After the Bell: Grains Mixed on Slow Exports, Beans Climb on China Trade Deal Optimism

Posted on 12/06/2019 2:37 PM

Corn

Price action: March corn futures closed steady on the day at $3.76 3/4. For the week, March corn lost 4 1/2 cents. The corn market bears had the better week this week and prices finished Friday’s trade with a whimper, which could lead to some mild price pressure early next week. Bearish traders expect USDA in its monthly supply and demand report next Tuesday to cut its U.S. corn export forecast about 50,000 MT. USDA’s daily export reporting service Friday reported private U.S. exporters sold of 245,872 MT of corn for delivery to Mexico during the 2019-20 marketing year this morning. U.S. corn export activity will have to pick up in the coming weeks and months if the corn futures market is to see a sustainable price uptrend on the charts.  There not only needs to be an improvement in U.S. corn export sales, but also in ethanol production. Producers are hoping President Trump throws them a bone in an election year in 2020 by pushing for ramped-up U.S. ethanol production.

Soybeans: January soybean futures closed up 5 1/4 cents at $8.89 1/2. For the week, January beans gained 12 3/4 cents. March soybean meal futures lost $2.10 on the day Friday, at $302.50, and for the week gained $5.40. March soybean oil futures closed up 71 points at 31.50 cents Friday and for the week gained 65 points. The soybean bulls had a good week, including a technically bullish weekly high close on Friday, as prices saw a good corrective bounce after trending lower since mid-October. Look for some follow-through technical buying early next week. Soybean trader focus is still on the U.S.-China trade talks and the rollercoaster rhetoric coming from both sides. China announced earlier today that it could waive tariffs on unspecified quantities of U.S. soybeans and pork as a goodwill gesture as the two sides approach the December 15 declines for the next round of U.S. tariffs on Chinese goods. Any new business is appreciated but this primarily serves China’s needs, with supplies from Brazil still three months away.Traders are awaiting next Tuesday’s monthly USDA supply and demand report, with focus being on Brazil and Argentina soybean production forecasts.

Wheat: Wheat prices closed mixed on Friday but lower for the week. March SRW rose ¾ cent to close at $5.24 ½ but down 17 ¼ cents this week. March HRW futures fell 4 ½ cents to close at $4.31, extending this week’s drop to 16 cents. March spring wheat was down 1 ¾ cents to $4.31 and down 2 ½ cents this week. The focus next week will be on the USDA changes to world production and demand forecasts on Dec. 10. Look for smaller crops in Argentina, Australia and Canada to be offset by bigger estimates for Europe and Russia. Supplies are small but still more than adequate to meet slowly growing global wheat demand. World ending stocks are seen falling to 286.2 MMT, down from 288.3 MMT forecast in November. Rumors that France has been selling wheat to China weighed on prices this week and will increase the importance of the Dec. 15 deadline for new U.S. tariffs on Chinese goods if there is no trade deal reached.   In the next month the focus will be on the pace of U.S. exports ahead of the USDA Winter Wheat Seedings Report on Jan. 10.  

Cotton: Cotton futures posted gains of 103 to 149 points through 2019-crop contracts. The December 2020 contract gained 53 points today. Cotton futures rebound from early-week losses and finished near weekly highs but were unable to close above last week’s highs. For the week, March cotton futures firmed 64 points. Traders have a lot on their plates next week, as USDA’s December crop reports are out Tuesday. The average pre-report estimates expect a smaller U.S. crop estimate and a cut to ending stocks. World ending stocks are also expected to be down from November. The other focus will be U.S./China trade talks and whether a Phase 1 trade deal is agreed to by Dec. 15 when President Donald Trump says he will increase tariffs on Chinese imports. That’s a lot of potential market-moving news.

Hogs: Futures ended mixed on Friday and down from early-session highs after prices reached a three-week high. February hogs slipped 2.5 cents to $67.55 and down 62.5 cents this week. April gained 20 cents to $73.70, paring the weekly decline to 22.5 cents.  Wholesale pork cutout values rose $1.06 at midday Friday on strong sales. Picnics rose to near a five-year high today. After an early-week setback, cutout prices are up 57 cents this week and set the stage for further gains in cash hog prices  and futures next week. On Friday, China confirmed that it will waive import tariffs for some soybeans and pork shipments from the United States, as the two sides try to reach a broader agreement ahead of a new round of U.S. tariffs set for Dec. 15. Next week will be focused on the latest trade talk headlines ahead of that deadline.

Cattle: Live cattle and feeder futures rose Friday and pared weekly losses. February live cattle rose 37.5 cents to $124.975, paring this week’s lows to $1.225. January feeder cattle rose $1 to $141.55 and ending this week down 72.5 cents. Cash trade this week was mostly $118 to instances of $120 compared with last week’s 5-area average at $118.21. This week will also be above last year’s average of $118.11. Still, the sheer number of committed cattle and upcoming two weeks of holiday-reduced slaughter may limit further advances into year end.  The choice beef cutout a year ago for this week averaged $213.43. Today’s quote was $225.18. Packer margins are still at least $100 above a year ago so it’s unlikely cash will trade lower this month and will likely be characteristically higher New Year’s week.  

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