After The Bell: Corn Surges on Export Demand, Markets Wait for Trump to Sign off on China Deal

Posted on Thu, 12/12/2019 - 15:57

Corn: Corn closed higher but down from session highs. March corn rose 6 ½ cents to $3.77 ¾, with December 2020 futures up 5 ¼ cents to $3.93 ¼. Corn prices strongly rebounded after reaching a three-month low on Wednesday. Improving demand with the lower prices encouraged aggressive fund short covering. This morning’s weekly USDA 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 and beating trade estimates. 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. That was the fifth largest one-day sale. In addition, USDA said 110,744 MT of corn were sold to unknown destination for delivery in 2019-20.   

Soybeans: Soybean futures settled 2 1/4 to 4 3/4 cents higher through the November 2020 contract. Nearby futures led today’s gains. Meal futures ended 60 cents to $1.10 lower. Soyoil futures finished 79 to 80 points higher. Today’s trade was rather disappointing given that gains in the corn and wheat markets outpaced those of soybeans. But the soybean market should get a boost overnight and Friday from reports the U.S. and China reached a trade deal in principle, according to Bloomberg, assuming the news is accurate and President Donald Trump signs off. Key will be what level of U.S. ag purchases China agreed to make – assuming that’s part of the deal, as the U.S. has insisted.  Weekly soybean export sales were at the top end of pre-report expectations at 1.05 MMT for 2019-20, including 241,600 MT to China.  

Wheat: HRW wheat futures led the wheat complex higher today, with futures settling high-range and up 10 ¼ to 12 ½ cents. SRW wheat finished with gains of 8 ½ to 10 cents for the day. And HRS wheat closed steady to 4 ¾ cents higher.   Reports the U.S. and China may have reached a trade deal in principle early this afternoon and the fifth largest daily corn sale on record to China helped both the soybean and corn markets to move higher today. Those markets have acted as a weight holding back buying in the wheat market of late, and the removal of that anchor helped winter wheat contracts to push aggressively higher, with the HRS wheat market tagging along for the ride.  Earlier this week, USDA surprised the market with a 40 million-bu. cut to its U.S. carryover estimate, whereas traders had expected a cut of just 4 MMT. That’s providing some delayed support, as are some crop concerns around the globe.

Cotton:  Cotton futures jumped to a five-month high. March cotton rose 129 points to 67.17 cents. U.S. President Donald Trump on Thursday morning said the U.S. was "very close" to nailing down a trade deal with China. "Getting VERY close to a BIG DEAL with China," Trump tweeted. "They want it, and so do we." Just after the close of trading, Bloomberg reported that the two sides have reached terms of a Phase 1 trade deal and now await Trump’s approval, according to people briefed on the plans. U.S. negotiators have offered to slash existing tariffs by as much as half on roughly $360 billion of Chinese-made goods as well as to cancel a new round of levies set to take effect on Sunday, according to the Wall Street Journal. But China must commit to purchase a designated amount of U.S. farm products to seal the deal. The White House's top economic and trade advisers were expected to meet this afternoon with Trump over the current status of the talks.

Hogs: Hog opened lower and closed higher. February hogs rose 92 1/2 cents to $68.65, with April rising 37 1/2 cents to $74.625. Lean hog futures closed higher but off their highs. The market traded to the highest level so far this week after President Donald Trump’s early day tweet that the trade talks were close to finalizing an agreement pushed the market higher. Followthrough strength on Friday is very important.The United States has reached a deal in principle with China on trade, Bloomberg News reported on Thursday after the market closed, saying the so-called "Phase 1" agreement was awaiting a signoff from Trump. Bloomberg cited unnamed people briefed on the plans in its report. Until there is an announcement there is no deal. Agricultural products will be included and that should help to give a further boost to U.S. pork sales.  

Cattle: Live cattle futures settled narrowly mixed with prices ranging from 22 1/2 cents lower to 32 1/2 cents higher through the summer-month contracts. Feeder cattle futures also ended narrowly mixed, ranging from 22 1/2 cents lower to 10 cents higher.  Cattle futures remained in pause mode today. Weekly beef export sales were uninspiring at 9,900 MT. While that was up from the previous week, it was down 36% from the four-week average. Cash cattle trade was also uninspiring as it got started at $119 in the Southern Plains – basically steady with last week’s average price. Feedlots were hoping to get $120 for cash trade earlier this week, so it was somewhat surprising they didn’t hold out until Friday. The plunge in beef prices continued this morning, with Choice cuts down another $2.04.