After the Bell: Corn Erases Post-Report Losses, Closes Higher; Soybeans Pare Decline

Posted on 11/08/2018 3:54 PM

Corn: Nearby corn futures settled 1 cent higher and near mid-range. December corn did poke to a 10-week high today. The highlight of the trading week is today’s monthly USDA supply and demand report, which was a mixed bag for the corn market. The government pegged U.S. corn production at 14.626 billion bu. versus trade expectations of 14.721 billion bu. This compares to 14.778 billion bu. in October and 14.604 billion bu. in 2017. USDA cut the average U.S. corn yield 1.8 bu., to 178.9 bu. per acre. That would still be a record yield. USDA’s U.S. corn carryover projection of 1.736 billion bu. is 77 million bu. lower than last month and 37 million bu. under the average pre-report trade estimate.  For global corn carryover, big upside revisions were made by USDA, based on new projections coming out of China. World corn carryover of 340.92 MMT for 2017-18 was up sharply from 198.21 MMT in October. Carryover of 307.51 MMT for 2018-19 was up sharply from 159.35 MMT in October. The larger China supplies mean little when Chinese domestic prices are rising and much above world market prices.  

 Soybeans: Soybean futures ended near their daily highs and about 15 cents off session lows. Soybean meal saw losses of 20 cents to $1.90, while soybean oil declined around 18 points in the front months. Another wild price session on a USDA report day. Nothing positive to report from the latest update and prices were able to rebound from session lows, albeit fail to close higher on the day. USDA cut its soybean crop estimate by 90 million bu. from last month, which came in 76 million bu. below the average pre-report trade estimate. It reduced the national average soybean yield 1 bu. to 52.1 bu. per acre, though that would still be record-high. USDA’s soybean ending stocks projection of 955 million bu. is up 70 million bu. from last month as export projections were just 160 million bu. Global carryover in 2019 was raised to 112.08 MMT, up from 110.04 MMT forecast last month and an estimated 99.69 MMT this year.  

Wheat: Wheat futures finished mostly 2 to 3 cents lower in SRW contracts and mostly 3 to 5 cents lower in HRW with prices ending midrange. Spring wheat futures were down about ¾ of a cent.  USDA’s wheat carryover forecast at 949 million bu. is 7 million bu. lower than last month and 9 million bu. under the average pre-report estimate. USDA now projects the average on-farm cash wheat price at $4.90 to $5.30, up a dime on the bottom end and down a dime on the top end of the range from October. Wheat prices were pressured by USDA raising its 2019 world carryover forecast to 266.71 MMT from 260.18 MMT forecast in October. That’s still down from 279.0 MMT estimated this year.  Most of the increase in world carryover came from upward revisions to China’s supply. World supplies outside of China declined and are forecast at the lowest in more than 10 years.

Cotton: December cotton lost 10 points to settle at 78.86 cents a pound. March futures were 16 points lower at 80.41 cents. Both contracts notched six-week highs early on today, but gains could not be held by the close. Today’s bullish USDA monthly supply and demand report appears to have been already factored into futures prices, given today’s modestly weaker futures closes. U.S. cotton production was pegged at 18.408 million bales versus trade expectations of 19.210 million bales, and compares to 19.763 million bales in October and 20.923 million bales in 2017.  USDA’s world cotton carryover projection of 4.3 million bales is down 700,000 bales from last month and around 300,000 bales below the average pre-report estimate.  

Hogs:  December lean hog futures ended up 10 cents and near the session high. The February contract lost $1.10 and extended this week’s decline to the lowest since Oct. 22.  Another mixed session with pressure building in the deferred futures on concerns about record red meat and poultry production in 2019. At midday, USDA reduced its projections for total meat production in 2019 and that provided underlying support to late trading. USDA also raised its price forecasts for 2018 and first quarter of 2019. Wholesale pork prices were lower again at midday Thursday, with weakness in bellies, ribs and loins leading the carcass value lower. Pork demand this week has been very good.  


Cattle: December live cattle futures closed up 50 cents, while the February contract gained 30 cents. Feeder futures hit nine-week lows early on today and closed up 25 cents in the January and up 2 1/2 cents in the March. All contracts finished near their mid-range on the day. Some mild corrective short-covering was featured today, following recent selling pressure.  Weekly USDA export sales of beef fell 31% below the prior four-week average this week, limiting support for futures. Choice and Select boxed beef values fell another 62 cents and 75 cents, respectively, today on light movement 

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