After the Bell: Wheat Leads Grain Market Selloff as Hogs Fall Limit

Posted on 02/19/2019 2:59 PM

Corn:  Corn futures prices ended down 2 1/4 to 4 3/4 cents today and finished closer to their daily lows. The nearby March contract hit a nearly three-month low today. Technical selling, lower wheat and soybean futures prices and a lack of fresh, positive fundamental news hit the corn market today. Weather in Brazil remains favorable for the next two weeks to get the second-season corn crop up and off to a fast start. Rains will ease hot, dry weather stress by late this week in Argentina with a cooler, drier pattern to return next week. USDA today said 941,811 metric tons (MT) of corn were inspected for export, up from 751,419 MT a week earlier and little changed from a year ago. However, the pace of U.S. corn sales needs to pick up, as seasonally the weekly numbers should strengthen.

Soybeans:  Soybean futures settled mostly 6 to 7 cents lower today, which was more than a nickel off session lows. Meal futures ended $1-plus lower and also closed well off session lows. Soyoil finished 20 to 21 points lower and low-range. Soybean futures were pressured by uncertainties with U.S./China trade situation, as there are just 10 days until the U.S.-imposed March 1 deadline for a deal. While talks are being held in Washington this week and President Donald Trump has said an extension of the deadline is possible, the dwindling timeline is making traders nervous. March soybeans ended today 6 cents under where they closed on Nov. 30 – the day before the 90-day U.S./China trade truce was agreed to. While China resumed buying U.S. soybeans after the truce, price action signals traders are now factoring in record U.S. and global ending stocks. Any trade deal with China should be temporarily price-supportive, but the market must still deal with the reality of record supplies. The other pressuring factor today was Brazilian weather. Most of Brazil is forecast to see beneficial rains over the next week to 10 days. This will help late-maturing soybeans. But with harvest on a record pace, the rains won’t likely increase crop size – only stabilize the Brazilian crop from further losses for now.  

Wheat:  Winter wheat futures fell 12 ¾ to 16 ¼ cents, with spring wheat down 7 ½ to 17 ½ cents, ending near session lows. March SRW wheat fell 14 1/3 cents to close at $4.89 ¾.: U.S. wheat futures dropped to new 13-month lows on Tuesday, as grain traders monitored bearish technical signals as well as falling prices in the global cash wheat market the past week. Instead of opting for U.S. wheat, Syria's General Establishment for Cereal Processing and Trade bought 200,000 metric tons (MT) of Black Sea-origin wheat in its latest international purchasing tender, a government source said Tuesday. Meanwhile, trading house Agrocorp secured a tender to supply 50,000 MT of wheat to Bangladesh and is expected to draw grain from Russia to fulfil the deal, officials with the state grains buyer told Reuters.  USDA reported this morning that only 357,131 MT of wheat were inspected for export last week, down from 562,706 MT a week ago and below 424,231 MT a year ago. Algeria's state grains agency last week bought 600,000 MT of milling wheat at a tender at about $15 per MT cheaper than Algeria’s purchase in January.

Cotton:  Cotton prices rebounded slightly but finished in the bottom half of the daily price range. March cotton rose 19 points to 70.41 cents. Some light mill buying developed today ahead of the USDA export sales report on Friday. March cotton fell to the lowest for the front contract since November 2017 last week, ahead of first-notice day on March 22. The U.S. dollar fell sharply Tuesday, which may help to increase demand for U.S. cotton. Since the government has re-opened, USDA has released three weeks of export sales numbers and those have shown net sales to China of 68,100 bales, including pima. Total export sales over the same period have been 923,200 bales. Traders are looking for Friday’s data for the six weeks ended March 14 to reach 1.5 million to as much as 2.0 million bales. A number at the high end of estimates is probably needed to support a turnaround.  

Hogs: Lean hog futures plummeted today, with the April through July contracts settling their $3.00 daily limit lower. As a result, daily trading limits will be expanded to $4.50 tomorrow. April hogs notched new contract lows today. Over the long holiday weekend, there was plenty of news about African swine fever (ASF), but it was a rumor of the disease that spurred today’s price plunge. A rumor got into the market that some feedstuff had been quarantined in Canada due to ASF. But our sources in Canada say that Egan Brockhoff, the chief vet at the Canadian Pork Council, says the rumor was a created one that is not true. If so, the hog market should see some corrective price action tomorrow. Meanwhile, another winter storm is headed for the Midwest, which could slow marketings and back up supplies.

Cattle: Live cattle futures closed up $1.275 in the April contract today, which was a contract-high close. June live cattle futures were up 55 1/2 cents. March feeder cattle futures gained $1.15 today, while the May contract was up 42 1/2 cents. More winter weather is expected this week from Kansas through Iowa, further eroding feedlot conditions and boosting cattle futures. Meanwhile, consumer demand for beef remains strong amid a healthy U.S. economy. Also, slaughter totaled 596,000 head last week, down from 620,000 a week earlier and 602,000 a year ago. Boxed beef values were higher at noon today, with Choice up 87 cents and Select rising $1.74. Movement was light at 54 loads.

Add new comment