After the Bell: Corn, Beans Firm on Bargain Buying; Wheat Retreats

Posted on 03/13/2019 2:57 PM

Corn: Nearby corn futures closed fractionally higher today and near mid-range. The bulls could not muster the power to produce good follow-through buying from the price rebounds seen Tuesday. The bulls could not get much traction today from rumors are circulating that China may be shopping for some U.S. corn, originating in the Pacific northwest. Some rumors focused on 3MMT of corn sales split between the two marketing years. Still, traders want confirmation of substantial China buys, not just rumors of such. Weekly ethanol production fell 19,000 barrels per day (BPD) to 1.005 million BPD the week ending March 8. Stocks fell 530,000 barrels to 23.73 million barrels, according to the Energy Information Agency. The National Weather Service is raising flood risks for most of the central U.S. river systems from North Dakota to Louisiana for the next two weeks. This week’s major storm with heavy snow in the west and heavy rain in central and eastern areas will begin a rapid snow melt and keep soils saturated. Another big storm is expected after March 24.  Weekly USDA exports sales data out Thursday morning are expected to show corn sales for the 2018-19 marketing year at 800,000 to 1.2 million MT, with the 2019-20 marketing year sales from 0 to 300,000 MT.

Soybeans: Soybean futures opened under pressure, but the market improved as the day progressed and futures ultimately settled high-range and up 3 ¼ to 4 ¼ cents. Soymeal posted gains of $1.70 to $2.00. Soyoil futures finished 6 to 9 points lower. Soybean futures rebounded further from yesterday’s intra-day drop to multi-month lows, with some sources signaling a month-end meeting of President Donald Trump and Chinese Leader Xi Jinping is still on the table. But clearly, the situation is a fluid one and traders are growing weary waiting for a deal and ag purchases to materialize. And negotiators could still fail to reach a deal. Meanwhile, some attention is also shifting to the U.S. growing season. Bean acres are expected to fall from year-ago levels, with many estimates coming in the 84 million to 85 million-acre range. But stocks remain ample, which will counter the impact of smaller plantings. With much of the Midwest still blanketed by a thick layer of snow and another storm bringing more moisture in the form of rain and snow to many producing areas again this week, flooding is very much a possibility.  

Wheat: Wheat futures closed lower and about midrange, giving back about 25% of yesterday’s strong advance. May SRW futures were down 5 ¾ cents to $4.47 1/4 and May HRW fell 6 cents to close at $4.36 ¾. Spring wheat futures were down 8 to 10 cents. March futures expire on Thursday. A flurry of short covering Tuesday failed to redevelop overnight to sustain the 20-plus cent rally and prices were under pressure most of the session. The urgency to cover shorts lost steam today following widespread beneficial rains across the Plains the past 24 hours. But too much rain is becoming a problem for some soft red wheat crops from Arkansas to Illinois. Uncertainty about export demand for U.S. wheat after the recent drop to new 14-month lows limited new buying interest today. Traders expect USDA on Thursday morning to report 400,00 metric tons (MT) to 600,000 MT of wheat exports for the week ended March 14. A week ago, USDA reported sales rebounded to 621,696 MT. Private exporters sold 204,987 MT in the same week a year earlier. After USDA reported 42,000 tons of U.S. wheat was inspected for export to China on Monday and rumors surfaced about China buying U.S. corn for old- and new-crop delivery, wheat traders will be watching for any signs of new Chinese demand for U.S. wheat. Right now, the US/China trade updates remain noticeably void of any updates on monitoring/enforcement of a trade agreement. Inability of both sides to post a date for Trump/XI meeting leaves managed fund shorts willing to hold near record large bearish bets.

Cotton: Cotton futures finished with gains of 20 to 87 points, with old-crop contracts leading the way. Cotton futures were boosted by followthrough buying. Buy stops were triggered on the push above the highs from Tuesday and last week in old-crop contracts. But the inability to take out the January highs caused the market to pull back a little into the close. The ability of the market to post additional gains tomorrow likely lies with weekly export data. Export sales in excess of 200,000 bales and exports above 300,000 bales are likely needed for a positive price response. Disappointing export demand figures could trigger a pullback.  

Hogs: Lean hog futures closed mixed and down from session highs. April hogs were down 17.5 cents to close at $63.475, while June rose 57.5 cents to $80.825. Lean hog futures got too far ahead of the rally in cash prices and profit taking set in after April rose to the highest since Jan. 22, about $14 higher than the cash index. Underlying cash market fundamentals remain strong. The pork cutout value climbed another 17 cents at midday to 67.79 and is up $7.30 this month. Movement was moderate this morning after strong sales on Tuesday. Strong sales are needed with slaughter this week running 32,000 head (2.3%) above a year earlier. Although that is down from 5-plus percent the past several weeks. Cash hog bids jumped an impressive $2.43 on a national average basis yesterday. China has confirmed a new case of African swine fever in Sichuan province after a truck carrying pigs was stopped along the highway. Chinese internal market hog prices hit a 14-month high this week amid tightening supplies. This is likely signaling a rising potential more imports.   Trading Thursday will key off the weekly export sales data in the morning.  

 Cattle: April live cattle closed up 7.5 cents at $126.725, with June gaining 72.5 cents to $119.40. May feeders closed up 32.5 cents at $146.425. The live cattle market bulls were able to stabilize the futures market today, following strong losses on Tuesday. If the bulls can keep futures prices from dropping and closing below this week’s lows, then they stand a good chance of restarting near-term price uptrends on the daily charts. Cattle futures tumbled Tuesday as speculative funds exited some of their aggressive long positions. Weather forecasts for some warmer, drier weather on the Plains likely provided some incentive to sellers after weeks of stressful cold and wet conditions in cattle country. Cash cattle fundamentals remain strong and it will still take a few weeks for feedlot conditions to improve, which may lead to another short-term consolidation period. Cash cattle trade is seen steady this week after moderately active trade volume last week. Rising packer-controlled supplies will limit strength in the cash markets. Wholesale beef prices fell slightly today, with Choice down 9 cents and Select down 36 cents. Choice this week hit its highest point since May 30 and the highest for this time of the year since 2015. The problem is sales remain sluggish in the face of elevated slaughter rates this week--up 3,000 head from a year ago.

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