After the Bell: Corn, Beans and Wheat Quietly Mixed Ahead of USDA Reports

Posted on 10/07/2019 2:43 PM

Corn

Price action: December corn futures closed up 2 1/4 cents at $3.87 today. Prices closed near the session high. There are two key elements grain traders are focusing upon that occur later this week: forecast snow and cold temperatures for the High Plains and northern Corn Belt, and the USDA monthly supply and demand report. This week’s expected snow following last week’s heavy rains promise an extended harvest season, with cutting likely to last until Thanksgiving. The growing season will probably come to end across the Dakotas and parts of Nebraska, Minnesota and Iowa by late this week as temperatures are forecast to dip to 28 to 32 degrees.  Look for underlying support the next two sessions from fund short covering before Thursday’s USDA production report. A Dow Jones survey of traders ahead of Thursday’s report found an average guess for U.S. corn yield at 166.8 bushels per acre and the average guess for production at 13.611 billion bu. this year.  

Soybeans: November soybeans lost a penny to close at $9.15 1/4 today. December meal was down $1.60 at $302.10 and December bean oil gained 20 points to 30.06 cents. Soybean traders have their eyes on end-of-the-week events that include a much-anticipated USDA report on Thursday, and cold and even snow forecast for the upper Midwest Friday and into Saturday. The big speculative “funds” remain in short-covering mode ahead of the USDA Crop Production Report on Thursday that is expected to show a smaller soybean crop and declining U.S. ending stocks. A Dow Jones Newswires survey showed the average trade estimate for this year's U.S. soybean production is 3.571 billion bushels and an average yield of 47.1 bushels an acre. This week’s expected snow following last week’s heavy rains promise an extended harvest season, with harvest likely to last until close to Thanksgiving. The growing season will probably come to end across the Dakotas and parts of Nebraska, Minnesota and Iowa by late this week as temperatures are forecast to dip to 28 to 32 degrees.  

Wheat: Futures closed mixed with winter wheat ending near session lows while spring wheat ended slightly higher. December SRW futures fell ¾ cent to $4.89 3/4, and December HRW was down 1 ½ cents at $4.02 ½. December spring wheat finished up 2 ½ cents at $5.38 ½. Winter wheat failed to follow the strength in corn and European prices today as exports continued sluggish. Wheat inspected for export fell to 385,259 metric tons (MT) from 502,915 MT a week ago and down from 448,294 MT a year ago. Cumulative inspections for the season are 21% ahead of last year but slightly behind the pace needed to reach the USDA export projections.  Underlying support stems from ideas that exports may improve in the second half of the season. European wheat futures in Paris rose on Monday, hitting a new two-month high in late trade as markets awaited crop data following an export-fueled rally last week. In France, this week will also see the farm ministry update its estimates of this year's grain production and farm office FranceAgriMer issue revised supply and demand projections, including for exports.  

Cotton: Cotton futures finished 15 to 17 points higher through the May contract. Price action was quiet in the cotton market today and is likely to stay that way. While the market may react to weekly crop condition/progress data, traders will likely be consumed by positioning ahead of USDA’s October crop reports on Thursday. Traders are also cautiously awaiting details from this week’s U.S./China trade talks. A drop in crop condition ratings over the past month suggests USDA is likely to lower its yield estimate in Thursday’s Crop Production Report. But a major decline in yield seems unlikely and barring any late-season weather/crop problems, yields could increase in future months. The average pre-report trade estimate signals a 170,000-bale cut to crop size is expected.  

Hogs: Lean hog futures faced heavy pressure to start the week and futures settled low-range with losses ranging from $1.45 to $3.00 through the July contract. The limit-lower close for December and February lean hogs means limits will expand to $4.50 tomorrow.  Last week’s big kill caught the market’s attention. USDA estimates 2.669 million head were slaughtered last week, a 23,000-head increase from the week prior and a 169,000-head gain from year-ago. There is concern about how well the market can absorb all of that pork, especially with much-anticipated Chinese business taking a long time to develop. Talk continues that China is increasing its pork buys ahead of trade talks with the U.S. this week, but confirmation of those purchases remains elusive. Despite slaughter concerns and pressure on futures, the product market got off to an impressive start to the week. A $13.79 surge in belly prices helped to push the pork cutout value $3.26 higher this morning. And cash hog bids reportedly strengthened this morning.  

Cattle: Fed cattle closed mixed and feeders were slightly to moderately lower. December live cattle rose 42.5 cents to close at $111.20 with November feeders sliding 45 cents to $140.925. Last week’s negotiated cash cattle trade totaled an active 93,000 head. The 5-area average rose $2.37, but at $107.30 was $1.70 below the cash top paid Saturday morning at $109 in western Nebraska. This week cash is expected to average higher than last week, picking up another $1.  Wholesale beef cutout values slipped lower again Monday at midday, with Choice the lowest since July and the Select making a new low for 2019. Slaughter weights remain below average and the spread between Choice and Select is above $24 and signals feedlots are current. While packer margins have narrowed more than $100 from the record peaks three weeks ago, margins remain very profitable.

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