After the Bell: More Sideways, Choppy Trade Amid Trade Concerns

Posted on 11/14/2019 3:02 PM

Corn: Corn futures spent the day within Wednesday’s trading range and settled low-range and fractionally to a penny higher. Corn futures got a bit of a boost today from news China has lifted its ban on U.S. poultry imports. African swine fever has left the country in need of protein, and some are hopeful that big shipments of poultry meat to China will translate to greater feed demand. Poor demand has been a major limiting factor for the market. Exports are running dramatically behind year-ago levels, a statistic tomorrow’s weekly export sales update will likely bring attention back to. And the ethanol sector has been struggling with slower exports and plant closures. Today’s update on ethanol production the week ending Nov. 8 was a bit more encouraging than recent weeks, however. It showed production climbed 16,000 barrels per day to 1.03 million bpd and stocks fell 889,000 barrels to 20.99 million barrels.

Soybeans: Soybean futures closed mixed. January beans were up 1 ½ cents to $9.16 ¾ and November 2020 futures fell 3 ¼ cents to $9.52. Meal fell about $1 and oil futures gained 23-plus points. The soybean market was choppy and pressured most of the session by lack of new optimism about reaching a Chinese trade deal, more rains in South America the next two weeks shrinking dry pockets and negative chart signals. China and the United States are holding "in-depth" discussions on a first phase trade agreement, and cancelling tariffs is an important condition to reaching a deal, the Chinese commerce ministry said on Thursday. China did announce it will allow U.S. poultry meat imports for the first time since January 2015 when Avian flu hit the U.S. industry. Beside the tariff roll back roadblock, China continues to fight specific ag import quotas that President Trump has said would be $40 to $50 billion per year, more than double the total before the trade war broke out. Meanwhile, USDA daily export sales reporting services said private exporters sold 129,000 metric tons of soybeans for delivery to China during the 2019-20 marketing year. That follows sales of 106,000 MT of soybeans to unknown destinations on Wednesday and was mildly supportive for prices today. U.S. House Speaker Nancy Pelosi on Thursday said a breakthrough in talks with the Trump administration on the trade pact with Mexico and Canada could be imminent and that she wanted to pass the deal by the end of the year. "I'd like to see us get it done this year, that would be my goal. I don't imagine that it would take much more in the Senate to pass," Pelosi told reporters on Thursday.

Wheat: Futures ended lower and in the bottom half of the daily ranges. December SRW fell 1 ¼ cents to $5.07 ¾ and December HRW was down 2 ½ cents to $4.22 ¼. Spring wheat fell 2 to 2 ½ cents. Prices were weaker most of the session. Egypt's state grain buyer, the General Authority for Supply Commodities (GASC,) said on Thursday it had bought 465,000 metric tons (MT) of wheat for shipment Jan. 5-15. GASC said the purchase was comprised of 120,000 MT of Ukrainian wheat and 345,000 MT of Russian wheat. European wheat prices fell today after the tender showed French wheat was less competitive than expected. That followed consultant Strategie Grains earlier today raising its monthly forecasts of EU wheat exports to 28.8 MMT from 27.4 MMT in October. Today’s estimate is 40% higher than a year ago and now looks a bit optimistic and further highlights U.S. wheat is not competitive. Argentina's 2019-20 wheat harvest is estimated at 18.5 MT, down from a previous forecast of 18.8 MT, due to an outbreak of the Fusarium fungi, the Buenos Aires Grains Exchange said in a weekly crop report on Thursday.

Cotton: December cotton futures closed up 5 points at 64.27 cents today and near mid-range in quiet trading. The cotton futures market continues its sideways price action. USDA’s reports last week were a bit friendly, but not enough so to push the futures market out of its range-bound trade.  That has cotton market bulls worried as the positive USDA news failed to spark any significant upside price action in futures. Also, the cotton futures market has paid very little attention to the U.S. stock market hitting record highs in the indexes this week—suggesting better consumer demand for cotton in the weeks and months ahead. The futures market could remain range-bound and sideways in the near term, bound by trader concerns of increased farmer selling just above the market if prices advance, and notions of producers holding out for better prices if the futures market begins to erode.  

Hogs: December lean hog futures closed down $0.375 at $62.75 and February hogs lost $1.175 at $73.375. Trading remains choppy and sideways. On the plus side, pork demand is improving and hog slaughter rates are beginning to decline from recent weeks—although still up 14,000 head from year-ago levels. However, cash hogs were lower yesterday with the national average price down 49 cents. Today’s noon pork cutout value fell another $1.33, led by picnics and hams. Movement at noon was 180.05 loads. Traders are awaiting Friday’s USDA export sales report to gauge Chinese buying interest in U.S. pork. That report is delayed by one day this week due to the federal holiday on Monday. China and the United States are holding "in-depth" discussions on a first phase trade agreement, and cancelling tariffs is an important condition to reaching a deal, the Chinese commerce ministry said on Thursday. Traders have become mostly numb to the latest proclamations of success, or lack thereof, on the U.S.-China trade negotiations front.

Cattle: Live cattle finished 32 1/2 to 97 1/2 cents higher through the June contract, led by front-month December futures. Feeder cattle posted gains of 57 1/2 cents to $1.225 through the April contract, led by January futures. Cattle futures recouped some of Wednesday’s sharp losses, suggesting the pullback was corrective in nature. Fundamental support for the price recovery came from the cash market, which was steady to firmer this week with prices around $115 in the Southern market. Given the early onset of wintry weather, traders should be willing to maintain the current $4 premium in December live cattle. But it may be a stretch to get them to build that premium. A supportive factor for additional cash market strength is wholesale beef trade. While prices were lower this morning, they have been surging since early October. 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

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