After the Bell: Wheat Leads Grains Higher; Cattle Rally

Posted on 10/17/2019 3:06 PM

Corn: Corn futures posted an upside day of trade and settled midrange about 2 to 3 cents higher on the day. A pullback in the U.S. dollar index pulled some money into commodity futures today. In addition, news that USDA will resurvey producers about harvested acres in North Dakota and Minnesota spurred talk damage from recent snowfall may be more extensive than the market thought. Concerns are also mounting about slow soybean planting in Brazil to date, which will delay planting of the country’s second-season corn crop. That would likely limit safrinha corn crop prospects. But rain is expected across central and northeastern areas of the country over the weekend and into next week. On the other hand, a lackluster demand story for corn continues to cap futures’ upside. The market will have to wait until Friday for the Weekly Export Sales Report, but ethanol production data for the week ended Oct. 11 reminded of struggles for the biofuel sector. The Energy Information Administration reports production climbed 8,000 barrels per day to 971,000 bpd. But ethanol stocks also climbed 837,000 barrels to 22.06 million barrels in the latest reporting period.

Soybeans: Soybean futures finished 1 1/4 to 3 1/2 cents higher through the August 2020 contract, though that was in the lower portion of today’s range. Meal futures posted gains of $1.50 to $2. Soyoil dropped 10 to 30 points.  Soybean futures followed the wheat market higher today. Additional support came from news USDA will resurvey farmers in North Dakota and Minnesota for harvested acres following the recent blizzard. Traders sense USDA’s soybean crop estimate will decline again next month on reductions to harvested acres and yield. Buyer interest was somewhat limited by uncertainty with the trade deal the U.S. and China verbally agreed to last Friday. While China reportedly pledged to buy $40 to $50 billion of U.S. ag goods, the timeline and other specifics must yet be agreed to and put into writing. Traders will likely remain somewhat skeptical until details on amounts and delivery periods are known and the deal is signed.

Wheat: December SRW wheat futures closed up 12 1/4 cents at $5.25 1/2 today and hit a three-month high. December HRW wheat futures ended up 6 1/4 cents at $4.31 1/4 and hit a nine-week high. Spring wheat gained 1 1/2 cents.  The wheat futures markets are being supported by weather concerns in the U.S., Canada, Australia and Argentina. There were roughly 400,000 acres yet to be harvested in the Northern Plains as of Sunday and many may not be fit for collection. There are also significant areas of Canada that have been hurt by cold, wet and snowy weather the past two weeks. Global wheat supplies are shrinking but remain at record levels. World prices are leading and that may help to bring buyers into the market to cover additional forward needs. The weaker dollar on the world foreign exchange market has also led to speculative buying and short covering in wheat futures. The U.S. dollar index hit a six-week low today. Egypt purchased 285,000 MT of wheat from Russia, 60,000 MT of wheat from France and 60,000 MT of wheat from Ukraine Wednesday. Prices were about $9 per ton higher than the purchase two weeks ago. Saudi Arabia’s state grain buyer is seeking 595,000 MT of wheat in a tender.


Cotton: Cotton futures finished high-range with gains of 17 to 45 points through the May contract. Some minor declines were posted in far-deferred contracts. Cotton futures faced some early profit-taking following gains the two previous days. But seller interest under the market was light, which allowed cotton futures to push higher into the close.  Cotton futures are getting some support from Chinese comments that cotton will be included in its ag purchases tied to the agree-to-trade deal. But specific details of the deal are still lacking and it must still be signed, so there’s a level of trepidation among traders.  USDA’s weekly export sales, which were delayed one day due to Monday’s government holiday, will give the market some direct tomorrow. Export sales likely need to be around 200,000 bales or higher to avoid a disappointed response.  

Hogs: Futures were moderately to sharply lower, led to the downside by the nearby contracts. December hogs fell $2.475 to close at $68.15, with February falling $1.20 to $77.65. The story remains record U.S. slaughter supplies versus potential increased Chinese purchases. Prices fell after White House economic adviser Larry Kudlow said on Thursday that China's "serious commitment" to buy $40 billion to $50 billion worth of U.S. agricultural goods as part of a phase 1 trade deal would depend in part on private companies and market conditions.  Speaking to reporters at the White House, Kudlow said the first phase of a trade deal, revealed last week, may be signed at the Asia-Pacific Economic Cooperation (APEC) forum next month in Chile, noting that the figures relating to Chinese purchases were a "considered number."  When asked if China had guaranteed the purchases, he pointed to other factors that weigh on the total amount. Slaughter the first four days of this week is up 10,000 head from a week earlier and 66,000 head more than a year earlier. Cash hogs were slightly lower today, adding to worries about supplies. Wholesale pork cutout values at midday fell $1.04 on moderately active sales with losses led by hams, bellies and ribs.

Cattle: December live cattle futures closed up $0.50 at $114.375 today. Prices closed at a 2.5-month high close. November feeder cattle futures finished off $1.60 at $144.325. Live cattle futures remain supported by positive cash market fundamentals and a more bullish near-term chart posture. Wholesale beef prices were firmer today, with Choice up 51 cents and Select gaining 6 cents. The Choice-Select spread remains at a wide $27.36, suggesting very current marketings of animals. Sales today were 55 loads. Cash cattle prices last week were up $1 to $2 and more gains had been expected this week before today’s explosion at a Cargill processing plant in Dodge City, Kansas that injured two and suspended operations for at least today. Some packers did buy larger volumes of cattle with time last week and that may limit market strength the next two weeks. Traders will closely examine Friday morning’s weekly USDA export sales report, delayed for a day by the U.S. holiday on Monday.  

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