After the Bell: Corn, Soy Inch Higher on Disappointing Early Yield Reports, Stronger Exports

Posted on 09/19/2019 3:02 PM

Corn: December corn futures closed up 1 1/2 cents at $3.72 3/4 today and nearer the daily high. This morning’s weekly USDA export sales report for the week ended Sept. 12 was a bullish surprise for corn. Old-crop corn sales rose to 1.465 million metric tons (MMT), with Mexico taking 1.158 MMT. That was up from 1.233 last week and the most since at least last February. However, the recent outbreak of African swine fever in South Korea raises concerns about corn export demand from one of the U.S.’s top customers. President Trump was to meet Thursday with a group of U.S. senators to discuss biofuels policy. The discussion will continue several meetings the White House has held with both biofuel and oil-refining advocates to negotiate a compromise between the two sides. Traders are eager for more widespread harvest results given the highly variable yield reports to date that don’t provide much evidence of smaller or larger crop potential.

Soybeans: Soybean futures finished with gains of 1 1/2 to 4 1/4 cents through the July 2020 contract, which was high-range. November futures led today’s price gains. Meal futures finished 40 to 70 cents higher, while soyoil was 10 to 60 points lower. Soybeans were supported by hopes for improved U.S./China trade relations and strong weekly export sales. Gains were limited by generally favorable late-season weather and a new government forecast calling greater odds of above-normal temps in October.  Deputy level U.S. and Chinese negotiators held the first of two days of meetings in Washington today. China will send a trade delegation to tour U.S. farms as a goodwill gesture next week. High-level talks between the two countries are expected in early October. Bottom line: Tensions between the two sides appear to be thawing, sparking expectations China could buy more U.S. beans for delivery in the first half of the 2019-20 marketing year. Weekly soybean export sales were stronger than expected at 1.728 MMT for 2019-20. China was the buyer of roughly one-third of those sales. China was also the lead destination for U.S. soybean shipments the week ended Sept. 12.  

Wheat:  Winter wheat futures fell slightly from five-week highs while spring wheat closed higher. December SRW futures slipped 1 ½ cents lower at $4.88, while December HRW closed ¼ lower at $4.09 1/2. December spring wheat futures rose 7 cents to $5.20 ¼. It was a mixed session of unwinding wheat spreads. Increasing concerns about the yields and quality of the final wheat harvests in the U.S. Northern Plains and Canadian Prairies allowed spring wheat to gain on the winter wheat. European wheat futures touched a one-month high on confirmation that Morocco will launch its import season next month. That will improve demand for French supplies as it cuts the customs duty on soft wheat to 35% from 135% from Oct. 1.  Consultancy Strategie Grains raised its estimate of EU soft wheat production and exports this season. But it also increased projected EU wheat stocks, expecting EU wheat to face competition both from rival wheat suppliers and other cereals. This morning’s weekly export sales report for the week ended Sept. 12 was negative for wheat. Wheat sold for export last week fell to 286,600 MT, down 47% from the prior four-week average.  

Cotton: Futures closed lower and near session lows with December down 17 points at 60.36 cents. Prices were pressured by sluggish weekly export sales in the week ended Sept. 12. USDA said exporters sold 85,000 bales last week, while up 14% from the previous week, that’s still down 38% from the prior four-week average. Net sales reductions of 35,000 bales were recorded for China.  U.S. and Chinese deputy trade negotiators resumed face-to-face talks on Thursday for the first time in nearly two months, trying to bridge deep policy differences and find a way out of a bitter and protracted trade war. The negotiations on Thursday and Friday are aimed at laying the groundwork for high-level talks in early October. The discussions are likely to focus heavily on agriculture, including U.S. demands that China substantially increase purchases of American soybeans and other farm commodities, a person with knowledge of the planned discussions told Reuters. Traders remain skeptical of China buying U.S. cotton as a goodwill gesture.   

Hogs: Lean hog futures settled $1.525 lower in the front-month and 15 cents to $1.325 higher in deferred contracts. The market faced pressure on the open, but most contracts staged a reversal to the upside. African swine fever remains on traders’ minds as the virus has spread to South Korea, China auctioned off some pork to provide consumers a bit of relief from soaring prices and Bulgaria reported an eighth outbreak of the virus. Meanwhile, U.S. and China are talking trade today/tomorrow and there is increasing optimism that the two sides will reach an interim deal that also entails some Chinese purchases of U.S. farm goods. Optimism U.S. pork would be in the mix is keeping a premium in deferred futures prices.  But recognition that the U.S./China situation has and will likely remain quite fluid is keeping buying in check. In addition, today’s weekly export sales update showed sales totaling 14,200 MT the week ending Sept. 12, down 34% from the prior four-week average, with China absent from the list of major buyers. South Korea, on the other hand, topped that list.  

Cattle:  October live cattle futures closed down $0.575 at $99.80, while December live cattle ended down $0.325 at $105.825. Both contracts did poke to three-week highs earlier today. November feeder cattle futures closed up $0.95 at $137.25, while hitting a five-week high. There was some position evening in the futures markets today, ahead of Friday’s USDA Cattle-on-Feed Report, which is expected to show strong marketings and reduced placements, paring Sept. 1 on-feed numbers by 0.6% from a year earlier. Cash cattle quietly traded steady to $2.00 higher at mid-week, but there were reports of $101.00 trade coming out of Texas today, which is up $1.00 from last week. Beef carcass prices firmed a bit today, with Choice grade up 17 cents and Select gaining 56 cents on light sales. Recent lower wholesale beef prices are bringing grocers and importers to the market and that will help to encourage packers to run at near capacity to make up for the lost production at the Tyson plant in Kansas.

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