After the Bell: Timid Corn, Soy Rebounds Waiting on Fresh Fundamental News

Posted on 10/29/2019 2:58 PM

Corn: December futures opened lower and close higher. December corn was up 2 ¼ cents at $3.86 ¼. The corn market was pressured by harvest hedge pressure with just 41% of the crop harvested as of Oct. 27, well behind the normal 61% average the past five years. Not much harvest will get done the next 10 days with rain from the Delta to the East coast this week, then more snow next week across the Plains and Midwest. The calendar spreads continue to firm, a sign of both overall light farmer sales and better demand potential. While export tenders continue to be quiet, prices are getting close to competitive on the world markets. Some European feeders are switching from feed wheat to cheaper Ukraine corn. Argentine farmers have halted sales after recent increased marketing ahead of the weekend elections that ushered in a new president, who may raise taxes on grain exports. The stronger Brazilian real has also halted farmer selling. As a result, U.S. export prices for January are close to competitive with world prices for delivery to Asia.

Soybeans: November soybean futures prices fell 2 1/2 cents today to $9.18 1/4. January beans lost 2 cents to $9.33 1/2 and closed at a three-week low close. December soybean meal closed down $1.00 at $303.00 and December bean oil gained 22 points to 31.00 cents. The soybean futures market was pressured in part today by better rains forecast for Brazil and Argentina next week. However, until then one-third of the Brazilian crops will see increasing moisture stress, along with about 15% of Argentina's soybeans. Some of the recent weakness in soybean futures reflects big speculative “funds” reducing their net long positions that had last week risen to the highest level since June 2018. Soybean cash basis levels remain strong, which is limiting the downside in futures.The downside was also limited today as the South China Morning Post reported President Trump and Xi Jinping will meet Nov. 17 in Chile to sign an interim trade deal. However, grain traders are leery of talk about a deal. They want to see actual new sales. USDA did not report any new sales in its daily reporting service this morning.  

WheatSRW wheat futures posted fractional losses today, HRW futures ended 1 1/2 to 2 cents higher and spring wheat futures finished 1 1/4 to 2 cents lower. Two-sided price action was seen in the wheat market today, as neither bulls nor bears could gain a decided upper hand. The Egyptian tender, in which the country bought a total of 235,000 MT of wheat from France, Ukraine and Romania, had mixed results. No U.S. wheat was offered as prices are higher than those origins. But the purchase prices from the tender were up roughly $5 to $6 per MT from Egypt’s tender just a couple weeks ago. Rising international prices should provide a floor of support under the market. While wheat exports are off to a strong start to the 2019-20 marketing year relative to last year, there are concerns about demand for U.S. wheat slowing. Today’s price action didn’t reflect results from USDA’s initial winter wheat crop ratings, which showed HRW ratings about in line with the five-year average, while SRW ratings were lower than normal for late October.

Cotton: Cotton futures favored the upside for much of the day, but nearby contracts softened into the close and settled 1 to 7 points lower. Deferred months held onto slight gains of 15 to 25 points. Cotton futures continued to chop sideways as traders look ahead to USDA’s Nov. 8 reports. Cotton can add to yields late given ideal weather, but a recent freeze brought the growing season to an end for many regions, reining in production forecasts. USDA trimmed the amount of cotton rated “good” to “excellent” a percentage point yesterday to 40% and it reported harvest was 46% complete. Farmers have been slow sellers of cotton given unattractive prices. Producers and market bulls continue to hold out hope U.S. cotton will be included in China’s big ag purchases as part of Phase 1 of the trade deal. President Donald Trump has said efforts to paper the partial agreement have been going well and he expressed hopes of signing the measure mid-November. But just when any commodity buys might take place remains a question mark.

Hogs: December lean hog futures fell $1.325 to $64.325 today and closed at a six-week-low close. February hogs lost $1.35 to end at $72.625. Big hog slaughter numbers continue to pressure futures prices, with packers enjoying strong margins. Slaughter on Monday rose 21,000 above a year ago and 3,000 above last week. The national average cash hog price fell $1.10 Monday and today the wholesale pork cutout value rose 75 cents on gains in picnics and bellies. Sales at midday today were decent at 208.24 loads. Traders are awaiting Thursday morning's USDA weekly export sales report for new pork exports to China. We are a bit concerned about a slowing down of U.S. pork exports into the end of the year. The market is still waiting for details regarding big Chinese buys of U.S. agricultural goods and for forward progress on the U.S./Mexico Canada Agreement. Concern is mounting that politics could get in the way of the latter being cleared by year-end.

Cattle: Cattle and feeder cattle futures closed narrowly mixed on Tuesday. December live cattle rose 22.5 cents to close at $116.825 and November feeder cattle were down 2.5 cents to $145.475. The beef market is on fire. Wholesale Choice beef cutout values jumped another $3.38 and Select rose $2.71 on Tuesday. Sales were sluggish at midday but the further widening of the Choice premium to Select signals tightening market-ready cattle supplies and further upside potential in cash markets. This morning packer margins were estimated at $298 per head, up from $243.50 a week ago, according to HedgersEdge.com. The profit incentive to slaughter as many cattle as possible will continue to lift the cattle futures. This week’s slaughter is down 2,000 head from both a week ago and a year ago.

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