Ahead of the Open: Corn, Soy Try to Hold Support Ahead of President Trump's NY Speech at Noon

Posted on 11/12/2019 6:12 AM

Grain Calls

Corn: Steady to mixed
Soybeans: Steady to mixed
Wheat: Up 1 to 3 cents.

General Comment:  Corn futures are trying to hold above new one-month lows set on Monday, but soybeans have extended declines to the lowest since Sept. 30 overnight. Volume remains light as traders wait on today’s update on a slow-moving U.S. harvest and a speech by U.S. President Donald Trump for clues on trade talks with China. Wheat was also little changed, holding above a one-week low touched on Monday.   
The grain markets need some good news. Market bulls were on the defensive Monday as concerns rose that the U.S. and China are struggling to get an initial trade deal done. Stock and commodity investors will be very closely watching Trump’s speech to the New York Economic Club at noon in which he may address the U.S-China relationship. One place where there could be some good news is a likely decision by the administration to push for congressional passage of the U.S.-Mexico-Canada accord and to delay the imposition of tariffs on European automobiles.

Soybeans and corn drifted lower yesterday on improving weather outlooks for both collection of the U.S. crops as well as development in Brazil and Argentina. Open interest rose about 4,500 contracts for corn and 7,300 for soybeans yesterday, according to preliminary CBOT data. That is a sign of new short positions rather than just long liquidation

USDA reports this week are delayed 24 hours show the markets will get some fresh export news at 10 a.m. CST with the weekly Grains Inspected for Export report and the Crop Progress Report will be out at 3 p.m. Look for good soybean shipments, average wheat inspections and continued weak corn demand. Look for corn harvest to be 65% to 70% completed as of Sunday and Soybean collection 87% to 80% done.

With investors waiting for the next China trade headline and growing violence in Hong Kong, equity markets have been relatively subdued so far today. Overnight the MSCI Asia Pacific Index added 0.4% while Japan’s Topix index closed 0.3% higher. In Europe, the Stoxx 600 Index was 0.2% higher. S&P 500 futures pointed to a small gain at the open even as the 10-year U.S. Treasury yield rose to 1.94%, nearing a new three-month high. 10-year yields are now above the dividend yield on the S&P 500, normally a sign of money that might flow back into bonds. Gold slipped further as investors dump metal holdings

Investors could face a bumpy ride next year as geopolitical tensions, including the U.S.-China trade war, continue to bring volatility to the markets, according to Goldman Sachs Asset Management. But, the global economy, while at a late stage in the economic cycle, is likely to avoid a recession next year, meaning there are opportunities for investors in equities, according to James Ashley, head of the asset management business’s international market strategy team.

USDA daily export sales reporting service said private exporters did not report any new large new sales.

Corn: December corn opened slightly higher but is back near the opening after failing to build on early short covering strength. 

SoybeansJanuary beans opened lower and set new six-week lows last night before finding some light buying interest. Brazilian farmers as of Nov. 7 had finished planting soybeans on 58% of the area estimated to be sown with the crop in the 2019-20 growing season, according to agricultural consultancy AgRural. That was slightly ahead of the 57% five-year average for the date and a 12 percentage-point increase from a week earlier.

Wheat: Futures are trying to build a new base of support but that will require additional signs of slow improvement in exports to move much higher. Agricultural consultancy SovEcon forecast a promising 2020 harvest and said the area of winter wheat is estimated at a record 16.7 million hectares, up from 15.8 million a year ago. The crops start the winter in the condition, which is significantly better than average and better than last year. Soft wheat exports from the European Union in the 2019/20 season that started on July 1 had reached 9.7 million tons by Nov. 10, official data showed, that was 55% above the volume cleared by Nov. 4 last year.

Livestock Calls

Cattle: Steady to firm
Hogs: Weak

Cattle:  Cattle are expected to start firmer and test last week’s highs. The market remains supported by the strong beef market. With the government closed Monday in observance of the Veterans’ Day holiday the market will key off the morning data update.  

Hogs:  Lean hog futures closed mostly lower Monday on worries about record supplies and China trade. China's pork prices fell sharply last week for the first time in 10 months, as reports of fresh disease outbreaks in the northeast led to more hogs being sent for slaughter just as consumers cut back on pricey meat. Consumption has declined about 30% since October due to the high prices; about 10% of carcasses, and sometimes as much as 20%, were being returned to slaughterhouses unsold because of high prices.

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