BROCK MORNING COMMENTS
Grain and oilseed futures are mostly higher this morning amid technical buying in corn and questions about U.S. crop yields. Corn is up 1 to 2 cents, while soybeans are up 4 to 5. Wheat futures are narrowly mixed. Cotton is up 40 to 50 points, and rice futures are flat.
In outside markets, Dow and S&P 500 futures are little changed this morning after weakness yesterday amid concerns about banks, particularly regional banks. Crude oil is up slightly, and the dollar index is firm. Gold is up $25.
For the week, corn is up more than a dime, and in the December contract it is poised to post its fourth straight daily gain and a bullish reversal on the weekly chart. Other corn contracts could also post bullish weekly reversals with a strong showing today. Soybeans are up nearly a dime for the week in November futures, while wheat is up 5 to 6 cents for the week. Cotton and rice are near unchanged for the week but have rebounded from contract lows set earlier in the week.
President Trump appeared to soften his stance on tariffs on China in an appearance with Fox Business News this morning, saying that his threatened additional 100% tariff on China is “not sustainable.” In the interview he also reiterated plans to meet with China’s Xi Jinping in a couple of weeks in South Korea, and said things with China will be “fine,” saying that he gets along “great” with Xi.
Western hemisphere weather remains mostly favorable. Rains in the eastern and lower Midwest this weekend into early next week will cause some corn and soybean harvest disruptions, but also been good for soft red winter wheat. Harvest disruptions overall will be limited and not a major market concern. In South America, a wet pattern in Argentina will further boost corn and soybean prospects. Center-south and center-west Brazil will see welcome rains in the coming days, but World Weather Inc. says those rains will be “light and a little erratic” and that much more rain will be needed. Along with corn and soybean yield reports in the U.S., this dryness in central Brazil may be a key issue for the markets in the weeks ahead.
There’s no sign of any breakthrough on the government shutdown, so the market continues to operate without most USDA data, and traders are left to mostly guess on export sales. Trade estimates of net U.S. soybean export sales for the week ended Oct. 9 ran anywhere from 33.0 to 73.5 mil. bushels. Trade estimates of net U.S. corn export sales for the week ended Oct. 9 ran anywhere from 19.5 to 55.0 mil. bushels.
Chinese buyers reportedly still need 8-9 MMT of soybeans for December-January shipment, but are not buying now due to high Brazilian export premiums and the tariffs on U.S. beans. Whether those needs are filled with U.S. beans will likely depend on whether any trade deal comes out of the meeting between President Trump and China’s President Xi at the end of this month.
A cold front next week in Argentina could have a negative impact on what to this point has been shaping up to be a great crop, the Buenos Aires grains exchange said Thursday. “Weather forecasts warn of a cold snap next week which, depending on its intensity and distribution, could affect the crop during its critical stages,” the exchange said. Reuters notes that the exchange’s current crop estimate of 22.0 MMT would be the second-largest in the country’s history. Harvest runs from November through January. Meanwhile corn planting in Argentina is 29.9% done.
In France, soft winter wheat planting was 27% done as of Monday, up from 5% last week and above the five-year average of 22%, FranceAgriMer said. Dry weather is also facilitating a smooth corn harvest, which was 56% done Reuters said, up from 37% the prior week and the five-year average of 50%. Rains are expected to return next week, which will slow planting but help a corn crop struggling with moisture. France AgriMer estimated that 60% of the corn crop was rated good/excellent, down from 78% a year ago.
Rice futures have continued to tumble this week, making a new six-year low, and that weakness is prevalent around the world and particularly in Asia. Thai rice export prices fell for the fifth straight week to an 18-year low, Reuters said today, while Indian prices remain near a nine-year low. The Philippines recent decision to extend a ban on rice imports has helped to exacerbate the weakness, and buyers are on the sidelines watching the market continue to tumble.
President Trump said yesterday that his administration is working to lower beef prices in the U.S.: “We are working on beef, and I think we have a deal on beef,” Trump told reporters at the White House. The price of beef is “higher than we want it, and that’s going to be coming down pretty soon too. We did something,” Trump added, without elaborating. USDA Secretary Brooke Rollins said earlier this month that the administration was working on a plan to rebuild the historically small cattle herd, which has been the main driver of weaker prices.
Live cattle futures again made new contract highs yesterday, with some contracts settling higher for a tenth straight day. For the second week in a row Plains cash markets have been quiet and slow to develop. There was no trade in the southern Plains yesterday. There was some light trade in Nebraska, up $4 to $5 from last week on a live basis and $8 on a dressed basis.
NOTE: Along with the potential for profit, there is always a risk of losing money when trading futures and options contracts.
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