After the Bell: Corn, Soy Retreat on Harvest Pressure, No China Trade Headlines

Posted on 10/25/2019 3:10 PM

CornCorn futures finished steady to 1/2 cent lower today, with the December contract ending unchanged at $3.86 3/4. For the week, December corn futures dropped 4 1/4 cents. Harvest activity picked up across the Corn Belt this week and both the soybean and wheat markets declined, which left corn without much support. If that remains the case next week, corn futures will again struggle to find buyers. Unless support at the Oct. 10 low is violated, however, the downside should be limited. That key near-term support level is at $3.80 1/4 for December corn.  Traders expect USDA’s Nov. 8 Crop Production Report to reduce the size of this year’s corn crop. But after USDA raised its yield estimate this month, some traders believe any cut will have to come via lower acreage. USDA is resurveying harvested acreage in North Dakota and Minnesota for the November report after recent winter storms.

Soybeans: Prices were lower most of the session after trading higher overnight. Futures slumped late to new two-week lows on profit taking and spread unwinding after failing to take out the summer highs earlier this week. November soybean futures fell 13 cents to $9.20 ¼, down 13 ¾ cents for the week. December meal futures fell $5.20 this week, while soybean oil extended its rally 60 points to 30.96 cents after touching 31.52, the highest since early March. Prices were lower on U.S. harvest hedging and little hard news from the U.S./China trade talks. China was out buying more Brazilian soybeans this week, adding to concerns that U.S. prices are not competitive, which may keep some pressure on prices next week. 
USDA probably will say on Monday the U.S. soybean harvest was 65% completed by Sunday, up from 46% reported this week. Traders will begin positioning for the Nov. 8 USDA Crop Production Report, the last one this year before the final summary in January
U.S. and Chinese trade officials are "close to finalizing" some parts of an agreement after high-level telephone discussions on Friday, the U.S. Trade Representative's office said, adding that deputy-level talks would proceed "continuously." In a statement issued after the call, the USTR provided no details on the areas of progress.   

Wheat: December soft red winter wheat futures closed the day up 2 1/4 cents at $5.17 3/4. On the week, prices lost 14 1/2 cents. December HRW wheat finished the day up 3 1/4 cents at $4.22 3/4 and for the week fell 11 cents. Spring wheat futures fell 7 ¾ cents this week. After a stronger start to last Sunday night’s trading and hitting multi-week highs to begin the week, the wheat futures markets proceeded to back off, but are still in near-term price uptrends on the daily charts. Global wheat price rallies also stalled and will need to see additional international tenders and increased weather concerns in the near term to extend price rallies. Traders will be closely watching USDA’s first winter wheat crop conditions report in the weekly USDA crop progress reports Monday afternoon. That report may confirm building U.S. Plains dryness is becoming more serious. Presently sluggish U.S. exports need to pick up the pace in the coming weeks if futures prices are to continue their near-term uptrends. Wheat export sales figures Thursday (262,400 MT the week ending Oct. 17) remind of the need for U.S. wheat prices to remain competitive on the world market.

Cotton: December cotton futures ended the day with gains of 25 points at 64.90 cents but near the session low. Early on today prices did hit a 3.5-month high of 65.70 cents. On the week, December cotton fell 26 points. The cotton bulls remain resilient as prices have been trending up on the daily chart since the late-August low. However, it’s likely that heavier farmer selling is occurring when prices get close to or above 65.00 cents in December futures. Harvest of the U.S. cotton crop is moving right along, and there is a sense USDA’s cotton crop estimate could climb next month. 
The Adjusted World Price (AWP) for cotton moved up to 57.11 cents per pound, effective today (Oct. 25), up from up from 55.26 cents per pound the prior week. The current mark would be the highest AWP since the week ended July 12 when it was 58.05 cents per pound. Cotton market bulls are encouraged by outside market forces at present, as the U.S. stock indexes are near their highs for the year, which are also record highs. That bodes well for consumer demand heading into the holiday buying season.

Hogs: Hog futures closed mixed to higher Friday, erasing a portion of this week’s decline. December hogs rose 37.5 cents to $64.925 and down $3.03 this week. It was a second straight weekly decline after prices failed to take out overhead resistance last week. Prices rose on reports the U.S. and Chinese negotiators are closer to finalizing some sections of the Phase I trade deal after today’s phone call. The top negotiators are expected to hold another call next week and U.S. officials may fly to Beijing for talks the first week of November, depending on follow-up discussions. The market will be listening for more positive comments from both sides early next week to extend today’s recovery. 
Wholesale pork carcass values jumped $4.17, erasing all of this week’s earlier decline, a midday USDA report showed today. Sales were moderately active and have been good most of this week. Before today’s session, cash hogs fell more than wholesale pork values, lifting estimated packer margins to more than $35 per head, up from $30.50 a week earlier, according to data from  Look for cash hogs to find some stability next week.   

Cattle: Cattle futures pushed higher to close out the week. Most live cattle rallied and closed on or near their highest levels since late April/early May, with gains of 82 ½ cents to $1.55. Feeder cattle futures posted moderate gains. Both markets notched solid gains for the week, with December live cattle up $2.50. Friday’s Cattle on Feed Report came in basically in line with expectations, meaning market reaction to the data should be very limited this week. Futures traders have increasingly been on the lookout for a corrective pullback in cash prices. That dip did not come this week, with trade occurring at steady to higher prices. Key next week is whether traders’ extend this week’s breakout above the July high or if the rally runs out of steam.  Buying for the holidays usually lifts boxed beef values from late October into November, but then prices turn lower. Choice and Select values have pushed aggressively higher this week, but lighter volume could signal the usual seasonal pullback lies ahead. That said, the wide spread between Choice and Select beef speaks to tight supplies of well-finished beef.   

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