Afternoon Market Highlights
1/31/2019 3:09:06 PM
The Ag markets were on the defensive most of the day from technical selling, lack of fresh supportive news and increased corn production in Argentina. Word from the past two days of trade talks, by President Trump, was that a very big trade deal with China would be struck or postpone the March 1 deadline. Later this afternoon there was chatter that the March 1 deadline would not be postponed.
- The energy markets traded higher early in the session, climbing above $55 to $55.37/barrel. Prices have turned lower this afternoon with the nearby crude oil trading below $54/barrel.
- The US$ traded both sides during the session and is trading 250 higher at 95.59. The gold market remains strong at $1,323, up $10-$11 bucks.
- The DJIA is lower while the S&P and NASDAQ are trading higher.
- Ground Hog’s Day is this Saturday (6 more weeks of winter are definitely possible). Weather forecasts suggest rain/snow over the weekend with a return to cold temperatures again next week.
The corn market traded lower after the March failed to hold above $3.80. Prices were also pressured from increased production ideas in Argentina. Closes: March at $3.76 ½, down 4 ¾ cents, July at $3.92 ¾, down 4 ¾ cents and December at $4.00, down 3 ¾ cents.
- The BA Grain estimated the Argentine corn crop at 45.0 mmt up from their previous estimate of 43.0 mmt. This compares to the USDA December projection at 42.5 mmt.
- Gulf premiums were steady to 1 cent firmer. ECB processor bids were mostly unchanged.
- Spreads: same again today with the H/K at 8 ½ carry, K/N 7 ¾ carry and N/U at a 2-cent carry, Z/N 19 carry.
The soybean market traded both sides, with strength early in the session, on hopes for improving demand from crop losses in Brazil. Prices turned lower on weakness in the corn market and technical selling once the March failed to hold above $9.25. Closes: March at $9.15 ¼, down 5 ¾ cents, July at $9.42, down 5 ½ cents, November at $9.55 ½, down 4 ½ cents.
- Gulf premiums were 1-3 cents weaker for February. Decatur processor bids were 3 cents firmer, while most other ECB processor bids were unchanged.
- The BA Grain exchange estimated the Argentine soybean production at 53.0 mmt, unchanged from their previous estimate. This compares to the USDA December projection at 55.5 mmt.
- Thoughts are that the key parts of the Argentine soybean area have produced higher than average yields and could offset any shortfall in other areas that saw crop losses from flooding.
- The canola market traded lower on hedge pressure from increased farmer selling and uncertainty about the fate of Canada’s trade relations with China, after the arrest of a Chinese business executive last month.
- Spreads: H/K 14 carry, H/N 26 ½ carry, H/X 39 carry, X/F 9 ¾ carry, X/N 24 ¼ carry.
The wheat market traded lower in sympathy with the row crops. Prices also saw pressure from poor demand for US wheat. March closes: Mpls at $5.69 ¾, down 1 ½ cents, KC at $4.99, down 3 ¼ cents and Chicago at $5.16 ½, down ¼ cent.
- Western Australia is expected to experience hot/dry weather conditions over the next few months.
- The US Southern Plains are expected to warm up over the weekend with a return to cold temperatures again next week.
- The winter wheat market awaits the USDA’s first assessment of the 2019-20 winter wheat seedings, which is scheduled for next Friday (Feb 8) at 11 AM CST.
- Spreads: Mpls H/K snuck out to a 4-cent carry, Kansas City H/K was unchanged at a 9 ¾ cent carry.
The cattle market traded lower on technicals. Prices saw pressure in the live cattle market once the April contract rose to a new high at $129.47 and failed to hold at or above yesterday’s close at $128.05. The feeder cattle market traded lower in sympathy with the live cattle market, despite weakness in the corn market. Closes: March feeders at $142.47, down 1.82, April at $144.20, down 1.62 and August at $148.87, down 1.55. April live cattle closed at $126.35, down 1.70 and June live cattle closed at $116.02, down 1.67.
- January feeder cattle futures and options expired with today’s close.
- Packer margins were stronger at $82.85.
- Today’s slaughter is estimated at 114k head.
- AM Boxed Beef values on 88 loads: Choice at $216.01, down $2.04 from the previous day and Selects at $212.51, down 49 cents from the previous day.
- Cash markets are $1.39 lower at a weighted average of $50.26.
The hog market traded lower on technical selling and concerns of African Swine Fever spreading into the US. Poland detected their first case of ASF today. With a soft cash market there is no incentive for the futures market to change direction. Closed: Feb at $56.25, down 1.12, April at $60.22, down 1.80 and June at $75.30, down 87 cents.
- Packer margins were slightly softer at $22.35/head.
- Today’s slaughter is estimated at 420k.
- AM Pork Product values on 133 loads were stronger across the products, but the carcass cutout values are still trading below $70.