After the Bell: Choppy Session with Weak Undertone Despite Wall St. Rally

Posted on Thu, 03/26/2020 - 15:04

Corn: Corn futures battled back from earlier losses to finish steady to fractionally higher and finished high range for the day. Corn traders had a muted response to weekly export sales that totaled 1.814 MMT for 2019-20 and 82,900 MT for 2020-21. The weekly data included the 756,000 MT of corn sales to China that USDA announced last Friday. Since that data was already “in” the market, it wasn’t seen as fresh news. But the drop to the lowest level in front-month corn futures since July 2018 during the reporting period also triggered a rush of additional business. Still, corn exports remain a concern and now there are major worries about falling corn-for-ethanol demand. It's likely going to take an influx of speculative buying to trigger an extended price recovery in the corn market.

Soybeans: Soybean futures got off to a firmer start, softened but then pared losses into the close, with futures settling 1 ¼ cents lower in the front month and steady to 2 ½ cents higher in deferreds. Soymeal posted gains ranging from $1.70 to $2.40 and soybean oil posted losses around 15 points. The soybean market paused today after working higher since mid-month. Markets have been relieved Congress is slated to deliver a $2 trillion coronavirus aid package, but today’s unemployment claims data (see “Evening Report”) reminded of the economic toll the virus has already had on the U.S. and global economy. Some support stemmed from an encouraging weekly export sales update that included 904,300 MT in sales for 2019-20, which China and unknown topping the list of buyers.

Wheat: Futures ended lower and near session lows on profit taking following this week’s surge. May SRW futures fell 11 cents to $5.69 and May HRW wheat declined 13 3/4 cents to $4.87 1/4. Spring wheat futures were down about 6 cents. Russian President Putin called for the food supply chain, including Russian grain exports, to function normally during a state quarantine into early April. The news caused a relaxation in world wheat prices as export embargo fears calmed, at least for the moment. This morning’s weekly USDA Export Sales Report showed better sales. Exporters sold 740,000 MT of wheat in the week ended March 19, up 73% from the prior four-week average and topping trade estimates for 200,000 to 500,000 MT. New-crop wheat sales were 366,400. China was the top buyer of both old- and new-crop wheat last week.

Cotton: May cotton futures closed down 66 points at 52.78 cents, with December futures down 43 points at 54.61 cents. The cotton futures market traders today chose to focus on a stunning rise of 3.28 million in weekly U.S. jobless claims, reported this morning, instead of this week’s strong rebound in the U.S. stock market that saw U.S. indexes solidly higher in early-afternoon trading. Traders reckon next week’s U.S. jobless claims are likely to be just as bad, or worse, and focused on what the crippled U.S. and global economies are doing for consumer demand for cotton.Today’s weekly USDA export sales report showed U.S. cotton sales of 277,100 running bales (RB) in the current marketing year. That’s down 19% from the previous week and down 23% from the four-week average. China took 44,000 RB

Hogs: June lean hogs closed down the daily $3.00 trading limit at $68.75 and the April contract was down $2.95 at $62.90. Futures trading limits expand to $4.50 on Friday. Lean hog futures traders’ jaws dropped when they saw the weekly U.S.  jobless claims report print a record-high weekly claims number of 3.28 million and knowing next week’s report will probably be just as bad or worse. Worries about sustaining the rally in pork prices and consumer demand combined with recent large hog kills put the bears back in firm control today. Positive weekly USDA export news on the pork front was ignored today. USDA said 38,600 MT of pork sold for export last week, up 8% from the previous week with Mexico and China the top buyers. Shipments rose to a new high of 48,600 MT, up 12% from the prior four-week average, with China taking 23,000 MT.

Cattle: Cattle futures closed sharply lower to limit down and limits will expand to $4.50 on Friday. Feeders cattle limits will remain at $4.50. June live cattle fell the $3 limit to $93.325. May Feeders dropped $3.675 to $125.425. On Wednesday, cash sales were quoted at $119-$121, up $8-$10 for the week in the south and $10-$14 higher in the north. But reports today that cattle feeders, who have aggressively sold inventory the past three weeks, were selling inventory $5 cheaper today pressured the market. The market’s focus is shifting to whether the $2 trillion emergency aid package will be enough to save the U.S. economy if the virus closure continues beyond the middle of April. U.S. jobless claims shattered the prior record last week, soaring to 3.283 million.