After the Bell: Corn Slides, Soy Rallies Ahead of China Talks, USDA Reports Next Week

Posted on 10/04/2019 2:53 PM

Corn: Corn futures dropped 2 3/4 to 4 cents through the July contract today. But for the week, December corn futures still gained 13 1/4 cents. Price action early next week could be key to the fall price trend for corn. Futures need to push above this week’s highs soon to confirm the bull flag formation and attract fresh chart-based buying. Numerous technical studies and analysis point December corn futures to a test of the $4.00 level, but last week’s highs must be cleared first. USDA will update its corn crop estimate and new-crop balance sheet next Thursday. Traders are expecting a smaller corn crop and significant drop in new-crop carryover after Sept. 1 stocks were more than 300 million bu. less than the trade expected. There’s potential for a hard frost/freeze event over a large portion of the Corn Belt late next week. If that happens, a significant portion of the corn crop would see the growing season end before the crop has reached maturity.

Soybeans: Soybean futures backed off session highs late but still finished 3 to 4 1/2 cents higher in most contracts. For the week, November soybean futures surged 33 1/4 cents. Traders have a lot to focus on next week. USDA will update its soybean crop estimate on Thursday, with traders expecting a smaller number. Combined with smaller-than-anticipated stocks as of Sept. 1, that is expected to trim new-crop ending stocks. Weather will also be in focus as forecasts signal a major cold front will move into the Midwest and could end the growing season for a large portion of the region. In addition, U.S. and Chinese trade talks will take place in Washington. There will be no shortage of potentially market-moving news, so price action could be volatile.

Wheat: December soft red winter wheat futures closed up 1 3/4 cents at $4.90 1/2. For the week, December SRW gained 3 1/4 cents. December hard red winter wheat futures lost 1 3/4 cents today to close at $4.04. On the week, December HRW dropped 3 1/2 cents. Spring wheat fell 11 ½ cents. Trading in the grain markets is likely to be a bit quieter early next week, ahead of the Thursday (Oct. 10) USDA monthly supply and demand report, which is expected show U.S. wheat stocks at the end of the 2019-20 marketing year at 1.011 billion bushels, according the average of a Bloomberg survey of analysts. That compares with USDA's September report reading of 1.014 billion bushels.

Cotton: Cotton finished slightly higher Friday, extending its weekly gain. December cotton rose 7 points to $61.67 and up 77 points for the week. Cotton futures built on the first monthly gain since April to start October. December cotton futures rose 200 points in September after making new contract lows in August. The market is finding light support from worries the U.S. crop isn’t getting any bigger and signs of slowly improving export demand. There’s still time for some of the smaller bolls to benefit from recent rains to make cotton and it looks like a slightly drier and warm October will facilitate harvesting. Cotton export sales in the week ended Sept. 27 rose 15% from the prior week and were up 49% from the four-week average. Increases were reported for Pakistan, Vietnam, Indonesia and Turkey. There were no new sales to China. Two-months into the marketing year and sales for the season are down 3% from a year ago but are equal to 57% of the USDA projection for the season, up from the prior five-year average of 50%.

Hogs:  Mixed finish with pressure in the front months and higher in deferred contracts. December hogs fell 85 cents today to close at $67.25 and down $1.60 for the week after rising to an eight-week high to start the trading week. Cash hogs moved higher this week to narrow the December futures premium. Further strength is needed to attract to new interest. The setback this week still looks corrective after December futures held support above $66 today and closed near midrange. Fresh pork prices also moved higher this week on moderately active demand.  Prices were under pressure from expanding slaughters. This week’s kill was estimated at 2.669 million head, up 23,000 head from last week and a new high for the year. Next week’s focus will be all about reports from the U.S.-China trade talks in Washington.

Cattle: December live cattle futures closed down 5 cents at $110.775. Prices did finish the week near the week’s high, which was a nearly two-month high. For the week, December live cattle gained 20 cents. November feeder cattle futures closed down 72 1/2 cents at $141.375. Prices ended in the middle of the week’s trading range. On the week, November feeders lost $1.60. Cattle futures next week may continue to consolidate recent gains, waiting for cash markets to catch up with premium-priced futures. Boxed beef prices were slightly lower today, with Choice slipping 6 cents and Select down 7 cents. The still-wide $24.86 spread between Choice and Select grades continues to suggest very current cattle marketings. Light cash cattle trade started Wednesday in Texas and Kansas at $2 higher prices of $105 and cash prices pushed up to $106 in these states yesterday. Sales volume is still on the light side. Live cattle futures prices this week pushed up to the highest level in nearly two months, with packers moving bids up $1 to $2 to acquire inventories even after buying ahead the prior two weeks.



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