After the Bell: Soybeans, Grains Retreat on Technical Selling, Export Worries

Posted on 12/26/2018 2:49 PM

Corn: Futures closed 3 1/2 to 4 1/2 cents lower today and near the lows of the daily trading range. March corn finished down 4 ½ cents to close at $3.73 ¼.  A firmer opening attracted selling, with futures pushing lower and below support this morning to uncover additional sell orders. A lack of bullish export news along with bearish macro financial markets are keeping the corn market on the defensive--despite the strong rally in U.S. stocks today.  Consumers and speculators do not want to establish new long positions with new U.S. export sales data unlikely to be available until President Trump and Congress agree to a new budget deal to reopen USDA offices. Corn inspected for export in the week ended Dec. 20 rose to 996,098 metric tons (MT) from 886,100 MT a week earlier. While shipments are 72% ahead of a year ago, they need to average almost 1.2 MMT a week to reach the current USDA export forecast. Also increasing trader reluctance to bet long on corn prices is concern that the Jan. 11 USDA annual Crop Production report will be delayed by the government shutdown. Most are looking for smaller U.S. crop estimate and tightening inventories.

Soybeans: Nearby soybean futures prices closed down around 14 cents, near their daily lows and hit four-week lows today. Soybean meal was off around $4.00 in the nearbys and also hit four-week lows. Soybean oil futures finished down about 35 points. The technical chart posture for soybean futures has deteriorated the past few sessions, which has emboldened the large speculator sellers and the chart-based bears. The fundamentals in the soybean market remain dim. U.S. soybeans inspected for export fell more than expected last week. USDA reported today 651,181 metric tons (MT) of soybeans were shipped in the week ended Dec. 20, down from 985,677 MT the previous week and below the 800,000 MT to 1.2 MMT expected by traders.  China's soybean imports from the U.S. in November dropped to zero from a year ago, while shipments from Brazil last month nearly doubled from a year ago, customs data released today showed. Shaky and volatile U.S. and world stock and financial markets are also working against the soybean market bulls at present, creating risk aversion that is not only keeping speculative traders on the sidelines, but also raising concerns about reduced global demand for raw commodities.

Wheat: Winter wheat futures posted losses of 5 1/2 to 7 1/2 cents. Spring wheat futures ended mostly 9 1/4 to 12 1/4 cents lower. Wheat futures were pressured by a general malaise in the grain and soy markets today amid a lack of fresh news in thin holiday trade. The fresh news today was uninspiring, as it reminded traders of the uphill battle U.S. wheat faces on the export front. Weekly wheat export inspections were within the pre-report range of estimates t 543,126 MT, but that was down 138,810 MT from the previous week. More importantly, exports are running 14.1% behind year-ago pace, whereas USDA anticipates an 11.0% increase from the 2017-18 marketing year. Bulls argue that means exports should be much stronger the second half of the marketing year. Bears contend that means wheat has a lot of ground to make up, which puts USDA’s export forecast in jeopardy of having to be reduced again.

Cotton: March and May cotton futures prices rose 95 and 93 points, respectively, today on short covering following recent selling pressure that drove prices to 12-month lows early on today.  Today’s corrective bounce in the cotton market is not surprising given the recent strong selling pressure. A solid rebound in the crude oil futures market today also supported some buying interest in cotton futures. Still, the cotton market has suffered ill effects from generally bearish outside market forces recently. The Dow Jones Industrial Average posted its worst Christmas Eve ever on Monday, dropping more than 650 points after the Trump administration put out mixed signals about the economy on Monday. There is talk President Trump is frustrated with Treasury Secretary Steven Mnuchin, and a source told CNN Mnuchin's job could be in "serious jeopardy." President Trump on Tuesday blamed all the recent market volatility on the Federal Reserve raising interest rates. The partial shutdown of the U.S. government continued for a fifth day and Trump is not sending any strong signals he’s interested in ending the standoff.  The rising economic concerns have some analysts talking about a synchronized slowdown around the world. Agriculture, including the cotton market, would be vulnerable to a deeper setback.

 Hogs:  Lean hog futures finished mixed with a modest upside bias in thin holiday trade. The February through August contracts posted gains of 2 1/2 to 22 1/2 cents. Some of the far-deferred contracts posted mild price losses.  Price action was light today and is likely to remain that way tomorrow as many traders have opted to take off until after the New Year’s holiday. In addition, fresh news is light, partly due to the partial government shutdown. USDA didn’t update its average national direct cash hog price because of price confidentiality, but cash sources reported weaker cash hog bids. That’s not a surprise given that packers are buying hogs for holiday slaughters through next week and market-ready supplies are abundant. As a result, we anticipate further pressure on the cash market the remainder of the week.

 Cattle:  Live cattle futures finished mostly higher, with prices rising 47.5 cents to $121.35 in December contract with February down 2.5 cents and April up 2.5 cents. The first three contracts all made new highs for the current rally. Feeder cattle futures were up 25 to 72.5 cents.  A major winter storm is heading from Colorado to Minnesota the next three days, with as much as a foot of new snow followed by sub-zero temperatures. That will create poor travel and harsh feedlot conditions. Demand for beef remains good to excellent. Midday prices rose 78 cents for Choice carcass values and 4 cents for Select. Sales were more than 100 loads with trimming demand improving and roasts strengthening. Estimated packer margins are more than $114 per head, and likely to support higher packer bids for a sixth consecutive week. Feedlots already asking $2 more than a week ago in early-week negotiations.

Add new comment