After the Bell: Corn, Soybeans Rebound to Finish Higher Before China Trade Talks

Posted on 02/20/2019 2:45 PM

Corn:  Corn futures finished near midrange today with gains of 1 to 2 1/2 cents. Fundamental support for the corrective buying in corn futures came in part from comments by President Donald Trump that China would buy “a lot of corn… a lot more than anyone thought possible” as part of its pledge to get a trade deal completed with the United States. There’s the possibility that Chinese purchases may exceed its annual quota amounts of 7.2 MMT of corn, according to Li Qiang, chief analyst with Shanghai JC Intelligence Co. Additional support for corn came from the weather as the latest winter storm dumped more snow on the Corn Belt. Corn planting forecasts have been on the decline recently. Any spring planting delays from saturated soils and flooding, which now seem more likely given the increasingly heavy snow cover, could further reduce corn plantings. The average estimate of corn acreage from a Reuters survey of 17 analysts shows corn plantings are expected to total 91.5 million acres, up 2.4 million from last year.  

Soybeans: Prices fell to new four-week lows and rallied to close higher. May soybean futures rose 1 ¾ cents to close at $9.02 1/2.  Selling dried up late today and prices rebounded on short-covering ahead of the USDA Agricultural Outlook Forum in Washington the next two days, ongoing U.S./China trade talks and Friday’s USDA export sales report for the past six weeks. High-level trade talks between the U.S. and China last week failed to narrow the gap around structural reforms to China’s economy that the U.S. has requested. Today, the political “big guns” of U.S Trade Representative Lighthizer, U.S Treasury Secretary Mnuchin and China Vice Premier Liu He will be meeting in Washington to further advance the trade talks the next two days.  Tomorrow morning USDA’s chief economist will unveil 2019-20 acreage and inventory ideas. Traders surveyed by Bloomberg look for soybean planted area to fall to 86.1 million from 89.2 million acres last year. Ending stocks seen slipping to 895 million bushels from 910 million forecasts this season.  

Wheat:  Nearby winter wheat futures prices tumbled to new contract lows today, closing down 8 to 10 3/4 cents. Spring wheat futures closed 6 ¾ to 7 ½ cents lower. Chart-related and new fund selling was featured in the wheat futures markets today in followthrough weakness to Tuesday’s drop.  U.S. wheat continues to follow world prices lower, with no signs of world buyer interest in U.S. supplies.  No U.S. wheat was offered in the Egyptian state tender for wheat today, suggesting U.S. wheat is not competitive because of freight costs. Egypt's state grains buyer GASC said it bought 360,000 MT of wheat. Reports said the purchase was made up of 180,000 MT of French wheat, 60,000 MT of Romanian wheat, 60,000 MT of Russian wheat and 60,000 MT of Ukrainian wheat. European wheat futures fell to new seven-month lows today

Cotton:  Cotton futures closed down 3 to 14 points in the old-crop contracts today, with prices finishing closer to their daily lows. It’s been quieter for cotton on the fresh fundamental news front. The U.S. attache in India forecasts the Indian cotton crop at 27.3 million bales. That’s up slightly from what USDA is officially projecting. Both U.S. and Chinese officials are pushing for leverage and the devil is in the details for a new trade accord. The latest major news in the trade saga is that the U.S. has asked China to keep its currency stable in a move aimed at discouraging officials in Beijing from devaluing the currency to offset the impact of sanctions. On Tuesday, President Donald Trump said negotiations with China were going well and suggested he was open to extending the deadline to complete them beyond March 1. Meanwhile, the Global Times, published by the ruling Communist Party's official People's Daily, said in a Wednesday editorial that both sides must remain calm during the current talks, but that Washington must not force anything on Beijing because it could lead to counter measures and that would be a catastrophic trick to global stock markets. "

Hogs: Hog futures were lower to sharply lower today, led to the downside by the April contract, which fell $3.55 to $52.975. May through July contracts fell 97.5 cents to $2.425. April futures fell below the cash market today, essentially taking any remaining premium out of the market related to the spread of African swine fever in Asia and Europe.  The Chinese regions of Shandong and Guangxi reported their first-ever cases of ASF, while Vietnam also confirmed that the disease was detected on three farms this week. While most of both nations’ pork is consumed domestically, both may still need to import pork this year to meet that demand. Midday wholesale pork prices rose $1.15 on Wednesday after falling to more-than-nine-year low on Tuesday. Sales the past two days are good but need to be better. That’s because slaughter the first three days of this week is estimated at 1.415 million head, up from 1.361 million last week and 1.339 million head a year earlier. Cash hogs at midmorning were weaker.  Until the cash market bottoms, the futures will struggle

Cattle: Live cattle futures posted gains of 30 to 75 cents today. Feeder cattle ended steady to 15 cents higher in all but some of the extreme far-deferred contracts. Live cattle futures were again supported by weather as another winter storm blasted the central United States. With poor feedlot conditions, especially in northern locations, and showlists thought to be down nearly 15,000 head this week, feedlots are unlikely to be willing to sell cattle at lower prices this week. As a result, traders built more weather and cash premiums into futures. Wholesale beef prices slipped this morning, with Choice down 3 cents and Select $1.53 lower. Movement was solid, however, at 92 loads, signaling there’s willing retail buyers under the market.  

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