After the Bell: Wheat Gains on Light Export Demand: Corn, Beans Slip Lower Ahead of USDA Reports

Posted on 10/09/2018 2:31 PM

Corn: Corn futures ended 1 3/4 to 2 cents lower and nearer their session lows. Traders are tentative early this week ahead of USDA’s monthly Crop Production and Supply & Demand Reports Thursday morning, as they anticipate a bigger corn crop estimate and larger projected ending stocks. Pre-report positioning is likely to continue tomorrow. Rains from Kansas to Michigan have stalled corn harvest progress in many areas of the Corn Belt. However, the rain should finish up by Thursday from the west to the east. There’s one more chance for rain early next week but then the Corn Belt outlook is drier and colder for the next two weeks. U.S. corn inspected for export in the week ended Oct. 4 slipped to 1.351 MMT from 1.377 MMT a week earlier. However, shipments were more than double the 582,248 MT shipped a year ago. Look for continued strong U.S. corn exports in the coming weeks. The Trump administration is expected to announce later today it will be allow year-round sales of E15 ethanol. President Trump travels to Council Bluffs, Iowa, for a political rally and is expected to make the announcement there.  

Soybeans: Soybean futures settled 4 1/2 to 6 3/4 cents lower through the August contract and finished in the lower end of today’s range. Front-month November futures led today’s price decline. Concerns the trade war between the U.S. and China is escalating weighed on soybean futures today. Now is the timeframe when U.S. export demand should be ramping up as new-crop supplies move to market, but there are major uncertainties with China largely an absent buyer of U.S. soybeans. Until now, the rest of the world has done a decent job keeping U.S. export demand relatively normal. But with Chinese demand missing, the export pace will slow. Weekly soybean export inspections totaled just 569,776 MT versus 1.491 MMT last year at this time. Traders are also preparing for USDA’s Crop Production and Supply & Demand Reports Thursday morning. Traders anticipate a bigger crop estimate and an increase in projected 2018-19 ending stocks. Pre-report position squaring will be a featured activity tomorrow.

Wheat: Winter wheat futures settled slightly higher and about midrange with prices up 1 to 2 ½ cents. Spring wheat futures gained 4 to 4 ½ cents and in the upper third of the daily price ranges. Wheat showed some minor signs of resiliency after the USDA reported this morning that private exporters sold 120,000 MT of hard red spring wheat to Bangladesh for delivery in the 2018-19 marketing year. Last year, Bangladesh bought 105,000 MT of U.S. wheat. USDA’s weekly export inspections report showed a small improvement to 423,270 MT last week, up from 371,991 MT a week earlier and up from 355,257 MT a year ago. Russia, the dominant exporter, is pushing wheat shipments off shore faster to beat any government restrictions. Still, some of the nation’s grain inspection services regional offices are requesting additional checks on quality for loadings to Turkey, Jordan, Israel, Nigeria and Sudan. The growth of agricultural production in Russia by 20% over the past five years is a real breakthrough and means the domestic economy is less vulnerable to market fluctuations, President Vladimir Putin said Tuesday. He noted the agricultural exports last year exceeded $20 billion more than the $15 billion of military arm, underscoring the importance of exports to the nation’s economy. Heavy rain across parts of Oklahoma and Kansas are always welcomed to get crops established in September and October. Excessive rains have delayed planting the past two weeks and some flooded fields will need to be replanted.  

Cotton: Nearby futures prices ended down 30 to 54 points and near mid-range. Bulls are disappointed there was little follow-through buying strength today after Monday’s good gains—especially as Hurricane Michael has strengthened and is bearing down on the Florida Panhandle region. Traders instead appear to be focusing more on U.S./China relations that are going south in a hurry. Last week's Cold War-like speech by U.S. Vice President Mike Pence certainly got China's attention and some sharp responses. Most expect the U.S./China trade battle to extend into 2019 and beyond unless President Trump and China leader Xi Jinping can settle matters late this year at the G20 confab in Argentina. But Trump will not engage in trade talks with Xi at next month's G20 summit if China does not produce a detailed list of concessions, sources told the Financial Times. Traders are awaiting Thursday’s monthly USDA supply and demand report. Analysts surveyed by Bloomberg News expect USDA to cut the cotton crop to 19.52 million bales from 19.68 million estimated in September. U.S. reserves may slip to 4.65 million bales from 4.7 million projected last month, traders said. In Thursday’s report, world inventories are seen rising to 77.58 million bales from the 77.46 million USDA estimated in September.

Hogs: Lean hog futures closed mostly lower with only the soon-to-expire October gaining 30 cents to $68.75. December through April fell 77 1/2 cents to $1.57 1/2. Prices settled in the upper half of the daily price ranges. Lean hog futures fell on carryover selling and profit taking after a weak performance on Monday. Weakness also came from signs of plentiful slaughter numbers. This week’s kill is estimated at 946,000 head, up from 922,000 a year ago. Packers did pay more for hogs today in Iowa/Minnesota with drier weather headed for the region later this week and next week. Wholesale pork carcass prices rose $1.13 at midday on moderate sales. China continues to deal with an outbreak of African swine fever that its ag ministry labels as complex and severe, noting that prevention and control efforts are at a pivotal time. The country has officially reported 28 cases of the disease in eight provinces, lending underlying support to U.S. futures. Brazil reported an outbreak of classical swine fever in the northeast. The outbreak was in a remote area and should not have an impact on pork trade from the fourth-largest producer and exporter.

Cattle: Live cattle futures made an early run at yesterday’s highs, but buying interest was short-lived and futures settled mid- to low-range with losses of 72 ½ cents to $1.10. Feeder cattle futures faced pressure throughout the day and the market settled midrange and down 72 ½ cents to $1.10.  Traders spent some time working to narrow the premium nearby contracts hold to the cash market today. After four weeks of near-steady cash cattle trade, the market is looking for the cash market to “prove itself” sometime soon. Choice boxed beef values are trading near their lowest levels in a year, but that is countered by lighter kill numbers and steer weights of late that ease supply concerns that have plagued the market over the past year. While December live cattle settled under the 20-day moving average for the first time since August today, it’s still too early to call a peak.


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