After the Bell: Choppy Trade and Lower Grain Closes on Weather, Exports

Posted on 08/15/2019 2:59 PM

Corn: Corn futures finished 1 3/4 cents higher in the September contract and fractionally firmer in deferred months. Futures ended midrange on the day. Corn futures closed higher for the first time in a week on light corrective buying. But the limited buyer interest and pullback from session highs shows how difficult it’s going to be for bulls to gain any significant traction after USDA’s bearish reports on Monday. The upside is limited to mild corrective buying until traders have a fundamental reason to flip to the buy side again. Weekly export sales weren’t strong enough at 56,100 MT for 2018-19 and 307,600 MT for 2019-20 to encourage buying. With corn futures around 50 cents lower than they were last week, there should be a pickup in export sales activity in next Thursday’s report. If not, it would signal foreign buyers are going to wait to see if prices drop further before actively forward booking supplies.

Soybeans: November soybeans fell 7 1/4 cents to $8.70 3/4 today. September futures were down 7 1/2 cents at $8.58. Nearby meal futures lost about $3.00 and bean oil was down 10 points in the nearby. Rains in the Corn Belt weather forecast have prompted selling pressure this week, with the price downdrafts in corn and wheat also spilling over into the soybean market. In addition, long term weather maps through November released today favor a warm fall in the Midwest. That may squelch talk of an early frost in the region, at least for now. U.S./China trade negotiations appeared to take a step backward today when China vowed to retaliate for the new U.S. tariffs, some of which go into effect on September 1. President Trump late Wednesday implied any U.S.-China trade deal could hinge on how mainland China handles the civil unrest in Hong Kong. USDA reported net sales reductions of 109,900 metric tons (MT) of soybeans last week, including 422,700 MT of reductions by China and 124,000 for unknown destinations. New-crop sales rebounded to 817,400 MT, topping trade estimates for 100,000 to 400,000 MT, but those did not include any Chinese buying. The NOPA U.S. soybean crush in July topped most trade estimates and surged from a 21-month low in June to the sixth highest for any month on record.   

Wheat: Winter wheat futures were mixed, realigning spreads. December SRW wheat fell 3 3/4 cents to $4.74 1/2 and December HRW wheat rose 3 1/2 cents to $4.04 1/4.  Spring wheat futures were down about 3 cents.  HRW gained on SRW after the September contract dropped to the biggest discount since before 1980. The market continues to struggle as adverse weather earlier this summer appears to have caused less damage to European, Black Sea and Australian wheat crops. Weekly wheat sales slipped slightly from a week ago with 462,200 MT sold last week, but near the top end of trade estimates, USDA data this morning showed. The department also reported 12,300 MT in new-crop sales. Egypt's state grains buyer, the General Authority for Supply Commodities, said it bought 295,000 metric tons (MT) of wheat on Thursday at an international purchase tender for the grain. GASC said the purchase was comprised of 175,000 MT of Russian wheat and 120,000 MT of Ukrainian wheat. At its last wheat tender on Aug. 6, GASC bought 415,000 MT of wheat.

Cotton: Futures posted small gains but near session lows. December cotton rose 5 points to 59.62 cents.   Cotton export sales rose to the highest since mid-May last week as lower prices helped to spur new buying. Sales for 2020-21 also improved as new contract lows encouraged some bargain buying, USDA data on Thursday showed.  Negative comments on U.S/China trade talks kept a lid on today’s rally. China on Thursday vowed to counter the latest U.S. tariffs on $300 billion of Chinese goods but called on the United States to meet it halfway on a potential trade deal, as U.S. President Donald Trump said any pact would have to be on America's terms. The Chinese finance ministry said in a statement that Washington's tariffs, set to start next month, violated a consensus reached between Trump and Chinese President Xi Jinping at a June summit in Japan to resolve their disputes via negotiation. U.S. retail sales surged in July as consumers bought a range of goods even as they cut back on motor vehicle purchases, helping to assuage financial market fears that the economy was heading into recession.  

Hogs: October lean hogs closed down $1.775 at $65.00, with December futures down $1.025 at $63.75. Prices finished near their daily lows. Lean hog futures prices opened firmer on strong weekly USDA export sales but failed to hold the early gains amid keener uncertainty about U.S.-China trade negotiations. China Thursday vowed to retaliate for the new U.S. tariffs, some of which go into effect on September 1. Meantime, President Trump implied any U.S.-China trade deal could hinge on how mainland China handles the civil unrest in Hong Kong.  USDA’s weekly pork sales rose 25% above the prior four-week average to 20,400 metric tons (MT) and included 10,200 MT sold to China. Shipments slipped to 26,400 MT, with Mexico taking 7,200 MT and China taking 6,800 MT. Cash hogs fell another 56 cents on Wednesday but today's wholesale pork cutout values rose 57 cents. Domestic pork sales were a light 127.57 loads at midday today.

Cattle: Live cattle futures closed mixed and near session lows while feeders were higher. October cattle rose 2 ½ cents to $98.525 with December sliding 27 1/2 cents to $104.275.  November feeder cattle rose 25 cents to $133.65. Market strength remains shaky with the uncertainty about how long the Tyson processing planting in Kansas will be closed after a fire last Friday. Tyson officials have hinted it may be months, not weeks before production returns to the plant that slaughtered about 5% of the daily cattle. Slaughter the first four days of this week is down 13,000 from a week ago and 11,000 head from a year ago, USDA data show. Growing global recession fears remain an overriding negative factor. After gaining almost $16 the first three days of this week, Choice beef rose $2.77 at midday on Thursday on modest sales. Packer margins are estimated at $297.55, almost double what it was a week earlier, according to Carcass weight data released today for the week ended August 3 reported steer carcasses weighed 872 pounds, 8 pounds below a year ago and lightest since 2013 for the week.

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