After the Bell: Beans Show Small Gains in Quiet Trade, While Grains Sink

Posted on 10/28/2019 2:35 PM

Corn: December corn futures closed down 2 3/4 cents at $3.84 today. Prices closed near the session low and hit a two-week low today. The corn bulls continue to fade, technically, and need to step up to show power this week to avoid more serious near-term chart damage being inflicted. The market saw selling pressure today from field reports suggesting yields may not be as poor as first expected. However, losses were limited as harvest in the eastern Midwest was slowed by rain during the weekend with more wet, cold and even snowy weather hitting much of the Midwest this week. Analysts on average expected the USDA this afternoon to report the U.S. corn harvest as 43% complete as of Sunday, which is still well behind average. U.S. corn export inspections were again uninspiring this week, at 380,660 MT for the week ending Oct. 24.  

Soybeans: Soybean futures finished 1/2 to 2 cents higher in most contracts today, though they ended near low-range. November soybeans gained 1/2 cent to $9.20 3/4. Meal futures ended 70 cents to $1 higher, while soyoil dropped 12 to 18 points. Soybean futures were supported by optimism on the U.S./China trade front as the two sides are reportedly close to finalizing Phase 1 of the deal. Adding support was a strong weekly export inspections figure of 1.568 MMT that easily topped the upper end of pre-report estimates. But weakness in the corn and wheat markets limited buyer interest. Funds expanded their net length in the soybean market in the week ended Oct. 22. With export demand for soybeans improving, funds are comfortable with a net-long stance, whereas they are comfortably short in the corn market given its export struggles. Soybeans are going to need the corn market to participate to the upside if the market is going to move the next leg higher.  

Wheat: Futures opened steady to firm and fell, closing in the bottom third of the daily price range. December SRW futures fell 6 cents to $5.11 ¾ with December HRW falling 5 ¾ to $4.17. December spring wheat futures were down 7 to 9 cents. SRW December futures fell to an eight-session low today as funds sold recent purchases. Funds flipped to a net-long SRW position of 12,099 contracts in the week ended Oct. 22, the first bullish net position since August and most since June, according to weekly CFTC data on Friday. Funds remain modest net shorts in both HRW and spring wheat futures. Prices are pressured by worries that Argentina farmers will quickly sell supplies before a new president raises export taxes in December to help fund rising government debt burdens. Argentine bond markets fell on Monday after President Mauricio Macri was ousted in an election by Peronist rival Alberto Fernandez, though economists said the impact could be cushioned by a stronger-than-expected showing by the conservative leader. The Argentine peso rose more than 2.5% against the dollar earlier today before giving back some of the gain after the central bank limited peso exchanges to $200 per month, down from $10,000.  Monday’s weekly USDA wheat export inspections were solid but within expectations at 523,262 MT. Shipments are up 23% from a year ago and on pace to reach the USDA annual projection for 950 million bushels. Mexico is the largest destination for U.S. wheat, followed by the Philippines, Japan and Nigeria.  

Cotton: Cotton futures closed narrowly mixed, paring losses late. December cotton fell 11 points to 64.79 cents a lb. Prices were under pressure from signs much of the recent rally was fueled by fund short covering and that may be ending. Funds cut net-short positions to 4,629 contracts as of Oct. 22, down from 11,377 a week earlier and the smallest since April 30. Funds held a record net short of 47,428 contracts on Aug. 6 and have cut that position in 10 of the past 11 weeks. President Donald Trump said he expected to sign a significant part of the trade deal with China ahead of schedule but did not elaborate on the timing. The U.S. president said the Phase 1 portion would "take care of the farmers" and "also take care of a lot of the banking needs.” Chinese officials confirmed over the weekend that the U.S. and China are close to finalizing the “Phase 1” deal Trump and Xi Jinping are expected to sign on the sidelines of a Nov. 16-17 meeting in Chile of the Asia-Pacific Economic Cooperation. However, until China starts to increase U.S. purchases, traders feel the market has reached fair value given growers still have a large unsold portion of this year’s crop to move. In addition, China is willing to increase its imports of agricultural and industrial goods from Brazil in order to enhance bilateral trade, Chinese Vice Premier Hu Chunhua said on Friday.  

Hogs: Lean hog futures opened under pressure and some contracts took out last week’s lows in early action, but that triggered bargain buying that helped return the market to positive territory and a high-range close. Futures settled 12 ½ to 72 ½ cents higher with the exception of the lightly-traded May contract that posted a 20-cent loss. Nearby futures led gains. Bull spreading helped nearby contracts to lead to the upside today. Futures have retreated in recent days as the market is getting impatient waiting for big purchases of pork from China. And while trade rhetoric on the U.S./China front has been positive and big purchases of U.S. farm goods have been promised, details have been scarce, and the market needs consistent big sales tallies to work higher. Pressure of late has also stemmed from a setback in pork bellies of late. Over the past week, belly prices have slid more than $13. Prices were able to edge higher Friday and this morning, however. Cash hog bids have also slipped in recent days amid massive slaughter tallies.  

Cattle: December live cattle futures closed up $0.525 at $116.60 and hit a six-month high today. November feeder cattle futures gained $0.35 at $145.725 and hit a two-week high. The U.S. stock markets saw its two major indexes—the S&P 500 and the Nasdaq—hit record highs today. The Federal Reserve is expected to ease its monetary policy at its FOMC meeting conclusion Wednesday afternoon. These elements are good evidence a growing U.S. economy will keep consumer demand for beef strong in the coming months. Boxed beef prices marched higher last week and continued with gains to start this week, with Choice jumping $2.07 and Select gaining 18 cents.  The Choice-Select grade spread widened to $27.49 today, which is also a bullish signal. Movement was slow at midday, at 35 loads. There was talk packers were bidding $112.00 for cash cattle Saturday, suggesting higher cash bids this week. The bulk of cash cattle trading last week took place at an average $110.13, which is up 40 cents from the previous week.

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