import forecasts earlier this week.  China is expected to open their markets by issuing duty-free import licenses or reducing tariffs, which could come as early as next week. But for today, traders were more concerned that the coronavirus outbreak in China will curb economic growth and corn demand throughout Asia.  

Soybeans:  March soybean futures closed up 4 cents at $8.96 1/4 and touched a more-than-two-week high today. March soybean meal continues to languish and closed up $0.20 at $291.90. March bean oil closed down 32 points at 30.72 cents. Short covering and some perceived bargain hunting were featured today as prices are slowly climbing up from the February low.  Trading is also cautious ahead of the Feb. 14 start of the U.S.-China trade deal and the U.S. trading holiday on Feb. 17. It will be tough for market bears to hold shorts into the long weekend and possible release of lower tariffs to make U.S. soybeans more competitive. China has yet to inform Washington of any delays or reductions to planned purchases of U.S. agricultural goods under the Phase 1 trade deal due to the coronavirus, USDA Under Secretary of Trade Ted McKinney said on Wednesday.  

Wheat: Wheat futures finished 3 to 5 cents lower. March HRW contracts led the price declines, but other contracts weren’t far behind. Funds continued to exit long positions in the winter wheat market, despite weekly export sales that were up sharply from week-ago, slightly above the four-week average, and at the top end of trade expectations. With funds still long, there is risk of additional near-term liquidation pressure barring strong bullish news. Export sales for the week ended Feb. 6 totaled 643,100 MT for 2019-20 and 44,000 MT for 2020-21. Traders expected combined sales between 300,000 MT and 700,000 MT. HRW and HRW sales were solid at 294,200 MT and 197,700 MT, respectively. But SRW sales were light at just 11,700 MT. Weekly exports of 506,300 MT were also up sharply from week-ago and the four-week average.  

Cotton:  March cotton futures closed down 83 points at 67.75 cents today, while December futures lost 48 points at 69.34 cents.  Once again, cotton futures traders were rattled today after China adopted a new testing method and announced on Thursday a big jump in coronavirus outbreaks and more deaths. The rising virus toll boosted worries China is hiding more details. Traders are more skeptical whether China can or will meet its ag buying commitments in 2020. The spike in coronavirus numbers came a day after markets were cheered Wednesday when China reported its lowest number of new cases in two weeks.  Export demand for U.S. cotton continued to improve in the latest weekly USDA export sales report, out this morning. Exporters sold 350,900 bales in the latest week, a new marketing-year high. Vietnam, Turkey, Pakistan and Bangladesh purchases offset reductions by China.  

Hogs:  April lean hog futures closed up $0.30 at $64.075, while the June contract gained $0.175 at $81.025. Short covering was featured in lean hog futures today as the bulls try to stabilize prices following the late-January downdraft. Weekly U.S. pork export sales slipped to 28,600 MT last week from 29,500 MT a week earlier. China bought 3,700 MT, the third biggest buyer after Mexico and Japan last week. Shipments remain active at 42,900 MT last week with Mexico taking 13,100 MT and China shipping 13,000 MT. While USDA did hike its 2020 pork export forecast by 275 million lbs. in Tuesday’s monthly supply and demand report, it did not specifically attribute the uptick to China. Today’s midday pork report showed carcass cutout value down $1.10, led by a drop in bellies. Movement was 155.5 loads.

Cattle:  Cattle opened lower and tested short-term support before rallying late to close higher, near session highs. April cattle rose 67.5 cents to close at $118.525. March Feeders cattle rose $1.275 to $136.325. Cash cattle continues to trade down $1 to $2 from last week and midday beef prices were mixed with small gains reported for Choice. Sales did show some improvement this morning and confirmation of bigger business in tonight’s report would be the sign that grocers, food service companies and perhaps overseas buyers are stepping up purchases ahead of the seasonal rebound in values.Some traders see China returning to the U.S. markets next week. Beef, pork and soybeans are expected to top their list of imports and speculators want to hold longs in anticipation of new buying. China has dire food shortages developing amid the outbreak of coronavirus and the devastation to the hog herd from African swine fever.