After the Bell: Mixed Friday Trade with Grains, Soy Lower for the Week

Posted on 11/15/2019 2:18 PM

Corn: December corn futures today lost 4 1/2 cents to $3.71 1/4. Prices hit a six-week low today and closed at a technically bearish weekly low close. For the week December corn was down 6 cents.The chart posture for corn has turned more bearish the past couple weeks, which suggests some more price pressure next week, including from the big speculative “funds.” Early-week price support this week due to cold, snowy weather producing harvesting delays in the Midwest have faded as it appears there will be warmer and drier weather conditions in the region in the coming days will allow additional harvest progress. Focus will continue on worldwide demand for U.S. corn, which has been tepid. The weekly USDA export sales report this morning showed net U.S. sales last week rose 19% from the prior week to 581,600 MT, which was right in the middle of trade estimates but below the pace needed to reach the USDA export projection.  

Soybeans: Soybean futures were unable to hold onto strong early gains and settled 1 to 1 ½ cents higher for the day. The market posted losses for the week, with the January contract sliding nearly 13 cents for the week. Soymeal posted gains of $3.60 to $4.00 for the week, and soyoil futures finished with losses in the upper 30-point area. Funds spent this week shedding long positions, causing soybean futures to slide, despite more indications of strong demand for U.S. soybeans. U.S. and Chinese crushers are both turning a profit on crushed beans. That plus an influx of freshly harvested beans helped push NOPA’s October crush to a new high—for any month. Exports have also been solid this year, thanks in part to a thawing of trade tensions with China. South American weather concerns eased to some degree after rains this week, though areas of dryness persist.  Several Chinese and U.S. administration officials this week signaled the end zone is near on a Phase 1 partial trade deal with China, with negotiators reportedly down to hammering out the final details. But those details on things like enforcement and Chinese purchases of U.S. farm goods are not small matters. Given past disappointments when a deal was near, the market is likely to take a cautious approach.  

Wheat: Wheat futures ended around a nickel lower in the two winter wheat markets. Spring wheat futures dropped 8 to 9 cents today. All three markets ended near weekly lows. For the week, December SRW wheat fell 7 1/2 cents, December HRW futures dropped 4 1/2 cents and December HRS futures declined 5 3/4 cents. Bears carry momentum into next week. Barring a weather scare with the U.S. winter wheat crop, the upside is limited. With forecasts calling for slightly milder temps, some followthrough selling is likely early next week. Key to how much followthrough selling is seen rests with how aggressive funds want to get with short positions.  

Cotton: Futures rebounded Friday to close higher for the week. December cotton gained 59 points to 64.86 cents, and up 14 points for the week.  Cotton prices rose after USDA reported an improvement in export demand. In the week ended Nov. 7, USDA reported net sales of 345,100 bales for 2019-20--a marketing-year high. Sales doubled the 164,483 bales sold a week earlier and were the largest since May. Increases were primarily for Pakistan (117,000 RB), China (83,300 RB) and Turkey (46,000 RB).  Export shipments of 126,200 RB were down 3% from the previous week and 13% from the prior 4-week average.  Exports were primarily to Pakistan (35,600 RB), Vietnam (31,100 RB), China (15,700 RB), Mexico (8,800 RB), and Turkey (8,000 RB). Total outstanding sales and shipments are 6% ahead of last year’s pace and represent 64% of USDA’s projection for the season, ahead of the 57% average the past five years. The dollar was lower Friday on optimism for the ongoing U.S.-China trade talks to reach a conclusion. If a deal is reached it could lead to further dollar weakness and improved demand for U.S. cotton.

HogsFutures ended mixed on Friday and lower for the week. December hog rose 45 cents on Friday to close at $63.20, down 92.5 cents this week. February hogs fell $1.375 to close at $72.00 and down $1.90 this week. Prices gave back early-week gains amid the weakness in cash hogs this week. Slaughter this week is estimated at a record 2.749 million head, up 56,000 head from a week earlier and 123,000 head more than a year ago. Packer margins are estimated at $87.60 per head, up from $68.00 a week earlier and keeping packing plants humming a full capacity. Midday wholesale pork cutout values rose $3.08 to $90.12, the highest since Aug. 9, up $7.45 this week and up from a six-month low of $68.11 in mid-September. Bellies led today’s surge, but hams hit a five-year high earlier this week.  Look for a better tone to develop next week.  

Cattle: December live cattle closed up $0.025 at $119.10. February live cattle ended the day up a nickel at $124.975. For the week, February cattle lost a nickel. January feeder cattle futures closed up $0.225 today at $144.275 and for the week lost $1.60. February live cattle futures prices late this week saw a normal corrective pullback and pause in a solid uptrend on the daily chart. Look for more price strength next week in this technically bullish market. Part of the late-week pullback was likely because December live cattle futures are still about $3 above this week’s early cash action. Cash cattle action picked up in Iowa and Nebraska from $115 to $117 on Thursday, at steady to higher compared with last week’s $114 to $115 trade. Given the early onset of wintry weather, traders should be willing to maintain the current $3 premium in December live cattle. But it may be a stretch to get them to build that premium.The strong product market has pushed estimated packer margins to more than $360 per head, giving plants a major incentive to push through as many cattle as possible. The firming cash market also gives feedlots incentive to keep marketings current, though they could balk if packers don’t keep raising bids.  

Add new comment