After the Bell: Continued Choppy Consolidation of Recent Corn, Soy Rallies

Posted on 10/16/2019 3:20 PM

Corn: December corn futures closed down 1 1/2 cents at $3.91 3/4. Prices did close nearer the session high today. The corn futures market saw some more profit taking today from the shorter-term traders after hitting a two-month high on Monday. At mid-week the market lacks a fresh, bullish spark to extend the recent rally. Traders are reminded of overall weak export demand for U.S. corn. There are also questions about corn and corn product exports to China in any trade deal. The Midwest will continue to see improving weather for crop maturation and harvesting as precipitation will be infrequent and light in the coming days. The next best rain chance is Oct. 20 to 22. Traders will be eager to hear updated off-the-combine yield reports for fresh clues about yield trends. The weather in South America leans a bit negative. Brazil rainfall is expected to expand across many center-west, center-south and northeastern crop areas this weekend and mostly next week. More will be needed, but it should aid soy planting and reduce concerns about delayed second-season corn planting in January.

Soybeans: Futures finished lower and near session lows. November beans fell 6 cents to $9.28. December soybean meal fell $3 to $304.80 and December oil was up 1 point at 30.40 cents. The bulls are waiting for news to keep the recent rally going and confirm U.S. President Donald Trump’s late-Sunday tweet that China is securing a significant amount of U.S. ag commodities. To date, such confirmation has been lacking and futures are sagging amid the growing Midwest harvest pressure. Talk Chinese crushers were buying some old- and new-crop Brazilian beans today added to the negative price action.  China threatened to retaliate against the U.S. if it passes the House-cleared bill supporting the Hong Kong protestors. The bill is not expected to be enacted, but it is raising tensions between the two countries as negotiators work to put last week’s verbal deal on paper. The U.S. soybean harvest advanced to 26% done as of Sunday, down from 49% on average for the date. It looks dry for the next three or four days and farmers will be going after soybeans before corn. Yield reports from areas not hit by cold temperatures in the past week are reporting better yield results.  

Wheat: Wheat futures finished high-range with gains of 4 to 6 cents in SRW contracts, 2 to nearly 4 cents in HRW contracts and 4 to 5 cents in HRS contracts. Wheat futures rebounded from overnight losses, as seller interest dried up and buying built through daytime trade. Much of today’s gains were corrective in nature, as traders covered short positions. Fresh supportive news was lacking.  Egypt purchased 405,000 MT of Russian, French and Ukrainian wheat at prices higher than it paid in recent tenders. No U.S. wheat was offered. Global tenders continue to be dominated primarily by Black Sea countries and France. There’s some hope that demand for U.S. wheat could increase if global prices continue to rally without a strong move up in U.S. prices.  Due to Monday’s government holiday, traders will have to wait until Friday to get weekly export sales.  

Cotton: Futures closed higher and near session highs in moderate volume. December cotton rose 101 points to 64.54 cents. Futures rose more than 1% as funds continued to cover short positions and a weak dollar provide additional support. The dollar fell to a one-month low against a basket of six currencies today, improving the competitive position of U.S. cotton. Cotton remains supported by Chinese export talk. According to a Chinese Foreign Ministry spokesman on Tuesday, the country has purchased 320,000 metric tons of cotton to meet market demand as inventories are set to fall to an eight-year low. However, President Trump said on Wednesday that he likely would not sign any trade deal with China until he meets with China President Xi Jinping in November. The Cotlook A Index, the average of the five cheapest cotton quotes from 18 global locations, strengthened and added to a positive backdrop for rising futures.  

Hogs: December lean hog futures closed down $1.50 at $70.625 today. Prices closed near mid-range. The hog market remains cautious about the unfinished U.S.-China trade deal. However, upbeat comments from President Trump on the matter at midday today did help to lift futures off their daily lows. China indicated it has purchased 700,000 MT of U.S. pork and traders will be looking for big sales in Friday’s weekly update (delayed by one day due to the U.S. holiday Monday). The divergent data from China and the United States adds to confusion in the U.S. livestock market over whether closely followed weekly U.S. export sales data includes hog carcasses, which are preferred by Chinese importers over other cuts. "There's been a lot of confusion out there about whether carcasses are covered or are not covered," a USDA official who was not authorized to speak to the press told Reuters on the sidelines of a USDA data users meeting in Washington on Tuesday. However, domestic hog prices are trading the equivalent of $250, so look for continued underlying support and Chinese buying.

Cattle: Live cattle futures saw two-sided trade today, but the market ultimately ended high-range with gains of $1.35 in the front-month and of 5 to 42 ½ cents in deferred months. Feeder cattle also spent time on either side of unchanged before finishing midrange with modest gains in most contracts. Cattle futures saw a mix of followthrough buying and profit-taking today. Momentum is to the upside, with bulls encouraged by rising beef prices, recent gains in the cash market with higher trade anticipated again this week, and the potential for bigger beef exports to Asian nations working to fill a protein gap left by African swine fever. But after a pretty lengthy run to the upside, the market could be due for a corrective setback. That had traders booking some profits today.  Increasing concern about headwinds for the U.S. and global economy could also trip up market bulls. The International Monetary Fund slashed its forecast for global economic growth and is now calling for a 3% rise in global GDP in 2019, the slowest rate of expansion since the Great Recession of 2009.  

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