After the Bell: Soybeans Rise on Talk of Fresh Chinese Buying, Grains Follow

Posted on 01/02/2019 3:02 PM

Corn: Corn futures again ended fractionally on either side of unchanged in more narrow-range trading to start the new year. The corn market saw selling interest limited on drier, warmer weather forecasts for Brazil, returning to the drier pattern that has been in place for central Brazil since Dec. 1. A few light showers this week will not offset 30 days of much-below-normal rainfall. In Argentina, heavy rains continue to cause problems across north-central regions. Crude oil futures prices erased their early declines and pushed higher today, also lending outside market support to the grains today. U.S. corn is competitive on the world export market amid record global demand for the feed grain. Corn inspected for export in the week ended Dec. 27 fell to 913,797 metric tons (MT), down from 996,769 MT a week earlier, USDA reported on Monday.

Soybeans: Soybean futures finished 8 ½ to 12 ¼ cents high and in the upper half of today’s trading range. March beans rose 11 ¾ cents to close at $9.07 after touching $9.10 1/2, the highest since Dec. 20.  Soybean futures rose on trade talk that China’s state buying agencies were buying more U.S. soybeans today. This would be the fourth round of buying with USDA only reporting two of those sales with the USDA shutdown over the budget impasse. Prior confirmed purchases were just over 2.7 million metric tons, and one trade source estimates total purchases may be near 5.0 million. China would like those sales to be publicized to increase its bargaining position. President Donald Trump said Monday that “big progress” is being made in trade talks and a meeting is planned between trade officials of the two countries the week of Jan. 7.  Trade talks between the U.S. and China are set to begin in Beijing next week. The American side is being led by Bob Lighthizer, a China skeptic who has said he wants to prevent Trump from making a quick, empty deal in order to calm the markets. China President Xi Jinping said today that his country reserves the right to use force to bring Taiwan under its control but will work to achieve peaceful reunification that Taiwan and the U.S. oppose.

Wheat : Winter wheat futures rose 1 ¾ to 3 ¾ cents today. Spring wheat futures finished around a nickel higher in most contracts. Wheat prices rose, erasing earlier declines on a technical bounce. Prices were supported by ongoing concerns about rains hurting quality in Argentina’s wheat belt and some suspicion cold temperatures the past two mornings may have damage U.S. winter wheat. U.S.  wheat is competitive on the world market, but actual new sales need to develop and be sustained to support a rally in futures. World wheat prices continue to work higher and usually don’t peak until late spring when more is known about the health of the crop across the Northern Hemisphere.

Cotton: Nearby cotton futures finished down 125 to 136 points and hit fresh 13-month lows on this first trading day of the new year, extending the big December declines. Shaky world stock markets continue to weigh on the cotton futures market, including worries about global demand if world economies start to contract. Weak manufacturing data out of China today highlighted those demand worries. Strong gains in the U.S. dollar index today also worked against the cotton market bulls. Cotton traders will continue to monitor new developments on the U.S.-China trade front. Positive, substantial news on the matter that would suggest the world’s two largest economies coming to a deal on trade could put a price bottom in for the cotton futures market.

HogsWe advise livestock producers to extend corn-for-feed coverage another month in the cash market through the end of February. Hogs started 2019 with strong gains and ended today’s session higher but in the bottom half of the daily range. February futures rose 72.5 cents to close at $61.70. Cash hogs were steady to firm today as midday pork carcass prices rose $1.05 on active sales to start the new year. Gains were led by bellies and hams, offsetting declines in loins, butts, ribs and picnics. Slaughter was estimated at 480,000 head, up from 472,00 a week ago and 460,000 a year ago. Trade talks between the U.S. and China are set to begin in Beijing next week. The American side is being led by Bob Lighthizer, a China skeptic who has said he wants to prevent Trump from making a quick, empty deal in order to calm the markets. China's agriculture ministry said on Wednesday that slaughterhouses will need to run African swine fever virus testing for pig products before selling them to the market, in a move to control spread of the highly contagious disease. The new government move came as China reported on Wednesday a new outbreak of African swine fever on a farm with 73,000 pigs in Heilongjiang province, the largest farm yet to report a case of the deadly disease, further highlighting the increasing severity of the outbreak.

Cattle:  Live cattle futures closed down 20 cents in the February contract and down 25 cents in the April. Some mild profit taking was featured today after prices hit a contract high on Monday. Feeder cattle futures closed down 92 1/2 cents and the March contract ended down 77 1/2 cents after both contracts hit five-week highs on Monday. Post-holiday beef demand could be key to this week’s cash cattle trade. Cash cattle trade firmed $3.71 last week to an average price of $122.52--the sixth straight weekly gain. Cattle traders will closely monitor boxed-beef price action and movement the remainder of the week. Boxed beef prices today saw good gains, with Choice cuts up $1.96 and Select $1.20 higher. Movement was light at 41 loads. Beef demand has been stronger than expected this past year and will need to continue to surprise with supplies expected to rise again in 2019.

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