After the Bell: Corn, Soybeans Drop on Disappointing Exports; Livestock Rally

Posted on 04/11/2019 3:05 PM


Corn: Futures closed lower and below the opening ranges. May corn fell 1 ¾ cents to $3.60, with December down 2 ¼ cents to $3.88 ½. Prices drifted lower after the reopening on disappointing weekly USDA export sales data.  USDA reported this morning private exporters sold 548,000 metric tons in the week ended April 4, which was below the 600,000 to 950,000 MT expected by traders and 18% below the prior four-week average. No sales were reported for the 2019-20 marketing year. While accumulated sales are 19% ahead of a year ago, sales yet to be delivered are down 42% to the lowest for the date in four years. Total shipments and undelivered sales are down 9% from a year ago and face increased competition from larger crops in Argentina and Brazil the remainder of the session. Brazilian crop agency Conab raised its forecast for the 2018-2019 corn crop to 94 MMT from 92.8 MMT in its March report. USDA forecast production this week at 96 MMT and some estimates have been raised to 100 MMT. In 2017-2018 Brazilian farmers grew 80.7 MMT of corn. Prices shrugged off the outlook for worsening flood conditions as this week’s snow melts add to saturated soils from Nebraska to Wisconsin. Heavy rain farther south and generally cool temperatures will limit planting for another two weeks. Three more storms are due during the next 10 days before the pattern turns a little drier into early May.  Big fund shorts will not be concerned by April delays. Plantings progress during the first three weeks of May will be key.

Soybeans: Soybean futures closed around 6 cents lower today, which was low-range. Meal futures dropped nearly $3, while soyoil futures were 5 to 9 points lower. Pressure on soybean futures from disappointing weekly export sales built as the trading session progressed. USDA reported soybean export sales of only 270,400 MT for the week ended April 4. That was down 86% from the previous week and 76% below the four-week average. China was missing from the list of buyers, having canceled a net 1,100 MT during the week. For a market that’s trying to make up lost ground on the export front, today’s data was disappointing. Rising soybean crop estimates in South America also continue to hang over the market like a wet blanket. Conab raised its official Brazilian soybean crop estimate to 113.8 MMT this morning, up nearly 400,000 MT from last month’s forecast. The Rosario Grain Exchange yesterday raised its Argentine soybean crop estimate by 2 MMT to 56 MMMT. The Buenos Aires Grain Exchange this afternoon raised its Argentine soybean crop peg by 2 MMT to 55 MMT. South American Consultant Dr. Michael Cordonnier earlier this week increased his Argentine soybean crop estimate by 1 MMT to 55 MMT amid impressive yields on early harvested acres.

Wheat: Winter wheat futures prices ended the day with gains of 3 1/4 to 4 3/4 cents and near their daily highs. Spring wheat was up 1 ¾ to 3 cents. Wheat futures were led to the upside today on short covering and weather concerns for U.S. wheat country. Traders are watching a major spring storm moving through the northern Plains today, adding to spring wheat planting delay risks and flooding. More rain next week will aid the HRW crop but cause additional problems for the SRW crops from Arkansas to Michigan. Weekly USDA export sales for wheat were a disappointing, at 273,000 MT, down 37% from the prior four-week average and below the average of trade estimates. New-crop wheat sales were above expectations at 201,400 MT.  Strategie Grains cut its 2019-20 EU wheat crop forecast to 144.8 MMT from 146.1 MMT a month ago because of dry weather. Production still forecast up 14% from a year ago.

 Cotton: Futures opened higher and closed lower. May futures fell 64 points to 76.98 cents and December futures dropped 43 to 76.59 cents. Futures pushed higher overnight and positive USDA weekly export sales failed to sustain the rally. Weakness stems from a stronger U.S. dollar, general commodity market weakness and softer stock prices. USDA reported 289,000 bales of cotton sold for export in the week ended April 4, up 39% from prior four-week average. New crop sales were 205,900 bales. China bought 43,600 bales of old-crop cotton and 36,500 bales of new-crop. Weekly shipments were 383,300 bales, improving the pace needed to reach USDA’s 2018-19 forecast.  Certificated stocks have rebounded this week, reducing concerns about supply tightness heading into the May delivery period

Hogs: Lean hog futures gapped higher on the open, with some contracts touching limit up. The market later filled that gap and futures settled low-range with still-solid gains of $1.25 to $2.075, with the exception of the front-month April contract that closed 32 ½ cents higher. U.S. pork export sales totaled a record-setting 90,700 MT the week ended April 4, with aggressive purchases by China driving the surge. The 77,700 MT in sales to Beijing were also record-large and more evidence the country’s African swine fever outbreak has left it with a shortfall of the meat. Today, a Rabobank analyst projected China’s 2019 pork output would drop 30% from year-ago. Further proof of tightening supplies came via monthly consumer price index data that included a 5.1% jump in Chinese pork prices during March. China’s latest round of pork buys were subject to tariffs in the 70% ballpark. If a trade agreement between the U.S. and China leads to the lifting of those duties, the export potential for U.S. producers could be enormous. In its latest Supply & Demand Report, USDA added 50 million lbs. to its U.S. pork export forecast, and that projection may still be too low.  

Cattle: June live cattle futures closed up 72 1/2 cents and the August contract gained 55 cents. Both closed nearer their daily lows after hitting three-week highs in early trading. Feeder cattle futures closed up 57 1/2 cents in the May and up 47 1/2 cents in the August. Both finished the day near mid-range. Most cash trade so far this week is steady to only slightly better (124 in the south and $127-$128 in the north) than a week ago despite the blizzard across the northern Plains. That has been disappointing for the cattle market bulls. This morning’s weekly USDA export sales report showed 11,800 MT of beef sold last week, down 28% from the four-week average. Wholesale beef cutout values were mixed today, with Choice grade down 9 cents and Select up 23 cents. Movement was 72 loads. Seasonally strong beef demand, cutting margins in the black and the stressful weather should continue to support the cash and futures markets at least into next week. Producers are current and retailers are set to feature beef heading into the grilling season.   

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