After the Bell: Quiet, Choppy Trends Ahead of Month End, Fresh Yield Reports

Posted on 09/24/2019 2:40 PM

Corrects closing hog prices in earlier version.

Corn futures finished with high-range close with fractional to 1 1/2 cent gains through the July 2020 contract. Price action in the corn market was quiet today, as traders weighed an unexpected uptick in crop condition ratings against forecast calling for cold temps next week. The GFS (American) weather model signals a cold air mass is expected for the middle of next week that could damage crops in the northern Corn Belt. But the European and Canadian models aren’t as cold. And the forecast period is still a week away. Based on today’s price action, traders aren’t ready to “buy” the forecast yet, though they will undoubtedly watch it closely. If potentially damaging cold temps remain in the forecast for the middle of next week, we would expect corn futures to strengthen, as this would be fodder for traders to build weather premium into the market and for funds to cover some of their sizable short position.A pickup in export demand is needed to sustain any kind of a price recovery barring a season-ending weather event in northern areas of the Corn Belt.

Soybeans: Soybean futures settled midrange and around 2 cents higher after a two-sided day of trade. Soymeal posted gains of 80 cents to $1.10, and soyoil closed with marginal gains. The bean market had a mix of data on the China front to sort through today. On one hand, China has reportedly issued two batches of waivers allowing several importers to buy around 5 MMT to 6 MMT of U.S. soybeans free of waivers and some firms have supposedly purchased at least 30 cargoes (around 1.8 MMT) of American soybeans this month. But there is no guarantee China will indeed make these big purchases, as we have seen over the course of the trade war. Meanwhile, President Donald Trump was quite tough on China in his address of the United Nations today, which caused equity markets to turn down. That likely capped gains for the bean market.

WheatWheat prices ended mixed with winter wheat futures following European prices lower, while spring wheat extended its rally to the highest since in two months. December SRW wheat fell 1 ¼ cents to $4.81 ¾ while December HRW fell 1 ½ cents to $4.05. December spring wheat was up 7 1/4 cents to $5.44 1/2. Spring wheat futures rallied for the fifth consecutive sesson on Tuesday as farmers harvesting in the northern U.S. Plains have found that wet conditions have lowered the yields and quality of the crop there. Winter wheat futures were weaker, pressured by good soil moisture levels in key growing areas as well as light demand on the export market. Farmers had harvested 87% of the spring wheat crop as of Sunday, an 11-point advance from last week as producers dodged showers. This was four percentage points more advanced than the market anticipated. Harvest is usually 97% complete as this point in the season. Solid progress on winter wheat planting was seen as progress advanced 14 percentage points over the past week to 22% finished, whereas analysts had anticipated just a 10-point jump. Planting is running just two percentage points behind the five-year average.

Cotton: December cotton futures closed down 51 points at 60.40 cents. Prices finished near mid-range after scoring a two-week low early on. The cotton market likely felt some pressure from a sell-off in the U.S. stock market and falling crude oil prices today. Both markets were pressured when, in a speech to the United Nations in New York, President Trump called out China for “gaming” the world trading system. It’s hard to imagine the Chinese leadership not at least considering hardening their stance against the U.S. following today’s “dressing down” in front of a world body. The USDA Monday afternoon reported the U.S. cotton crop condition down 2% in the “good to excellent” category from the previous week, at 39%. The long-term average in that category is around 48% for this time of year.

From a psychological perspective the cotton bulls need to see prices hold above the key 60-cent level in December futures. A drop below that level is likely to invite some fresh speculative selling interest.

Hogs: October lean hog futures closed up $1.05 at $62.00. December futures finished up 72.5 cents at $69.10. Selling interest in the futures market was limited today as cash hogs firmed on Monday with the national average price gaining 46 cents. Fresh pork cutout was up another 92 cents today on decent movement of 228.49 loads. Trading in futures will likely remain cautious ahead of USDA’s Hogs and Pigs report on Friday afternoon. China will auction 10,000 MT of imported pork from its state reserves on Sept. 26, according to a notice from the China Merchandise Reserve Management Center on Tuesday. The auction of frozen pork is the second to be announced so far this month. In a speech to the United Nations in New York today, President Trump called out China for “gaming” the world trading system. It’s hard to imagine the Chinese leadership at least not considering hardening their stance against the U.S. following today’s dressing down by Trump, especially in front of a world body.

Cattle: Live and feeder cattle futures closed mixed but off early session lows. December cattle fell 35 cents to $107.425 with November Feeder cattle rising 47.5 cents to $140.20.   U.S. stock and commodity markets fell and bond prices rallied this morning after U.S. President Donald Trump delivered a stinging rebuke to China's trade practices on Tuesday at the United Nations General Assembly, saying he would not accept a "bad deal" in U.S.-China trade negotiations. He said Beijing had failed to keep promises that it made when China joined the World Trade Organization in 2001 and was engaging in predatory practices that had cost millions of jobs in the United States and other countries. Midday beef prices fell Tuesday on moderately active sales with Choice down 93 cents and Select falling $1.45. Beef stocks totaled 469.4 million lbs. at the end of August, up 17.5 million lbs. from July but 31.9 million lbs. less than last year. The five-year average is an 11.5-million-lb. increase in beef stocks during August. The small increase in beef stocks last month paled in comparison with the 5.7% increase in beef production during the month, so demand is more than keeping up with rising supplies.

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