After the Bell: Grain, Soy Tumble on Slow Exports, China Trade Talk Pessimism

Posted on 02/14/2019 3:43 PM

CornCorn futures prices closed 3 to 4 cents lower and near their daily lows today. Corn prices were pressured in part today by lackluster weekly USDA export sales in the week ended Jan. 3 that totaled 459,800 MT--down 64% from the prior four-week average. The data was delayed by the partial government shutdown. USDA is set to release multiple weeks of sales data next Friday. South America weather in corn-growing regions sees numerous rains producing near- and above-normal amounts in Brazil over the next two weeks, which would improve soil profiles for the second-crop corn. Most of Argentina will be dry over the next week, accompanied by some heat. A cooler and wetter period starts Feb. 20.   

Soybeans: Soybean futures finished on or near session lows with March down 13 cents at $9.03 ½. Soybean meal futures fell $4-plus and soyoil futures were down about 10 points. Soybeans traded lower overnight and extended those losses through the day. Prices fell after USDA reported net sales reductions of 610,900 MT in the week ended Jan 3, compared with estimates for sales of 600,000 MT to 1 MMT. Cancellations included 807,000 MT intended for China, the world's top soy importer, and 444,000 MT for "unknown" destinations, which the market believes could also be China.  Pessimism overtook impatience by midmorning. With little hard news, the market jumped on a morning report from Bloomberg News report that negotiating teams are far apart on U.S. reform demands. The Chinese government's alleged forced technology transfers as well as its subsidization of domestic industries remain central sticking points as the world's two largest economies seek to find common ground on a broad trade.   

Wheat: Winter wheat futures tumbled today, closing 10 ¾ to 15 ½ cents lower. March SRW wheat futures settled at their lowest level since Jan. 2, while March HRW wheat hit a new contract low. Spring wheat futures posted losses of 5 to 7 cents. Reports that the U.S. and China are still far apart on a trade deal weighed heavily on the commodity sector today, including wheat. And delayed export data for the week ending Jan. 3 served as a reminder that demand for U.S. wheat has been slow to develop. Sales of 131,200 MT for 2018-19 marked a marketing-year low and a 76% drop from the prior four-week average.   

Cotton: Cotton futures prices ended with gains of 27 to 29 points in the nearby contracts today. Short covering was featured. March futures prices hit a 15-month low early on today. It was a quieter trading day in the cotton market, as the bulls try to stabilize prices following this week’s selling pressure. USDA today reported, for the week ending Jan. 3, cotton sales in the 2018-19 marketing year at 299,800 running bales (RB), which were up 31% from the previous week and up 52% from the four-week average. For the 2019-20 marketing year, sales of 19,400 RB were reported. Shipments of 16,200 RB were down 5% from the previous week but up 3% from the four-week average. A big batch of USDA data will be issued next Friday. General caution continues for a U.S./China trade deal. After three days of deputy-level meetings on technical details talks between U.S. and Chinese officials are slated to move to a higher level.   

Hogs: April lean hogs fell $1.075 to close at $58.70 while the June through December contracts were down 42.5 cents to $1.10. Most contracts finished in the bottom half of the daily trading ranges. Cash hog bids eased slightly on Thursday. Midday pork prices were slightly higher as belly gains offset a drop in picnics.  However, movement continues to be light relative to the size of the daily hog slaughter. A seasonal slowdown in hog slaughter in the next few weeks could put a floor in hog futures. Slaughter the first four days of this week estimated at 1.831 million head, down from 1.857 last week and a year ago. Most of the decline occurred due to maintenance at one plant earlier this week. The market tone turned more pessimistic today after Bloomberg New reports that U.S. and China negotiators remain far apart on reaching deal that might reopen pork trade without Chinese tariffs

Cattle: February live cattle closed up 17 1/2 cents, while the April and June contracts were up 40 and 47.5 cents, respectively. Feeder cattle futures were up 55 cents in the March and up 42.5 cents in the May contract. The live cattle futures market remains bullish amid dropping weights due in part to wintry weather the past several weeks stressing animals, very current marketings, good consumer demand and recently strong cutout values. Boxed beef values were lower at midday, with Choice down 5 cents and Select down 66 cents. Movement was 62 loads.  Also, cattle slaughter numbers take a seasonal dip from mid-February to mid-March.


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