After the Bell: Corn, Soy Extend Declines; Wheat Rallies

Posted on 11/18/2019 2:57 PM

Corn:  Futures ended down about 3 cents and fell to more than eight-week lows. December corn fell 3 ½ cents to $3.67 ¾ with March down 3 ½ cents to $3.77 ¼. Corn prices were pressured all day on intermarket spreading, harvest hedge selling and more chart-based fund sales. Stocks and commodities both broke this morning after a CNBC report said the mood in Beijing about a trade deal is growing pessimistic because of President Donald Trump’s reluctance to roll back tariffs. The market ignored the USDA daily export sales reporting service reporting that private exporters sold 132,000 metric tons (MT) of corn for delivery to unknown destinations during the 2019-20 marketing year. Corn inspected for export in the week ended Nov. 14 came in near expectations at 637,400 MT, or 25.1 million bu. Based on seasonal pace of shipments, the weekly total is enough to keep corn exports on target with the newly revised lower 1.850 billion bu. USDA forecast. The key is pushing shipments up above 40 million bu. in January through March.

Soybeans: January soybeans closed down 8 cents at $9.10 1/4 today and hit a six-week low. December soybean meal closed down $5.90 at $301.20 and finished near its daily low. December bean oil gained 21 points at 30.64 cents and closed near mid-range. The roller coaster ride regarding progress, or lack thereof, on the U.S.-China trade talks continues, with today’s latest thinking downbeat after reports Monday said the Chinese are worried President Trump won’t agree to roll back tariffs to sign a deal. That helped to pressure the bean and meal futures market today. U.S. soybeans inspected for export in the week ended Nov. 14 rose to 1.533 million metric tons, up from 1.347 MMT a week earlier, with China taking about 60% of the total. Inspections are 50 million bushels above this same time last year, and seasonal tendencies show U.S. soybean inspections should pick up beginning in January.Weather in the Corn Belt now leans just a bit bullish as the drier forecasts issued Friday did not pan out amid unexpected weekend moisture over the region, and a second system is due through the central harvest areas the middle of this week.

Wheat: December SRW wheat futures closed up 4 1/2 cents at $5.07 1/4.  Prices scored a technically bullish “outside day” up on the daily bar chart after hitting a five-week low early on today. December HRW wheat closed up 1 1/2 cents at $4.18 1/2, finishing near mid-range after notching a three-week low early on. Futures prices were lifted by some fresh demand news to start the trading week. Algeria and Tunisia have issued tenders for wheat. The market was also supported by firm Russian cash prices, which may lead to better demand for U.S. supplies. Strategie Grains lowered its estimate of the soft wheat area for next year's harvest about 200,000 hectares, to 23.7 million hectares. Heavy rain disrupted fieldwork in western EU countries. The dry weather in the Black Sea region and eastern Europe may keep a bid under wheat, or at least caution aggressive new selling. Dryness is also becoming a concern in parts of China.

Cotton: Cotton futures faced pressure for much of the day and tested support at the November low earlier in the session before recouping around half of its losses and ending 54 to 94 points lower on the day. U.S./China trade talk shifted from talk of “constructive” dialogue between negotiators over the weekend to increasing pessimism about a deal from the Chinese side due to President Donald Trump’s reluctance to budge on the lifting of tariffs that the U.S. can use to make sure China follows through on any commitments. Past twists and turns on the lengthy trade war have means the market is all too well aware how quickly progress can erode.  Some fund liquidation ahead of first notice day for the December contract at week’s end also contributed to pressure today.  

HogsDecember lean hog futures finished 45 cents lower. Deferred contracts posted losses of $1.775 to $2.625. December hogs were pressured by the premium they hold to the cash market. The lead contract finished today $3.51 above where the cash index will be quoted tomorrow (as of Nov. 15) and the cash market continues to soften. The average national direct cash price was 27 cents weaker this morning. Pressure on deferred lean hog futures stemmed from reports U.S. and Chinese negotiators remain at odds over the level of Chinese purchases of U.S. ag goods. While China needs pork from the U.S. (and every other exporting country), even if tariffs remain in place, the market continues to react negatively when it senses the trade war isn’t near ending. We expect the market to continue to ebb and flow with the latest Chinese headlines.

Cattle: Cattle futures ended mixed and off session lows with feeders closing slightly higher. December live cattle fell 30 cents to $118.70 and February futures were up 12.5 cents to $125.10. January feeder cattle rose 20 cents to close at $144.475. Cattle retreated as futures narrowed their premiums to the cash markets and funds took profits on long positions after boosting net-longs nearly 13,000 contracts, to 73,714 futures and options as of Nov. 12, the most since May 14. Wholesale beef prices were mixed today, with Choice falling $1.81 and Select jumping $2.02 at midday on light sales. Choice fell for a third straight session after reaching a 28-month high last week. The official announcement this morning that the Tyson Fresh Meat’s Finney County, Kansas beef plant will be back in business on Dec. 2 appears to be at least partly factored into market prices. Most industry watchers are wondering what impact having the Finney plant back online will have on the negotiated cash cattle market--a market that typically strengthens from now until year’s end, seasonally anyway. It certainly won’t be bearish for cash prices.

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