After the Bell: Markets Favor Downside Heading into USDA Reports

Posted on 11/07/2018 3:17 PM

Corn: Corn futures settled 1 cent to 1 1/2 cents lower in most contracts today after trading in a narrow 2-cent range. Futures were going nowhere fast today waiting for new direction from the USDA’s Crop Production and Supply & Demand Reports Thursday. USDA is expected to trim both its crop and carryover estimates for the U.S. based on too much rain during October and strong demand for corn. But the potential for a world surprise has the market trading cautiously. That surprise may come from China.

Soybean: Nearby soybean futures ended near their daily lows with losses of around a nickel today. Soybean meal saw losses of $2.10 to $3.30 in the nearby contracts, while soybean oil gained around 30 points in the front months. Traders will be watching to see if President Donald Trump’s optimism about reaching a China trade deal has waned now that the elections are over. Trump sounded upbeat on the matter of U.S. trade in a press conference today. Soybean traders are positioning for USDA’s monthly supply and demand report Thursday. They expect the report to show a U.S. soybean crop of 4.676 billion bu., down 14 million bu. from October. However, ending stocks are expected to climb 13 million bu., to 898 million bu., amid reduced export demand.

Wheat: Wheat futures finished mostly 2 to 5 cents lower in SRW contracts and mostly 6 to 8 cents lower in HRW and HRS contracts. Wheat futures ended low-range. Wheat futures failed to capitalize on sharp losses in the U.S. dollar index today. Instead, the market was pressured by export concerns and technical-based selling. The low-range close today sets the market up for followthrough selling, though it’s unlikely traders will be too aggressive ahead of tomorrow morning’s Supply & Demand Report. Traders expect U.S. wheat ending stocks to rise slightly from last month, while global wheat carryover is expected to decline modestly.

Cotton: Futures closed higher and in the upper 25% of the daily trading range. December gained 155 point to settle at 78.96 cents a pound. Cotton rebounded ahead of the USDA updates on U.S. production and world supply and demand estimates on Thursday. The rally also followed U.S. stock prices higher today, and the dollar was lower, improving competitiveness of U.S. fiber on the world market.  A divided government after yesterday’s elections may cause no harm to the economy and in turn keep a floor under world growth and demand for cotton

Hogs: December lean hog futures ended up $1.325 and near the session high. The February contract lost 27 1/2 cents, hit a two-week low and closed near the daily low. Some corrective technical buying was featured in the nearby December contract today, after yesterday’s limit-down price performance. Another report of African swine fever in a Chinese province also added support to futures prices today. February futures were pressured by another drop in pork product prices—21 cents today with declines in loins and bellies. Movement was decent at 219.90 loads.

Cattle: December live cattle futures settled 67.5 cents higher, while deferred months finished 60 to 80 cents lower. Feeder cattle also finished mixed, with strength in the front and weakness in the deferred futures. Cash trade on Tuesday was light and down about $2 from last week. Wholesale beef prices fell at midday with Choice down 20 cents and Select down $1.27. The market was able to bounce with the strong rally on Wall Street. Domestic beef demand appears quite good with consumer confidence at an 18-year high.

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