News & Media

Market Briefs for February 7, 2019

USDA plays catchup
Due to the government shutdown, many USDA reports were delayed. The government began releasing export data Feb. 1, starting with the week ending Dec. 20. The report from the week ending Dec. 27 was released Feb. 7. Export sales data is expected to catch up on Feb. 22, but that is only if another shutdown can be avoided. USDA is scheduled to release what many are calling a “data dump,” which has potential to have big impacts on the markets. On that day, USDA will release monthly Supply and Demand reports, Dec.1 grain stocks, Winter Wheat Seedings, and the final 2018 crop production report. The market will certainly have a lot to absorb over the next few days.

The “ceasefire” in the trade war between the U.S. and China is set to end on March 1, which means if a deal isn’t reached by that date, the situation could deteriorate quickly. However, there are differing opinions on how much that could impact the market. U.S. exports to China were down 85 percent last year, so there isn’t much more to lose. The negative fundamentals are well known at this point, and should largely be built in to prices. Export data has begun to catch up, and reports have been better than expected. USDA says 88.4 million bushels were sold for export the week of Dec. 20 and 38.8 million were sold the week of Dec. 27. Those totals were above trade estimates, but still show 2018-19 export sales running 24.2 percent behind the year-ago total. If additional sales show up on subsequent reports, it could result in at least short-term support for the market. Soybeans are still trending higher, but the December high of $9.41 for March and $9.71 for November is providing resistance for the time being.

Rice futures have traded in relatively narrow range for the past two weeks on very light volume. March has been content to trade between the recent high of $10.93 and the low of $10.34. Rice export sales from the week of Dec. 20 were a marketing year high 145,500 metric tons, with Haiti and Panama the top buyers. Sales were down significantly during the week of Dec. 27 to 66,500 metric tons, which was down 33 percent from the four-week average, and shipments were 44,900 metric tons, down 53 percent from the four-week average. 

After trending higher to start the year, cotton futures have turned toward a more sideways pattern in weeks. The appearance of the March chart is somewhat worrisome as that market has broken trendline support, and could retest the low of 70.65 cents, especially if trade talks between the U.S. and China don’t yield results by the March 1 deadline. Cotton also set a marketing year high for export sales during the week of Dec. 20, and China was a buyer. Net cotton export sales were 373,100 bales.  Shipments for the same week were 207,000 bales. Sales were down to 228,200 bales for the week ending Dec. 27, but that was still 33 percent above the four-week average. Shipments of 189,000 bales were up 13 percent from the four-week average.

Corn futures have also been chopping along mostly sideways, with the lack of USDA data having an impact here as well. The direction of the corn market will largely depend on the planted acreage total, as farmers decide between planting corn and soybeans. The March contract is consolidating between $3.75 and $3.81 for the time being. Export sales reports from December are old news, and haven’t had much impact on the market, but, for the record, sales for the week of Dec. 27 were 503,100 metric tons, down 65 percent from the four-week average. Weekly ethanol production is slightly behind the same time last year, which is making it even harder to build any upward momentum in the corn market.

Live cattle futures have fallen from their contract highs set during mid-January. The February contract charted a huge downward reversal on January 31, but so far there has been no follow-through selling, with prices instead trading within that day’s trading range. The market had become oversold and due a correction. Slow cash trade due to the weather will also be a factor. USDA is scheduled to issue the next Cattle on Feed report on Feb. 22, as long as another shutdown is avoided.

Soft cash markets, winter weather and concerns about the trade war with China are all contributing to the sharp downtrend in hog futures. The market is oversold and due a corrective bounce, but it might be tough to find in the short term.