After The Bell: Choppy Trade Waiting on Harvest Reports, Weekly Exports on Thursday

Posted on 10/23/2019 3:20 PM

Corn: December corn futures closed down 1/4 cent at $3.87 3/4 and hit a two-week low today. Prices did finish near the daily high. Bulls have faded this week and need to step up and show some fresh power yet this week, to keep their near-term technical advantage. Generally cold, dry weather in the Midwest the next two weeks will help to promote active corn harvest and that was a bit bearish today, as was stepped-up farmer selling off the combine. Yield reports from the field continue to be on the positive side, but it is not the first two- thirds of harvest that will determine this year’s production, but rather the last one-third. U.S. export demand concerns also continue to limit buying in the corn futures market. Export sales are running dramatically behind year-ago levels, with plenty of cheaper corn available from non-U.S. origins. Thursday morning’s weekly USDA export sales report is expected to show U.S. corn sales of 400,000 to 700,000 MT in the current marketing year, and sales of 50,000 to 150,000 MT in the 2020-21 marketing year.

Soybeans: Soybean futures settled steady to fractionally lower in most contracts today, which was midrange. November soybeans closed down 1/4 cent at $9.33 3/4. Meal futures ended high-range with gains of $1.30 to $1.70 in most contracts, while soyoil finished mostly 26 to 27 points lower. Soybean traders were disappointed there wasn’t any confirmed Chinese soybean purchases after Beijing reportedly allowed crushers to import 10 MMT of duty-free soybeans from the U.S. on Tuesday. There are also concerns about U.S. soybeans being priced above Brazilian supplies. But with Brazil running short on old-crop supplies and planting of its 2019-20 crop delayed through the first month of the planting season by dryness, China will likely need more U.S. soybeans during the first half of the 2019-20 marketing year than it had previously hoped – even with demand curbed by the African swine fever outbreak. Therefore, we expect Chinese buyers to eventually take advantage of at least a good portion of the 10-MMT duty-free quota.  

Wheat: Prices erased earlier declines and closed in the upper half of the daily range. December SRW wheat rose 2 ¾ cents to $5.20 ½ with December HRW up 2 ¼ cents to $4.23 ½. December spring wheat gained 3 ¼ cents to $5.42 ¼. Futures remain underpinned by crop concerns in some exporting nations and the recent improvement in global demand for forward purchases that has boosted global prices. Still, U.S. wheat remains uncompetitive in many importing nations, limiting stronger U.S. export sales. Traders polled by Reuters are looking for sales in the week ended Oct. 17 to come in around 300,000 to 600,000 metric tons (MT), compared with 395,122 MT a week earlier. Algeria bought about 600,000 MT of milling wheat this week, most of which is expected to be sourced from France.  Jordan issued a tender for 120,000 MT for delivery in February-March.  India lifted its wheat buying price 4.6%, the smallest increase in five seasons because of rising unsold inventories from last year’s crop. India’s price hikes will keep its surplus off the world market.  

Cotton: Cotton closed higher and near session highs. December cotton rose 37 points to 65.79 cents after opening lower. Futures rose a second day in a row as funds covered short positions on speculation the U.S. and China will reach a trade deal. Cotton prices are down about 10% this year because of reduced Chinese demand for the U.S. fiber. Funds continue to cover short positions ahead of Thursday’s USDA weekly export sales report and the potential to see an increase in Chinese business.

Gains will be held in check from favorable harvest weather for this year’s crop, which is forecast to rise 18% to 21.71 million bales this year. U.S. ending stocks-to-use ratio will rise to 36%, up from 27% last season and world ending stocks are seen rising.  

Hogs: December lean hogs were able to edge out a daily gain of 32 ½ cents, but deferred months settled low-range and down 60 cents to $1.50, with spring contracts leading losses. Today’s kill was up 14,000 head from year-ago and this week’s kill is steady with last week and up 3.2% from year-ago levels. Large to record-setting hog slaughter has given market bulls pause, despite impressive demand that has more than rose to the challenge of chewing through an abundance of pork.  Yesterday, USDA reported frozen pork stocks contracted during September, which bucked the trend for a month-to-month rise in supplies. And Chinese customs data out today showed China’s pork imports have surged nearly 44% for the first nine months of the year as African swine fever left the country with a major protein shortage. More big import tallies likely lie ahead.  

Cattle: December live cattle futures closed up $1.55 at $115.25 today, near the daily high and hit a nearly six-month high. November feeder cattle futures gained $1.25 at $144.75 and also closed near the session high today. Strong packer margins and rising boxed beef prices this week rallied futures markets today. Choice grade beef rose another $2.46 at noon today and Select gained 50 cents. The Choice-Select spread widened to $24.81 today, as movement was modest at 69 loads. Traders are looking for higher cash cattle trade to occur yet this week. U.S. beef inventories totaled 464.2 million lbs. at the end of September, down 5.7 million lbs. (1.2%) from August and 43.0 million lbs. (8.5%) from last year. The five-year average is a 25.5 million-lb. increase in beef stocks during September. Beef stocks are 15.6 million lbs. below the five-year average for September.


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