Ahead of the Open: Mildly Firmer Start Expected in Grains Today

Posted on 11/27/2019 8:22 AM

General Comments


American and Chinese trade negotiators are inching closer to agreeing on a Phase 1 trade deal, according to officials from both countries. The two sides also have been discussing where, or whether, President Donald Trump and Chinese Leader Xi Jinping would get together to sign a partial deal. A possible location for signing a deal would be at the World Economic Forum in Davos, Switzerland, in January. However, Trump tempered his optimism in an interview with the former Fox News host Bill O’Reilly about the trade deal. “We can’t make a deal that’s like, even,” Trump said, adding that he said that to China’s Xi. “I’m holding it up. Because it’s got to be a good deal,” Trump says. “We have to make a deal where we do much better, because we have to catch up.”

 

Officials from Canada, Mexico, U.S. to meet today re: USMCA. Chrystia Freeland, Canada’s deputy prime minister, and Jesus Seade, Mexico’s U.S.-Mexico-Canada Agreement negotiator, are due to meet U.S. Trade Representative Bob Lighthizer today in Washington to discuss the “side letter” that would include the changes negotiated with House Speaker Nancy Pelosi (D-Calif.).

 

As a reminder, markets as closed Thursday for Thanksgiving. There is no overnight trade Friday. Grain and livestock markets will open at 8:30 a.m. CT on Friday. There will be no “Ahead of the Open” on Friday. We’ll include opening calls in a special “First Thing Today” that will be sent around 8 a.m. CT. Grains close at 12:05 p.m. CT and livestock at 12:15 p.m. CT on Friday.

 

 

Grain Calls          

Corn: Steady to 1 cent higher
Soybeans: Steady to 2 cents higher
Wheat: Mixed to 2 cents higher

 

Corn: Futures posted modest gains overnight, but buyer interest eased at the end of the session. Aside from light corrective buying, the upside is limited. While a winter storm is hammering parts of the northern Corn Belt and around 13.1 million acres of corn was still standing in fields as of Sunday, traders are showing little concern due to poor export demand.

 

Soybeans: Futures were supported by light corrective buying overnight. Key today will be whether funds tap the brakes on recent liquidation of long positions or continue to dump longs. South American weather is improving, so there’s no fundamental support to curb fund liquidation, but they may be content to pause for a bit after the extended down move. The upswing in U.S./China trade talks should be mildly supportive.

 

Wheat: Winter wheat futures were mildly firmer overnight, while spring wheat futures favored the downside. We expect similar price action early this morning. Given a lack of fresh news and the upcoming holiday, trading volume is likely to be light.

 

 

Livestock Calls

Cattle: Steady/firmer
Hogs: Mixed/firmer

Cattle: Live cattle futures were supported yesterday by wintry weather that moved across the Plains and upper Midwest. That pushed February live cattle futures to a seven-month high and just shy of the contract high. With more wintry weather on tap and signs pointing toward packers paying higher prices for cash cattle again this week, we expect followthrough buying this morning. But with December live cattle trading $4-plus above last week’s cash trade and February futures another $5-plus higher than the lead contract, there’s already cash strength and weather premium built into the market, which could curb buyer interest today.

Hogs: Lean hog futures continued their holding pattern yesterday with another two-sided day of trade. We anticipate more choppy price action today, as trading volume should be light ahead of Thanksgiving. Traders are likely waiting on more definitive news on the China trade front. While comments from both sides have been more positive this week, traders have been burned by seemingly improved trade talk in the past. Wintry weather in the Midwest and a 68-cent rise in the national direct cash hog price yesterday could lend some support, but December futures are already premium to the cash index. It’s unlikely traders will add many new positions ahead of the holiday, especially with this being the last trading day of the week for some traders

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