After the Bell: Soy Leads Grains Higher as Bears Fears Potential Chinese Buying

Posted on Wed, 02/12/2020 - 15:14

Corn: March corn futures closed up 3 1/4 cents at $3.83 and December futures were up 1 cent at $3.93. The futures market was supported today on light farmer sales recently, firm cash basis levels and some concerns about saturated U.S. soils that may once again create a planting season of problems. Also, Chinese and U.S. officials are still saying they can meet their trade-agreement purchase commitments despite the outbreak of the coronavirus in China.  The market needs a fourth week of good U.S. corn sales in Thursday morning’s weekly USDA export sales report to make another run at the upside. The trade is looking for current marketing-year sales of 700,000 to 1.2 million metric tons, and new marketing-year sales of zero to 100,000 MT.

Soybeans: Soybean futures finished 2 to 7 3/4 cents higher through the November contract, with the front-month March contract leading gains. Meal futures ended 80 to 90 cents higher, while soyoil futures closed 31 to 32 points higher.  Soybean futures traded on both sides of unchanged today, but a late wave of buying resulted in a high-range close. That sets the table for followthrough buying, though it’s likely going to take supportive news to fuel active buying. Funds hold big net shorts in soybeans and the soy meal, but without a bullish catalyst, there’s little incentive to actively cover shorts.  A candidate for potential supportive news would be USDA’s weekly export sales data. For the week ended Feb. 6, traders expect sales between 600,000 MT and 1 MMT.  

Wheat: Winter wheat futures turned higher during the day trading session and the market settled high-range with gains of 2 ¼ to 5 ½ cents for the day. HRS wheat futures faced pressure for much of the day and finished midrange and steady to fractionally lower. An early move to new lows for the month spurred some corrective short-covering today, as traders recognize there is already the potential for some supply-side concerns in the United States. Soils are saturated in many areas of the Northern Plains, crops are still in fields, and more wet weather is headed for the region. And several weather watchers say the Midwest and northeastern Plains could be headed toward a cool, wet spring. Already, concerns are mounting about the possibility of another slow planting season and possibly even lost acres. State updates signal the winter wheat crop has not over-wintered well, and winterkill may be a threat to crops in the Upper Midwest and northern Plains the next two days.

Cotton: Cotton closed higher, erasing early losses. March cotton formed a bullish outside day up reversal. March futures rose 35 points to 68.58 cents and December futures closed 51 points higher at 69.82 cents. Cotton futures reversed Tuesday’s losses tied to negative forecasts from USDA’s monthly supply and demand report. Much of that buying was tied to speculation Thursday’s weekly USDA export sales report will show continued strong new business and active shipments. The agency increased its estimates for global ending stocks for the 2019/20 crop year on Tuesday, citing larger production and lower consumption.

Hogs: Hog futures opened lower and closed mixed, with most of the weakness in the front four months. April hogs fell 45 cents to close at $63.775 and June was down 12.5 cents to $80.85. Prices continued to weaken today in the front futures contracts. Wholesale pork cutout values were unchanged at midday with few changes in the primal cuts. Sales remained slow. Cash hogs continued to soften. Back months rallied on Chinese pork demand optimism. China has not informed the United States of any delays or reductions of its planned purchases of U.S. agricultural goods under the Phase 1 trade deal due to the outbreak of coronavirus, U.S. Department of Agriculture Under Secretary of Trade Ted McKinney said on Wednesday. He said he hoped China would consider additional tariff relief to help it meet its purchase commitments but had no indication Beijing would do so.

Cattle: April live cattle futures gained $0.675 at $117.85 today, closing near the session high after touching a four-month low early on. March feeder cattle futures closed up $0.375 at $135.05 and near mid-range. Some short covering was featured in the cattle futures today. Gains were limited by cash cattle trade coming in slightly lower yesterday, and beef prices also retreating.  Light cattle trade $1 to $2 lower from action the week prior and in line with futures. The product market has been struggling, with prices sliding and lower prices failing to spark demand. Choice grade beef fell another $1.15 on Wednesday and Select gained 85 cents, narrowing the Choice-Select grade spread to just $1.30, a negative signal. Movement was again lackluster at 88 loads.